TRADE: Mandelson Attacks South Africa and Nigeria Over EPAs

TRADE: Mandelson Attacks South Africa and Nigeria Over EPAs
By David Cronin

BRUSSELS, November 20 (IPS) - Africa’s largest nations are trying to block the signing of the economic partnership agreements (EPAs) with the European Union (EU), Peter Mandelson, EU trade commissioner, claimed today.


Speaking to members of the European Parliament, Mandelson strongly criticised the positions taken by Nigeria and South Africa in the EPA negotiations between the EU and nearly 80 African, Caribbean and Pacific (ACP) countries.

He alleged that the larger African countries are preventing their counterparts in the regional EPA-defined groupings from signing deals by an end-of-year deadline.

The EU has threatened to impose punitive tariffs on Europe-bound exports from about half of the ACP countries if they do not enter into EPAs by December 31.

As the remaining 39 ACP participants are classified as least developed countries (LDCs), they qualify for a seven-year-old EU trade scheme, known as Everything-But-Arms, under which they would enjoy duty and quota-free access to the Union’s markets for most of their goods.

‘‘If you go to West Africa, the regional group is dominated by Nigeria, which wouldn’t touch an EPA with a barge pole,’’ Mandelson said. ‘‘That’s okay for West Africa if you are relatively rich like Nigeria. But what about Côte d’Ivoire and Ghana? They are not rich, nor are they LDCs. They need an EPA to avoid disruption to trade at the end of the year.’’

Similarly, he argued that South Africa, which already has a trade agreement with the EU, ‘‘does not have as much at stake’’ as its neighbours. He raised the possibility that EPAs could be signed with other southern African countries, if South African president Thabo Mbeki’s government rules one out.

‘‘Am I -- because of South Africa’s inability finally to commit -- to say there should be no EPA for southern Africa; that there should be a disruption of trade with Botswana, Lesotho, Namibia and Swaziland?’’ he asked.

Mandelson’s combative stance was condemned by anti-poverty activists, who are perturbed by indications that the EU is attempting to drive a wedge between African countries, putting pressure on them to conclude deals that would prevent them from cushioning their farmers and nascent industries from an influx of European goods.

Karin Ulmer from Aprodev, an umbrella group for Protestant aid agencies, said it is ‘‘not fair’’ that the EU is trying to pull poor countries into an ‘‘unequal relationship’’.

‘‘Maybe it is not even the intention (to create divisions between ACP countries) but, de facto, that is what the European Commission is doing,’’ she told IPS.

Oxfam campaigner Luis Morago noted that Senegal’s President Abdoulaye Wade recently commented on how EU-Africa relations are ‘‘out of order’’ because of differences on trade. This does not bode well for the summit between European and African heads of state and government, scheduled to take place in Lisbon, Portugal, next month.

‘‘The EU-Africa summit is meant to herald the start of a new partnership,’’ Morago said. ‘‘Most African countries are not convinced that what the EU has put on the table is worth signing. European and African leaders should take this opportunity to step back, rethink their approach and focus on creating a truly development-focused partnership.’’

Also meeting on November 20, development aid ministers from the EU’s 27 member states, issued a statement which ‘‘expressed concern’’ over the slow pace of the EPA talks in some regions.

The ministers endorsed suggestions by Mandelson that agreements limited to trade in goods should be signed this year, allowing talks on other issues such as investment, competition and services liberalisation to run into 2008.

Caroline Lucas, a British Green member of the European Parliament (MEP), argued that Mandelson is putting pressure on vulnerable countries to open their markets to European goods. The Guardian newspaper in London, she remarked, had reprimanded him this week for ‘‘bully-boy tactics’’.

But Mandelson, who played a pivotal role in reforming Britain’s Labour Party before being appointed to the European Commission, said he had encountered such charges since the mid-1980s. ‘‘The day that Peter Mandelson is not called a bully by The Guardian newspaper, I will throw a very large party indeed,’’ he said.

Erika Mann, a German Social Democrat MEP, said that some African countries would ‘‘have a lot of problems signing a free trade deal with the EU.

‘‘The problem is that they don’t have the capacity to negotiate free trade agreements with other countries elsewhere in the world,’’ she added.

British Conservative Party MEP Robert Sturdy took Mandelson to task for his readiness to discuss the possibility of deals with some ACP countries that will exclude others.

‘‘Surely the whole point of the EPAs is to facilitate and promote regional integration,’’ said Sturdy. ‘‘This is not about bilateral agreements. President Wade has said that the system proposed by the EU for trade is not acceptable and that EU-Africa relations are broken. It doesn’t sound as though things are going particularly well.’’ (END/2007)

TRADE-EAST AFRICA:
Officials Confused About Pros and Cons of EPA

TRADE-EAST AFRICA: Officials Confused About Pros and Cons of EPA
Aileen Kwa

KAMPALA, Nov 20 (IPS) - The news that the ministers of the East African Community (Kenya, Uganda, Tanzania, Rwanda and Burundi) are on the verge of signing an economic partnership agreement with the European Union (EU) has been received with mixed reactions by government officials from these very same countries.

The East African Community (EAC) ministers had agreed with their EU counterparts last week that they would sign a framework agreement on trade in goods, market access, development cooperation and fisheries by no later than November 23 this year.

This framework agreement will reduce to zero 81 percent of current EU exports in industrial and agricultural products entering the EAC markets. The elimination of tariffs to zero will take place over a transition period of 25 years.

By the end of the tenth year, there will be a zero percent tariff on raw and capital goods. Tariffs on intermediate goods will be brought down to zero between the eleventh and twentieth year and tariffs on finished items will be brought to zero percent after 25 years.

Built into the agreement will also be a mechanism for the continuation of the economic partnership agreement (EPA) negotiations beyond December 31, 2007. The additional areas to be negotiated include liberalisation of services, intellectual property and the ‘‘new generation issues’’ of investment, competition policy and government procurement.

A negotiator from the region who had been involved in the negotiations felt that the outcome is good for the EAC. ‘‘Of course it is good. If it wasn’t good for us, we won’t have agreed to it.’’ He was pleased about the level of liberalisation, coupled with the exclusion list (19 percent of current trade), and the transition period. Tariff reductions will only commence from 2010.

Other government officials from the region, however, expressed unease. A major issue between the negotiating partners had been over ‘‘development’’. The EAC had presented the EU with a matrix of projects they wanted the richer nations to fund.

According to an inside source from Nairobi, Kenya, who spoke on condition of anonymity, ‘‘what is not clear is what we are getting in the ‘development’ framework. I don’t know how concrete or binding this development framework is. It is a total mess, but unfortunately we are already there.

‘‘Are we getting additional funds? The EU is saying they will be using the current EDF (European Development Fund). We have been conned into this thing. Here we are, opening our markets to the EU, and in return we are getting a ‘best endeavour’ (non-binding) development framework,’’ he told IPS.

‘‘We don’t know, in concrete terms, where the funds are coming from -- if there are no additional funds. So this interim arrangement is just about opening up our markets for EU,’’ he said.

Another government official from Kampala, Uganda, raised similar concerns: ‘‘I think there is an EAC development plan. Most probably that is what has been picked up for support under ‘development’.

‘‘In terms of funds, are we getting anything over and above what we would have got (without the EPA) or are we getting the same? Those answers are not very clear and nobody can tell you. We know that the EDF is coming. Maybe it will still be the same amount of money.

‘‘But we are told that the EU has been the major funder of our roads, so we need to agree with them (on the EPA). So it is a bit tricky,’’ the Ugandan official said, on condition of anonymity.

When asked how the package might affect the agricultural sector in Uganda, there was some uncertainty. The Ugandan official commented, ‘‘there is a list of sensitive products which has been excluded from liberalisation. I am told that the (EU agricultural) subsidies are not open for negotiation.

‘‘This means that, tentatively, (the EAC will not open its markets) to those products that the EU is subsidising, such as beef and dairy. But when you look at Rwanda, they are importing a lot of milk from the EU. How are Uganda and Tanzania going to keep the milk out? If there are no border measures, the milk can easily come here.’’

To the question whether the EPA will affect the industrial sector in Uganda, he commented: ‘‘We don’t have much of an industry to talk about, really. Maybe the problem is upcoming industries, I don’t know.

‘‘It could be a catch-22. Maybe we can attract investment or maybe it will discourage our local entrepreneurs who have already started something or who could have started something’’, were it not for external competition.

He gave the example of small grocery stores that are currently being pushed out of the market. ‘‘They are being swallowed by supermarkets. These small shops were supplying extra services. You could get a few things and pay later, and they were in the suburbs. Now, with the coming of supermarkets, some are pushed out.

‘‘They are no longer competitive. We are not sure whether those (EU) people will come in (as a result of the EPA) and displace the small people.’’

He also raised the issue of neighbours benefiting at the expense of Ugandans. ‘‘What if Europeans decide to put up industries in Kenya and don’t come here?

‘‘Unilever is in Kenya and they are bringing all the products here -- soap, toothpaste -- to our supermarkets. So the people benefiting are Kenyans and there is no guarantee that we will benefit, although we are talking as EAC.’

‘‘When you look at the Kenyan private sector, their export volume is quite high. But when you look at ours, the volume is a bit low. Ours could go under the EBA (the EU’s Everything-But-Arms trade initiative). I don’t know if our private sector is aware of this. If they are not, they might be told that by January, their products will attract a higher tariff.’’

As a least developed country (LDC), Uganda can avail itself of the EBA preferential arrangement of the EU which provides zero duties on all LDC exports.

The Kenyan official had this to add: ‘‘We are better off with the generalised system of preferences (the tariff rates which the EU offers to all countries). The duties are high but they would not have stopped us from exporting and we would not have had to open our markets for the EU.

‘‘But now the EU is telling us to pay a price for the preferences we are receiving from them by opening our markets. Even when we do this, the countries we fear will still be more competitive – India, Korea and others. The EU is already entering into free trade agreements with them. So there is nothing we are gaining by opening up.

‘‘But the political aspect comes into play. The politicians say we need to reassure some of the key players, particularly in horticulture, that trade will not be disrupted (at the end of the year). Just because of horticulture, we are opening up our markets.’’ (END/2007)

TRADE: EU Set to Milk East Africa With Subsidised Goods?
TRADE: EU Set to Milk East Africa With Subsidised Goods?
Analysis by Aileen Kwa

NAIROBI, Nov 15 (IPS) - ‘‘Dairy farmers in Kenya are doing well now,’’ says Peter Wanyeki, as he flashes a big smile. ‘‘Before, when we went home to the village, you could never take enough money with you. Everybody was poor. But now the situation is different. The dairy farmers are rich because they are getting a very good price for their milk.’’


Peter now works in Nairobi, but he grew up on a dairy farm. ‘‘I want to go back to farming in five years. I think I can have 30 to 50 cows, get together with some other farmers and set up a processing centre. If we do that, we will do fine,’’ he says, clearly upbeat about the prospects for the industry.

The picture for dairy farmers is not uniformly attractive though. There are farmers in certain regions, such as those along the coast, who feel they have been marginalised by the government.

Nevertheless, on balance, with government support for the revitalisation of the dairy marketing board called the Kenyan Cooperative Creameries (KCC) in 2003, the sector has performed much better.

The question is, will Kenya’s dairy farmers survive if Kenya and the other countries in the east African region enter into an economic partnership agreement (EPA) with the European Union (EU)? The deadline for the talks is December 31 and even at this late stage, negotiations remain heavily bogged down by differences.

The EU envisions the EPA to be a reciprocal trade agreement. It plans to open 100 percent of its market duty free and quota free to its former colonies, including Kenya. In return, the EU is insisting that Kenya and its neighbours open 90 percent of their markets.

What will happen to the dairy industry? Will this lead to another deluge of EU milk powder into Kenya?

As a result of the World Bank’s structural adjustment programmes, the dairy sector was liberalised in 1992. Tariffs were lowered to 25 percent and the KCC, which had bought milk from farmers at set prices, was abolished. Private traders were allowed to operate in the sector.

Disaster struck as milk powder flooded the Kenyan market. The milk came from a variety of sources, including New Zealand, South Africa and Zimbabwe, but the EU was the predominant exporter.

Powdered milk imports rose from 48 tonnes in 1990 to 2,500 tonnes by the end of the decade. In fresh milk equivalent, this presented an increase from 400,000 litres to 21 million litres.

The local industry collapsed. Prices dropped way below production costs. Domestic production fell by nearly 70 percent, reaching a meagre 126,000 tonnes in 1998. Small dairy farmers -- numbering some 600,000 people -- were plunged into poverty.

In 2001, the government increased the tariff from 25 to 35 percent. However, even this was insufficient to stem another episode of import surge in 2001. Following much public debate, tariffs were raised to 60 percent in March 2002.

The revival of the KCC in 2003 was a major boon. Since then, locally produced and processed dairy products have increased substantially and have regained their majority share in the domestic market.

What will happen to the dairy sector if Kenya liberalises as per the EPA? This question is especially pertinent given that, despite the claims of ‘‘free market’’ competition, the EU subsidises its dairy sector to the tune of 2.5 billion euros a year.

Kenya is by no means the only country that has been badly affected by the export of artificially cheap European milk powder. In Jamaica, imported European milk powder devastated the sector. In the Dominican Republic, the fifth most important market for the EU, 10,000 farmers have been forced out of the sector in the last two decades.

In Sri Lanka, the seven-fold increase in milk imports from the late 1990s has consigned the local milk sector to permanent sluggishness. From Bangladesh to Nigeria and the Ivory Coast, artificially cheap European milk squeezes small producers out of their local market.

The last reform of the EU’s Common Agricultural Policy (CAP) in 2003 did little to correct the distortions in the dairy sector. The reform meant that export refunds in the milk sector are being scrapped and domestic prices are being brought in line with world prices.

However, EU farmers are now compensated through direct payments which have been labelled a new form of hidden export subsidisation.

It is projected that in France, the CAP reform is likely to push small French farmers out. Nevertheless, their production quotas will be taken over by the big producers and the quantity produced for 2007 is expected to be even higher than in 2003.

Kenya and its regional partners have asked the EU to reduce its domestic and export supports to agriculture in the context of the EPA negotiations. The EU has flatly refused to even discuss the issue, arguing that domestic supports are an ‘‘internal’’ issue.

This is untenable, given that the African market is being targeted as a major market for Europe’s subsidised milk products.

Between 1996 and 2003, even as EU dairy exports to the world market decreased by 0.44 percent, dairy exports to African, Caribbean and Pacific (ACP) countries grew by 32.8 percent. The ACP market accounts for about 14 percent of total EU dairy exports, and Africa absorbs the largest share.

If Kenya eliminates tariffs on milk in the EPA negotiations, Kenyan milk farmers will be plunged into their nightmare of the 1990s. Kenya may choose to protect milk tariffs in the EPA negotiations by classifying milk powder under the sensitive products list.

However, the EU is pushing Kenya and its partners to limit the sensitive product list for the region to a meagre 10 percent of all goods currently imported into their countries from Europe. If milk is protected, another sector in industry or agriculture will be sacrificed. Which one will it be? (END/2007)

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You can take any number of products from the Caribbean and see how the EU screwed us over and the strategy and tactics used and seeing their thinking at work to see where this is going to go or what the desired outcome will be. Bet good money they will get it as well because of a lack of a clear concensus and bigger agenda of African countries..EU will simply make deals with those who take the bait and have more in terms of a short term gain and do business with the. The master has the whip hand and he knows it.