AEFJN and Trade
1. Introduction to Trade and AEFJN
Trade between the European Union and the African countries
In our present and globalized world one of the elements that influence the life of people is trade. The rules regulating trade have a great impact in bettering or worsening the life of people and societies. The way trade is envisaged and dealt with, may bring benefits or may impoverish countries and populations. Today international trade is benefiting the rich countries while failing the poorest and keeping billions trapped in abject poverty. Current global trading systems are dominated by a few economic powers - rich country governments, transnational corporations, stock markets and multilateral institutions. They set the rules in their favour, force economic liberalization on the poor and prevent them from accessing to the global market on equal terms.
While the International institutions: European Union (EU), World Bank (WB) and International Monetary Fund (IMF) argue that increased trade liberalisation will bring important benefits for both North and South, the African farmers and workers, NGOs and civil society organizations tend to be more sceptical and critical. The current negotiations on the Economic Partnership Agreements (EPAs) between the EU and the Africa, Caribbean and Pacific (ACP) regions on further liberalisation reflect this deep division. Alternative commercial models do exist, but the big powers are not always in their favour.
For Africa the consequences of liberalization means, privatisation of essential services (transport, water, electricity, communications) and reduction of the help that governments can give to vulnerable farmers, producers and traders. It means exposing their vulnerable economies to transnational corporations. Though the raw materials from Africa are in high demand by most developed countries, the continent is left "aside" of the benefits of international trade and globalization. Poverty has increased during the last 20 years. Many factors influence this impoverishment, but two contribute greatly to it: the rules of international trade and the external debt of the African countries.
AEFJN was founded to deal with economic issues related to Africa, and to foster more equitable relations in trade, between the European Union and the African countries. It aims at changing the actual unjust rules of trade, in order to empower the marginalized countries and communities of the continent and to develop their economies and trading systems so that they are at the service of the population. AEFJN together with other civil society organizations is committed to working for justice and to ensure that trade and globalization contribute to improve the living standards of the poor in Africa. This means also to work to transform the "unfair" trade agreements of the European Union and the World Trade Organization.
Trade between the European Union and the African countries
The Lome Conventions
From 1975 until 2000, the different Lomé Conventions have regulated the relations between the European Union and the African, Caribbean and Pacific (ACP) countries. The successive Lomé Conventions tried to improve the trade performance of the ACP countries, with the aim of promoting their economic growth and development. For that purpose, the European Community (EC) granted ACP countries unilateral, non-reciprocal or "asymmetric" preferential access to the European market for products originating in ACP countries. This meant that the ACP countries could export their goods to the EU without paying custom duties, while the EU products had to pay custom duties when entering the ACP countries.
This "asymmetry" favoured the exports of the ACP countries to the EU, and allowed the ACP to get an income from the custom duties of goods imported from Europe. The Lomé regime allowed ACP countries the space to pursue pro-development policies, such as protection for local industries and access to the European market. This regime was a successful formula for Mauritius and Botswana who saw their GDP per capita rise from less than US$300 at independence to US$10,000 by 2002. But these preferences did not prevent the increase of poverty in most African countries. The Lomé Convention kept the ex-colonies as primary exporters of "raw materials" and did not help the diversification, nor the development of industries and of "added value" to those raw materials. Another criticism was that these "asymmetric" agreements violated agreements made within the World Trade Organization (WTO).
The Cotonou Agreement
The expiration of the IV Lomé Convention in February 2000, and the major changes on the world and in the ACP countries - the spreading of poverty, instability and potential conflict - highlighted the need for another style of cooperation. A new Agreement between the ACP and the EU was negotiated and signed on 23rd of June 2000 in Cotonou, Benin, by 77 ACP countries and the then fifteen Member States of the European Union. The new Cotonou Agreement entered into force in 2002 and will conclude in February 2020. In order to maintain the "asymmetric" trade regime until December 2007, the EU-ACP countries asked for a waiver (special agreement) from the WTO, which was granted.
The Economic Partnership Agreements (EPAs) between the EU and the ACP countries
By signing the Cotonou Agreement, the EU and the ACP States agreed on a process to establish Economic Partnership Agreements (EPAs) that will pursue trade liberalisation between the signatories, and will create free trade areas. These new "free trade" agreements are being negotiated actually and will progressively remove trade barriers between Africa and Europe. The asymmetry and "unilateral preferences" granted to the ACP in the Lomé Conventions will disappear in the new trade agreements. The 77 ACP countries will have to open their borders to the products coming from the EU, and set up a free-trade area (FTA) with the European Union (EU) based on reciprocity. The EPAs are compatible with the WTO norms.
Apart from a gradual and managed liberalisation of imports from the EU, the main objectives of the EPA-process include an enhanced market access for ACP countries to the EU, negotiations on trade in services, a deepening of the regional integration process between ACP countries, and increased co-operation in trade-related areas like competition and investment. Although these trade-related areas (services, competition and investment) were refused by the ACP countries at the WTO, the EU is putting them on the table in the EPAs negotiations.
Aspects of the EPAs and its consequences for Africa
Although called Partnership Agreements, the fact is that the level of development of the two negotiating regions (EU and ACP) is extremely unequal. The EU is the world's leading commercial power, and provides most of the development aid for the ACP states. This means unbalanced power relations. What authentic partnership can countries such as Lesotho, Mali, Burkina Faso have with the EU?
Free Trade and market access. The EPAs demand that ACP countries remove 80% of their tariffs in order to gain market access into the EU. The free trade areas is a great risk for the ACP countries, which are unlikely to gain better access to the European market, due to a series of EU rules (Rules of Origin, Sanitary and Phytosanitary measures and Technical Barriers to Trade). These rules set such standards that most African products can hardly reach the European market. At the same time Africans will see their agriculture - which 80% of the rural population in Africa live from - put under severe strain by competition from cheap subsidized European imports. The nascent ACP industries will be endangered by their impossibility to compete with European companies, and many industries will have to close, bringing about deindustrialisation, unemployment and social unrest. In Kenya products such as fertilizer, cement, salt, medicaments, paper and paper products, footwear and insecticides are likely to face competition from EU producers once tariffs in intermediate and finished goods come down. Already the current EU trade policies - without EPAs - are endangering local poultry farming, beef, cereals, milk, onions, tomatoes, etc...
Revenue loss. ACP countries rely heavily on custom tariffs for government revenue. The elimination of custom duties on essentially all products coming from the EU will lead to a significant decline in government revenue, which will mean less money for infrastructures, education, health, social services. This will provoke an increase in unemployment, economic insecurity and political instability.
The development content of the EPA negotiations remains an area of major divergence between the EU and the different sub-regions. Though EPAs are supposed to be development tools, development is not taken into account in the Trade negotiations. Poverty reduction and development are main points of the Cotonou Agreement, but a rapid trade liberalisation is not the way to develop countries, as Africa already experienced with the Structural Adjustment Programs.
Additional resources. Market opening is not enough for trade to play its role in economic development. For the EPAs to be effective in fostering the development of the African countries and the regional markets, African countries need to strengthen and build their competitiveness. They need resources to build their production capacity, address supply side constraints, and infrastructure and trade-related constraints. The EU agreed on about €22 billion for the European Development Fund (EDF), the only fund destined to EPAs adjustment. The EDF sum falls far short of amounts required by ACP countries. In the Eastern and Southern Africa region, for instance, the resources are only half of what is required.
Regional integration. Though the EPAs aim at fostering regional integration, the effect will most probably be the undermining of the actual regional integration. Countries in the same region are submitted to different trade regimes with the EU: Least Developed Countries (LDCs) that are able to export freely to the EU under the "Everything but Arms" and developing countries that will have to open their market in order to export freely to the EU. The LDCs have a serious dilemma: to maintain their non-reciprocal access to the European market under the "Everything But Arms" but leave their regional grouping, or stick with their regional partners and open their market to the EU. This could disintegrate the existing regional blocks and put countries in direct competition with each other, in order to attract foreign investors.
2. Trade and Africa
Our actual world is full of injustice and inequality. The "structures" - institutions, conditions, rules and practices of international trade - impoverish people and regions. In most African countries the international trade system has taken away the livelihood of the people and communities and is keeping them destitute and depending on aid.
Trade has always existed. If the exchange is done fairly, trade has potential to bring about growth and prosperity, and increase human well-being. But trade on unequal terms is damaging, creates and maintains inequities, abuses and exploits the weakest and can lead to poverty, violence, conflict and environmental destruction. Trade should be a means of sharing the resources of the earth and the fruits of human labour. Yet too often it is a force that yields poverty, despair, injustice and death, especially in the South.
The EPAs and Africa
The Economic Partnership Agreements (APEs) being negotiated by the EU and the ACP countries offer some of these possibilities. On one side they will open the African market to European companies and will benefit a few in Africa, but on the other hand, they can be a thread to the well-being of a great part of the people of Africa. The EU advertises the EPAs as a friendly way of trading, but the reality is that they have more requirements than the WTO: more Intellectual property rules; inclusion of trade-related areas: services, competition and investment. The conditions and time limits imposed by the EU give little space to the African countries to research and articulate more pro development alternatives.
If the Economic Partnership Agreements (EPAs) are signed in their current form, some of its impacts in Africa will be:
Major economic instability as a result of the elimination of tariff and duty barriers and significant declines in government revenues reducing social investment (infrastructures, education, health, social services);
- Chronic food insecurity by diminishing production of food and agricultural products, with the consequent lack of livelihood for millions of people;
- Threat or closure of domestic manufactures leading to unemployment and retarded industrialisation;
- Weakening of local retail sectors in the services and goods because of the strength of European companies;
- The government tenders and procurements will reduce national economic and preferential imperatives;
- Significant welfare losses, particularly in the purchasing power of consumers and the provision of basic social services from governments that have lost crucial state revenues
- Capital flight from African countries to the detriment of local entrepreneurs, state coffers and low income groups;
- Dispossession of indigenous land owners and lost livelihoods for African farmers, as export -driven, non essential products (flowers, vegetables, fruits) and tourism (large safari parks) will take the priority over the needs of the population and the food security.
- Undermined development objectives of African countries and the sovereignty of peoples and states
- Weakened regional integration process and the reversal of those gains achieved so far
- Reduction of the political space to devise pro-poor economic policies
3. Trade and AEFJN
3.1. The commitment of AEFJN
The current trade policies contribute to increase poverty and inequality in Africa. The international agreements and the way they are understood promote the marginalization of a whole continent. The neo-liberal system subordinates human being to the "market", and works towards the despoliation of nature. This goes against God's will. Unjust and unfair trade kills lives, while just and fair trade enhances life.
As Christians we have to measure the consequences of trade in the perspective of the Kingdom of God and His justice. The law of love that is the core of Christianity includes Justice, siding with the poor, and furthering the interest of others. The Social Teaching of the Church (STC) puts human beings in the centre of concern of any policy - trade should be at the service of people. This is just the opposite of the actual neo-liberal system where people are to serve anonymous market rules and regulations.
AEFJN is concerned with the African people, mainly the victims of the actual neo-liberal system, the poor. As Christians our guides are the Gospel and the Social Teaching of the Church where the supreme value is the dignity of each human being. The action of AEFJN is oriented to a more just trade people oriented, which contributes to the dignity of every human being, to poverty reduction, to just distribution of wealth, and to the sustainability of creation. This is why AEFJN is working at a better deal for Africa in the actual EPAs negotiations, so that EPAs become agreements of "Fair Trade" instead of the desire of the EU to have them as "Free Trade".
3.2. Trade and basic rights
Trade and economy are not an aim in themselves, but must be at the service of the human being. Trade rules should be an instrument for the promotion of human well-being, sustainable communities and economic justice. The neo-liberal economic policy, does have an effect on the human and social rights.
The publication in 1998 by civil society of the secret negotiations taking place at the OECD on the Multilateral Agreement on Investment (MAI), which would have given priority to the rights of foreign investors over public interest concerns, opened the eyes of society on the fact that international trade policy could harm human rights. It became clear that international trade policy was essentially developed amongst rich countries, and in secret, regardless of its impact on developing countries or the public interest.
Trade policies should respect the Social and Economic rights that are legally binding. In August 1998, the UN's Sub-Commission on Promotion and Protection of Human Rights adopted a resolution calling for human rights to be recognized as the primary objective of trade, investment and financial policy. Because Human Rights are included in the UN Charter that prevails over all international agreements, and because they protect the fundamental aspects of human dignity, they should have priority over economic agreements and policies. These rights principles challenge the economic injustice of unfair trade rules in the international trade agreements.
In promoting « free trade » at all costs, the International Institutions (WTO, IMF, WB, EU) seek to do away with possible regulatory interferences with the free flow of goods and services, thus limiting government's ability to regulate in favour of development, environmental protection or concern for vulnerable groups, which is a breaking of the basic rights of peoples and societies. The respect of human and social rights requires states to take decisions that go in the direction of respecting these fundamental rights, in favor of their population and not prevent the enjoyment of human rights in other countries. The fundamental rights have also a moral force as ethical principles for all persons. This respect for the economic and social rights requires positive action.
The reality is that though most states have ratified the International Covenant on Economic, Social and Cultural Rights, these rights are currently being violated by trade agreements, which promote international commerce by limiting governments' ability to act in the public interest. Already food security, wildlife and pollution controls laws have been challenged and weaken under trade rules as illegal "barriers to trade." Human rights advocates have an important task ahead of them to ensure that trade and trade rules respect, promote and fulfill human rights. Trade policy should be more transparent, accountable and responsive to the needs of the people it is said to serve, as well as being more sustainable and more legitimate.
3.3. Trade, the Gospel and the Social teaching of the Church (STC)
The work of AEFJN is based on core values found in Christianity (the Bible and the STC), but these are values also shared by other faiths and other persons:
Dignity of every human person
In the light of the Gospel, a person is not only a human being with his or her own rights and a fundamental equality with everyone else, but becomes a Living Image of God. This makes of each individual a person worthy of dignity and respect, and this also in all trade activities. All economic activity - including trade of goods and services from low cost countries, working conditions in factories and so on - has to respect and strengthen this human dignity.
The human person is social
The human person created - a relationship of self-gift-love - is social, in interrelationship with others. God created human beings in society, at the image of God Trinity, as a community, a people, not as individuals. This involves moral obligation towards the other human beings and leads Christians to work for a just and equitable society where nobody should be oppressed or marginalized, and where each person has the right to have the minimum necessary and the duty to provide for this minimum for each member of the human community.
The common good demands that the rights of the person and of the communities be preserved and promoted over any other economic gain. This should be the supreme law governing trade and economic relations. The Common good calls us to look at policies, strategies and decisions as what they do to the whole community.
The Gospel and Christian ethics give a clear priority to the poor, because the good news of God in Christ is for them first. The biblical principle of giving special support to the poorest should be applied to the current global trading system. A just international system should have rules that explicitly support a real "special and differential treatment" to the poor.
Just distribution of wealth
Just trade needs to be "equitable" so that everyone receives a fair share of the earth's resources, has the opportunity to develop and flourish as human being and has the possibility to exercise his/her responsibility for himself and others. Trade has the task to care and develop regulations that allow all people to participate at the sharing of resources.
There is no peace with extreme disparities of wealth. Only communities, economies and societies which care for the weaker are sustainable and can live in peace. To have a "reconciled" society, where the "shalom" becomes a reality demands a fair and just economy and trade system. The actual system of trade excludes nearly the whole African continent from the benefits of trade. This can create unrest and conflicts. As Christians we have to work towards including all in the networks and benefits from which most Africans are excluded.
Sustainability of creation
The resources of creation are God-given and we are to use them well, carefully and efficiently with respect for their inter-relatedness and without delaying them to future generations. Trade is closely linked with environmental issues. Through production and transport of goods and services trade contributes to a great deal to environmental destruction. But trade centered on people and on sustainability could contribute to heal the wounded creation.
Participation in decision-making
The dignity of every human being as social leads to the value of participation. Human dignity is violated when they cannot decide on their own life: receiving aid, unable to sell their products, unable to find work. To respect human dignity means to enable each person to participate in decision-making, and to make a constructive contribution according to their abilities. Everyone has a right to have a say in decisions which will affect him/her, but today countries and persons are excluded from the decision-making. Many international agreements diminish the power of the state and are signed without the involvement of the population, even when their impact will fall on them.
3.4 EPAs and AEFJN
AEFJN is deeply concerned that the EPA proposed free trade agreements will exacerbate the current agricultural crisis that African farmers already face, increase poverty and violate human rights.
AEFJN believes that the proposed EPAs do not ensure the protection of the rights of citizens or the sovereignty of state, nor does it respect the provision set forth in the Cotonou Agreement that no country should be worse off as a result of such a partnership.
4. Trade advocacy and lobbying
In general AEFJN advocates for:
- Fairer conditions of trade between the European Union and the African countries.
- An economic and trade system that creates justice between and among countries and communities, and offers opportunities to all.
- Rules governing trade that favour the poorest African countries, giving them special help and protection. ("equality" is not just when the situations between rich and poor countries are so different)
- African countries governments should have the freedom and right to choose, which trade policies to implement to fight poverty. They should not be forced to free trade and privatisation.
- Developing countries should be allowed to protect and assist their vulnerable traders and new industries.
- Protect and enable the fulfilment of all human rights
Regarding the EPAs, AEFJN calls for an EU-ACP partnership that will:
- Protect African producers in domestic and regional markets
- Be based on the principle of non-reciprocity, as instituted in the Generalized System of Preferences and special and differential treatment in the WTO;
- Reverse the pressure for trade and investment liberalisation;
- Allow for the necessary policy space and support for ACP countries to pursue their own development strategies.
Political pressure, domestically or internationally, is what makes international law and policy work.
The media can create awareness on the different problems, which is a necessary step towards mobilization and action to influence the politicians in their decision-making.
Strategies for Advocacy and Lobbying
Human Rights can be used to strengthen civil society and political mobilization at EU and national level. Human rights can engage a broad section of public opinion. HR arguments provide extra "leverage" to economic policy arguments. Governments should be confronted with the HR consequences of their trade policy decisions, at both national and international level - and the violation of their legal obligations that those consequences represent.
AEFJN lobbies the different bodies of the European Union on issues related to Africa: the European Commission (DG Trade & DG Development), the European Parliament and the Council.
- AEFJN lobbies the EU Member States through its national Antennae.
- AEFJN is in touch with some media houses in Europe and Africa to whom it sends the Press Releases on different issues.
AEFJN is part of a series of platforms working on EPAs:
- The European Trade Network (ETN)
- The African Trade Network (ATN)
- The Our World is Not For Sale (OWINFS)
- The Concord-Cotonou Working group on Trade.
- The PAN-European Action Group on EPAs. EPAs 2007.
- The Stop EPA coalition.
- The DG-Trade EU-Civil Society Dialogue.