The European Union is currently negotiating Economic Partnership Agreements (EPAs), with 77 States in Africa, the Caribbean and Pacific (ACP). For the past three decades, ACP countries have had preferential access to European markets through the Lome and Cotonou agreements. With the establishment of the WTO in 1995, it was said that such preferential trade agreements had become “incompatible” with multilateral trade rules. Based on this, the EU and ACP countries started in 2003 to negotiate a follow up agreement. The negotiations are being undertaken with six regional groupings. According to the negotiation timetables, EPAs are to take effect on January 1, 2008.
The EU argues in public that EPAs are vital for developing countries in Africa, the Caribbean and the Pacific to maintain their access to European markets in a form that is compatible with WTO rules. It has also repeatedly told these countries and the European public that it has no commercial “offensive interests” in the negotiations and that there will be long periods for implementation. Yet the demands and proposals of the EU and its aggressive negotiation approach appear to contradict these statements.
EPAs are Free Trade Agreements intended to serve the interest of European business.
It has become clear that EPAs are by no means “Partnership Agreement” but essentially Free Trade Agreements (FTAs), creating “free trade” between the EU and ACP countries, with essentially no duties or quotas on trade between the regions. In order to continue enjoying duty-free access to Europe’s markets, ACP countries have been told to fully open their own markets in return. The EPAs will abolish the principle of nonreciprocity that was a key element of the Lome and Contonou agreements, according to which the EU gives market access to these countries without asking them to open up their markets.
Besides the full elimination of tariffs on agriculture and non-agricultural goods, the EU also intends to include other elements in EPAs, such as the liberalisation of trade in services as well as the liberalisation of investments. The services sector (according to the WTO) covers a large and diverse range of economic activities, such as wholesale trading and distribution (e. g. supermarkets), tourism, banking and insurance, transport, health care, education, water services etc. Given the fact that services, unlike goods, cannot be moved from one country to another, the core interest of the EU is to include rules in EPAs that will allow big European services corporations in these sectors either to buy up existing domestic service providers or set up their own business.
Many groups in ACP and EU countries have undertaken empirical investigations and analyses to assess the potential impact of EPAs. In past years, even the European Commission provided impact assessments of trade agreements – not only with ACP countries but for other regions as well. All analyses give a clear answer: EPAs as pursued by the EU (and other developed nations such as the U.S.) will aggravate and deepen poverty in both rural and urban areas, degrade natural resources and lead to a substantial loss of policy space and self-determination among other things.
Even now, existing experience with the opening of agriculture markets in ACP countries clearly demonstrates the negative impact. Poultry farmers – mostly women – in Cameroon and Ghana cannot compete with underpriced chicken parts from Europe. Ghanaian tomato canning factories had to close because of cheap imports. In Kenya, dairy farmers poured their milk into ditches when cheap European milk powder flooded and destroyed their own markets. Only when the Kenyan government raised milk import tariffs – a flexibility which will be largely lost with EPAs – did the situation for diary farmers improve.
EPAs would introduce more binding trade liberalisation and hence only promise more dumping (the selling of produce below the cost of production). For most African farmers, access to local and regional markets is the basis of economic activity and survival, not export to Europe. With the EPAs proposed by the EU, a massive loss of livelihood for small farmers and also for bigger agricultural producers in ACP will be the result. This will further increase the dependence on food imports and undermine family and community food security. It will also lead to more and massive migration to cities, with all the attendant consequences.
In the industrial sector, the experience of trade liberalization in ACP countries has damaged several industries as well as workers, their rights and working conditions. Many jobs have been lost, as domestic firms could not compete with foreign investors and working conditions have further plummeted. More than 30,000 Nigerian textile workers lost their jobs following liberalization under World Trade Organization rules, coupled with economic conditions imposed by the International Monetary Fund. 90,000 jobs in Kenya’s leather industry were lost, after liberalization policies were applied, and almost all of the diary industry collapsed with the import of cheap European milk powder. Labour standards in Madagascar’s footwear industry (with mostly women workers) have severely declined. Longer working hours, the loss of social benefits (e. g. maternity leave) and the casualisation of jobs are among key characteristics of jobs today. Trade unions in ACP countries are well aware of what further trade liberalisation would mean. EPAs will continue the process of deindustrialisation – already previously set in motion by IMF and World Bank liberalisation programs and WTO agreements – and increase unemployment, already now reaching generalised and catastrophic levels in most ACP countries. Increased migration to developed countries, as a consequence of both the loss of farmers’ livelihood and the loss of jobs in the industrial sector, will be the logical result in the people’s search for a better life. The EU will also seek to benefit from people’s desperation. While increased security measures at the EU’s outer borders will ensure that “unskilled” and “poor” migrants are kept out of the EU as far as possible, “qualified” persons, such as nurses, doctors or people with other desirable profiles, will be allowed in. This will further destroy the basis for economic and social development in ACP countries, as their talented and educated people will leave the country and in many cases not return.
EPAs as proposed will lead to a massive erosion of government revenues as a consequence of extensive tariff reductions. The national budget of many ACP countries is highly dependent on these revenues. In some countries these revenues represent up to 50 % of the national budget. The United Nation’s Economic Commission for Africa (UNECA) estimates that Sub-Saharan African governments will lose 1,516 billion Euros per year in tariff revenues through the full implementation of the kind of EPAs envisaged by the EU. This will have massive consequences for the policy space of these countries. Further cuts in public spending, e. g. on health and education, are to be expected. Existing health crises, above all HIV/AIDS in Africa, will worsen and continue.
Besides the loss of government revenue, the inclusion of provisions to regulate investments would have serious implications for national economic and social development. The EU clearly uses EPAs (and bilateral or regional trade agreements in general) as well as basic principles of investor protection to introduce measures that will force ACP countries to treat foreign investors in the same way as domestic investors. As a consequence, ACP countries will be largely deprived of policy instruments, for instance the use of public spending in a way that helps to build their own economies by giving contracts to domestic or regional firms. And investor protection as promoted by developed countries, including the EU, clearly aims at securing corporations profits, against the public interest. One example in the U.S. may indicate what can be expected: the company Methanex currently seeks US$ 970,000,000 compensation for loss of profits after the state of California banned the use of MTBE (chemicals involved in methanol production), because they contaminate the state’s drinking water and consequently the health of millions of people living there. This is possible because of investment provisions in the NAFTA agreement. Bechtel sued Bolivia for loss of profit, after the water corporation had to leave the city of Cochabamba, due to heavy social protests and people demanding the return of their control over water. The legal case was based on Bolivia’s bilateral agreement with a European country that included investment protector provisions.
While trade liberalisation in the past has in some cases led to economic growth, it has also negatively affected the ability of people to access basic human rights such as food, work, health, and self-determination. EPAs would clearly undermine the realization and application of human-rights obligations that most ACP countries have signed.
The impact of EPAs on the right to health may illustrate what is at stake. The right to health requires the establishment of a system of health protection which provides “equality of opportunity for people to enjoy the highest attainable standard of health”. One major threat in liberalising health services is that the most vulnerable persons are not served. Their low income does not make them “clients” from which profits can be made. Additionally, the loss of government revenues, due to the elimination of import tariffs on European goods, substantially decreases already limited public funds. As a consequence, government spending on health care will decrease, and this has already occurred. Another element of concern here is the fact that intellectual property rights will be negotiated in the EPAs. Already now, generic manufacturers face huge barriers to the production of cheaper versions of urgently needed drugs due to the existing TRIPS (Trade in Intellectual Property Rights) Agreement of the WTO.
In the Cotonou Agreement it was stipulated that EPAs should be negotiated with the extensive participation of various stakeholders. The reality is otherwise. EPAs are negotiated largely behind closed doors. In Africa for example, most Africans, parliamentarians included, are not aware, nor informed, of EPA negotiations. In many countries, only the ministries of trade are engaged in the negotiations, leaving out other ministries such as agriculture or fisheries. Despite this situation and increasing demands from different sectors of civil society in the ACP countries not to sign the agreements or to prolong the negotiation period, the EU insists on signing EPA agreements until the end of the year.
EPAs – as free trade agreements negotiated today either at the bilateral, regional or multilateral level – imply an enormous loss of selfdetermination and democracy. Future laws and regulations a country wishes to establish, in order to protect its people or environment, can in most cases be challenged if they are regarded as limiting corporate profits. Investor-to-State Dispute Settlements are part of many bilateral or regional trade agreements, such as NAFTA, which have already led to various court cases in which corporations challenged laws made by governments. In the case of the WTO, such complaints can only be registered by countries, yet the interest behind them remains the same. This implies that investors’ interests are put above the interests of people.
In October 2006 the EU Trade Commissioner, Peter Mandelson, with the support of EU trade ministers, presented to the European public the new EU trade strategy, called “Global Europe – Competing in the World”. This strategy – as with any other EU trade policy – had been developed with the preferential access and input of European business and without any democratic process and consultation in the member states. It claims to be a contribution to growth and jobs in the EU. The strategy’s main objective is to secure global competitiveness for EU corporations. To achieve this, the strategy proposes on the one hand a further aggressive opening up of foreign markets to European goods and services, to secure access to (cheap) resources including energy, to improve intellectual property rights and to create a more secure environment for European investments. On the other hand, the strategy clearly indicates that future internal EU social, environmental, labour and other regulations need to serve the goal of “global competition”. The strategy also leaves no doubt that the EU intends to pursue its interests via different levels of trade negotiations, multilateral, regional and bilateral. With the WTO Doha-Round Negotiations being in serious trouble for years now, and with a high probability that they will not be concluded in the near future, the EU is more aggressively advancing bilateral and regional negotiations in order to secure its own access to resources and markets.
The objectives of EPAs are consistent with this overall EU trade policy. One of the key interests of the EU in ACP countries and in particular Africa is clear: maintaining and increasing access to its natural resources – oil, minerals, timber and most likely agrofuels – in the near future. One emerging competitor the EU is facing in Africa is China. With EPAs the EU aims to secure its preferential access to Africa.
European social movements, trade unions and NGOs, which until now have mostly focused on criticising EU internal policies because of their negative impact on workers rights and European citizens access to social rights among other things, are now challenged to include a better understanding of the EU’s trade strategy in their analyses. Global Europe is an essential element in the process of liberalisation and privatisation as well as in the acceleration of the downward spiral of working conditions, labour rights, social rights, environmental rights, etc.
The above-described impact on ACP countries, an impact already felt from past trade liberalisation, and which will be even stronger if EPAs are signed, do not in their basic dynamic differ from the European experience. In ACP countries and Europe, jobs are destroyed and those which remain in most cases see a deterioration of working conditions, salary, and social rights. Public services are liberalised and consequently privatised with the effect of worsening their quality and access to them, leaving those most in need without services, or with worse services. In ACP countries and the EU, agriculture and trade liberalisation promotes an unsustainable model of industrialised agriculture, increasingly controlled by a few agribusinesses dominating the whole food chain. The same could be said of any other region in the South. The beneficiaries in the case of EPAs (or any other trade agreement the EU has signed or would like to sign) are transnational European corporations.
While the core objective of the current EU integration is the creation of a single European market in which farmers and workers in the EU are made to compete with each other, the core objective of trade agreements (whether bilateral, regional or multilateral), is further to advance the creation of a global market, in which farmers and workers worldwide compete with each other despite their very diverse economic conditions, and transnational corporations are able to maximise their profits in all the stages of value creation.
Already in 2004 an international Stop-EPA Campaign was launched as an initiative of the African Trade Network, a broad network of civil society organisations in Africa. With the World Social Forum taking place in Nairobi, Kenya, in January of this year, EPAs for the first time reached a broader audience of social movements, trade unions and other social sectors, in particular from Europe.
The WSF in Nairobi also helped to broaden the resistance in Africa and Europe. Social movements in Africa have developed a clear message and call for action to require their governments to stop the EPAs and not to conclude a free trade deal with the EU by the end of this year.
In Europe, until recently most of the Stop EPA campaigning had been done by groups engaged in development work. Attac, Via Campesina Europe and other groups have taken up the challenge to broaden resistance in Europe to include social movements and trade unions. At the G8 mobilization in Rostock, EPAs and Europe’s trade agenda were featured prominently in the demonstration and at events at the Alternative Summit.
Several important mobilisations are to occur in the next months. A global day of action against EPAs will take place on September 27, in which representatives of African social movements will visit certain key EU member states to explain the devastating impacts of EPAs and challenge their European counterparts to engage in this struggle and in the building of a bi-regional network that sets the stage for a new kind of relationship and joint collaboration that goes beyond trade agreements.
Besides joining the struggle of social movements in Africa, the Caribbean and Pacific (and other regions and countries with which the EU negotiates or plans to negotiate trade agreements), European social movements, trade unions and NGOs face the challenge of better understanding the objectives pursued by the EU’s foreign policy and of linking it to the objectives of domestic reforms. People in the South have a clear analysis and experience of the role and work of the EU in their regions. They perceive the EU as an imperialistic power, partly seen as even more aggressive than the US in the pursuit of its interests.
Fighting for another Europe has essentially to include resistance against the current trade policy of the EU, not only out of solidarity with people in the South, but out of the understanding that a social and democratic Europe will not be possible with trade rules that put corporations rights above human rights, workers rights, social rights etc. Resisting the signing of EPAs or any other trade agreements currently being promoted needs to be combined with the internal struggle within the EU to change domestic policies which have devastating external but also internal impact. Among the most immediate and important policies relevant to the South are the Common Agriculture Policy, and policies that massively promote the use of agrofuels as well as the EU’s energy policy, to name a few. Changing those policies within the EU requires building new alliances among social movements, trade unions and NGOs within Europe. It also requires developing cross-sectoral debates and analyses that help to gain a better understanding of interlinkages.
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