Tensions simmer over EU-Africa trade relations

Trade relations are likely to be at the heart of the delayed EU-Africa ‘strategic partnership’, but only if long-standing tensions can be resolved, including different views on the content and form of the future trade partnership.

The EU-African Union summit, originally planned for mid-October, was delayed until 2021; officially because of the second wave of the COVID-19 pandemic, but long-standing disagreements are simmering over future trade policy between the two continents.

The main demand of African leaders is expected to centre on the continent’s ability to develop local industries and productive capacity to export high-value products rather than raw materials.

‘It is our hope that the new partnership will create new global value chains, to increase exports of finished goods,’ Botswana’s trade minister Peggy Serame told European Commission officials at an event in late-October.

“We as Africa need to look at our productive capacity to put in place measures to be competitive but of course there are ways where we can work with the EU, who can also encourage and help us to develop our own local productive capacity,” Serame told EURACTIV.

African ministers are also likely to request new instruments on infrastructure investment, and to improve the ease of access to existing EU funds such as the External Investment Programme and European Investment Bank funds.

Serame said that in Botswana’s case EU trade relations can be improved within the context of the Economic Partnership Agreement between the EU and the Southern African Development Community, of which Botswana is a member. The SADC Economic Partnership Agreement is the only EU trade deal with an African regional bloc to have been fully ratified and implemented.

“I wouldn’t re-write it (the EPA) completely,” Serame said.

“The EU will say that we have the best terms in the world in terms of what the EU will usually offer but, of course, we believe there are still areas where we can still engage further and find new opportunities. There are other (African) countries with no agreement at all and I would encourage them to have an agreement with the EU that can guide the partnership going forward,” she added.

Progress in ratifying the EPAs has ground to a halt in recent years. Africa’s least developed economies enjoy tariff-free access to the EU market with or without the EPAs, while wealthier countries complain that the terms of the EPA prevent them from protecting local industries and developing the capacity to export finished goods.

German Chancellor Angela Merkel has suggested that some EU-Africa trade deals could be renegotiated to include more preferential trade terms.

There are similar tensions between African regional trade blocs and the United States over the terms of the latter’s African Growth and Opportunity Act, which precludes the imposition of tariffs on a number of US exports to Africa.

While 54 African countries have agreed to create continent-wide free trade area, insiders to the EU-AU talks suggest that the EU insists that EU-Africa trade must remain based around the Economic Partnership Agreements.

At a EURACTIV event last month, a European Commission official argued that the African Continent Free Trade Area (AfCFTA) should be aligned with the EU’s green deal, the Commission’s flagship ten-year €1 trillion programme, designed to shift Europe to a low-carbon economy.

There are fears among African governments that the EU’s proposed introduction of a carbon tax as an own resource to fund future EU budgets could also catch them, since many African countries are unlikely to move as fast on green value chains as their EU counterparts.

In the meantime, the disruption to regional trade and supply chains caused by the COVID-19 pandemic has prompted a number of African countries to prioritise local industrial production, particularly agriculture, to ensure food security.

“We saw serious disruptions to our supply chains and had to put in place a number of protocols to protect ourselves and guard against the spread of the virus. That delayed the flow of goods into Botswana,” Minister Serame told EURACTIV.

“We also saw our private sector quickly identify new opportunities. We are seeing a lot more companies go into food production,” the minister added.

[Edited by Zoran Radosavljevic]

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