It seems as if trade agreements are impossible to understand. They’re characterized by complex jargon and detailed economic analysis that's far away from the everyday concerns of most people. The current negotiations over Economic Partnership Agreements (EPAs) between the African, Caribbean and Pacific (ACP) group of states and the European Union are no different. Yet what is the nature of these negotiations and the likely end agreement? What kind of relationship between Africa and the Europ...read more
It seems as if trade agreements are impossible to understand. They’re characterized by complex jargon and detailed economic analysis that's far away from the everyday concerns of most people. The current negotiations over Economic Partnership Agreements (EPAs) between the African, Caribbean and Pacific (ACP) group of states and the European Union are no different. Yet what is the nature of these negotiations and the likely end agreement? What kind of relationship between Africa and the European Union does it represent? And what will be the impact of this trade agreement on the social and economic fabric of our societies? Following on from our special edition on EPAs in July, Pambazuka News is retaining the focus on trade between Africa and Europe by running a series of articles on the subject, beginning with this edition and running through until the end of the year. In the first article, Stephen Hurt looks at the shifting power relations in international trade between the ACP states and the EU. The conditions of the current EPAs can be understood by looking at the historical relationship between these groupings - and actually reflect EU ambitions that date back to the early 1970s. (See below for French version).
The European Union (EU) is a major trading partner of sub-Saharan Africa. Both critics and supporters of the current negotiations towards Economic Partnership Agreements (EPAs) tend to agree that they are likely to have a significant impact on the development prospects of many African states. The particular importance of EPAs, which are part of the Cotonou Agreement between the EU and the African, Caribbean and Pacific (ACP) states, is that they represent a return to non-reciprocity in trade relations. Therefore they can be seen as a substantial change in EU development policy. The current emphasis on trade, and the associated relative decline of European aid going to Africa, represents a reversal of the approach adopted in the early years of the relationship. Then the focus was predominantly on aid rather than trade. In order to understand how the current situation has arisen, it is necessary to put the EPAs into historical context. By doing so it becomes clear that precedents have been set in the past. Moreover, it is apparent that since the 1980s the EU has been moving inexorably towards its current position in its relationship with Africa.
To understand the dynamics that have driven the historical development of the EU’s relationship with Africa it is important to consider the wider global context of North-South relations. As I seek to demonstrate in this article it is both material and ideational developments within this structural context that condition the policy decisions taken by government and bureaucratic elites within both the EU and African states.
Decolonisation and the Yaoundé Conventions
The EU’s relationship with Africa has been formalised since the very creation of the organisation in 1957. Due to the insistence of the French government, the Treaty of Rome included articles providing for the association of African colonies. Thus, in terms of trade and aid arrangements, a special relationship between the EU and Africa has been in existence for almost five decades. The agreement gave both member states and their colonial dependencies preferential trade access. This meant that EU member states received preferential trade terms with the associate states in comparison with third parties and vice versa. These rather humble beginnings provided a lasting legacy for the EU’s relationship with Africa, and the developing world more generally. As Holland argues ‘historical ties rather than need’ have been the criterion for determining preferential trade and aid relations (2002: 27).
Following the independence of a number of African states during the 1960s, the EU’s relationship with Africa was reorganised through the Yaoundé Conventions of 1963 and 1969. These acknowledged, to a degree, the political independence of the associate states; joint institutions were established, including an Association Council and a Parliamentary Conference. However, as Koutrakou (2004: 122) suggests, the main driving force of this relationship was the continued economic interests of the EU’s member states in Africa. This self-interest was reflected in the fact that preferential trade access remained reciprocal.
By the beginning of the 1970s the dominance of francophone Africa in the EU’s relationship with the continent was already being significantly reduced. In 1971 the EU introduced its Generalised System of Preferences (GSP), which reduced its external tariff for trade with all developing countries. This served to erode the relative benefits of the trade access enjoyed by the signatories of the Yaoundé Convention. However, the most significant development in this period that led to a reappraisal of the EU’s relationship with Africa was the confirmation of the United Kingdom as a European member state in 1973. Members of the Commonwealth, who were at a similar stage of development to the 18 Yaoundé states, united to form the ACP group.
The European Commission was strongly behind the idea of negotiating a new agreement with this enlarged group of developing states. Negotiations began in July 1973 and eventually culminated in the Lomé Convention. Despite the fact that the ACP was a rather heterogeneous group of states, they displayed a striking level of unanimity in the negotiations (Holland 2002: 33). The unity of the ACP group was further strengthened by the global context of the early 1970s. The Bretton Woods System had collapsed and Third World states had become increasingly forthright in their desire to improve their position in the world economy. These developments resulted in the call, chiefly within the United Nations General Assembly, for a New International Economic Order (NIEO). As a result the ACP states adopted a negotiating stance with the EU based closely on this NIEO agenda.
Although the final agreement of Lomé I did reflect some of these influences the concessions made to the ACP states were qualified in a number of ways. For example, the trade provisions were based on a shift away from reciprocity towards preferential access solely for ACP states exporting to the EU. However, this access to the EU market was limited in the export of agricultural commodities, one of the key sectors for many African states, by the non-inclusion of products covered by the EU’s Common Agricultural Policy (CAP). This remains a contentious issue thirty years later. In addition fairly stringent rules of origin and a safeguard clause allowed the EU to retain a significant degree of control over trade matters.
From Lomé to Cotonou
Looking back, Lomé I can be seen as the peak of the EU’s willingness to accede to the demands of African governments. In fact ‘the history of European development cooperation from this point onwards can be understood as the steady erosion of these limited concessions, and the increasing adoption of neo-liberal thinking’ (Hurt 2004: 158). This process ultimately resulted in the Cotonou Agreement between the EU and ACP states, which was signed in June 2000.
During the 1980s no substantial progress was made by the ACP states during the two renegotiations of the Lomé Convention. However, a strong shift towards neo-liberal thinking in the global North coupled with the Third World debt crisis significantly altered the context of the EU’s relations with Africa. These changes were reflected in the introduction of structural adjustment in Lomé IV, which was signed in 1989. This moved the EU’s approach significantly closer to the policies of the International Monetary Fund (IMF) and World Bank. In developing its policy on structural adjustment the EU claimed it had devised a more pragmatic approach than that adopted by the IMF and World Bank, which would take greater account of the impact of such policies on vulnerable groups. This claim has been contested by a number of critics (see for example Brown 2002 and Parfitt 1996).
The genesis of the Cotonou Agreement can be traced back as far as 1992 when the European Commission released a document called ‘Horizon 2000’. This paper argued for both an increase in conditionalities attached to aid and a shift in trade policy towards the benefits of multilateral trade liberalisation rather than preferential regimes. These concerns were partially addressed in the mid-term review of Lomé IV but the limitations of working within the existing framework made more substantial alterations to the trade pillar particularly unfeasible. Hence the European Commission published a Green Paper in 1996, which presented an overall assessment of the EU’s relationship with the ACP states and outlined the reasons for an overhaul of the relationship (European Commission 1996). It was argued that the creation of the World Trade Organisation (WTO) and the associated pressures for multilateral trade liberalisation made the EU’s preferential trade relationship unsustainable. The effectiveness of non-reciprocal trade preferences was also questioned due to exports from the ACP group having shown a steady decline as a proportion of total exports to the EU. These were views that were accepted by a majority of African state elites reflecting the increasing consensus on neo-liberal thinking.
What were the major causes of the abandonment of the Lomé Convention in favour of the Cotonou Agreement? During the 1990s significant changes in both geo-politics and the global economy had an impact on the nature of the EU’s relationship with Africa. The end of the Cold War led to significant alterations in the priorities of the EU’s foreign relations. In particular, the expansion programme of the EU saw trade and aid flows being redirected towards Central and Eastern Europe (Koutrakou 2004: 125). Consequently a rather sharp decline in the proportion of EU aid going to ACP states took place. In 1989 the ACP group received 63.5 per cent of total EU aid, but by 1998 this proportion had fallen to just 29.1 per cent (ECDPM 2001 (Part 5): 3).
In the global economy, since at least the early 1980s, neo-liberalism as an idea has become increasingly dominant. This is significant because when ideas assume such a position, debates on policy are framed in a narrow fashion. The influence of the hegemony of neo-liberal development thinking is readily apparent in the EU’s claim that the Cotonou Agreement and the negotiation of EPAs are necessary to meet the global rules of free trade embodied in the WTO. This position neglects the obvious fact that the rules of the WTO are not ‘fixed and immutable’ but a ‘political construct’ (Hurt 2003: 174). If the focus of the EU’s relationship was truly developmental it could seek to alter the very rules of the multilateral trading system that it claims limit its options.
There is a clear precedent for the moves towards the EU developing reciprocal trade relations with Africa. Soon after the end of apartheid in South Africa, the EU began negotiations with the new government led by the African National Congress (ANC). Eventually a bilateral Trade, Development and Cooperation Agreement (TDCA) was agreed in October 1999 after four years of negotiations. The trade pillar of this agreement was the creation of a Free Trade Area (FTA) between the EU and South Africa. Although the trade agreement includes an element of asymmetry in the time periods of liberalisation required by each party, by 2012 ‘substantially all’ trade will be accorded duty free access. At an early stage in the negotiations South Africa had requested full membership of the Lomé Convention. The EU had responded by arguing that South Africa was sufficiently developed in comparison with the rest of the ACP group that it would be able to withstand the adjustment costs of reciprocal trade liberalisation (Hurt 2000: 72-73). This may have been a questionable assessment of the situation in South Africa. Moreover, with hindsight it is ironic that the uniqueness of reciprocal trade relations deemed only relevant for ‘developed’ South Africa, have since become applicable to the rest of Africa.
The ACP group of states has been unique to the EU’s external policy with the developing world. The relative unity and negotiating strength of this grouping is clearly challenged by the current negotiations of EPAs on a regional basis. As I have demonstrated in this article, this is just one of the many differences with the period during the early 1970s when Lomé I was negotiated. The ‘normalisation’ of the EU’s relations with Africa manifested in the Cotonou Agreement actually reflects ‘the long-held wishes of the EU that actually date back to the early 1970s and the negotiations prior to Lomé I’ (Hurt 2004: 170). There exists a stark contrast between the instability of the world economy coupled with the relative negotiating strength of African states thirty years ago, and the dominance of neo-liberal development thinking embodied in the rules of the WTO in recent years. This change has allowed the EU to move away from preferential trade access and towards the negotiation of EPAs that African states are presently faced with.
* I use the term EU throughout this article to represent the European Union and the organisation, pre-Maastricht Treaty.
* Stephen Hurt is a Senior Lecturer in International Relations at Oxford Brookes University, UK. ([email protected])
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