Is Africa For Sale?
By: CONS KARAMATATHIS Sunday, trade representatives from member states of the Southern African Customs Union (SACU) will meet their counterparts from the United States in Walvis Bay, to resume negotiations for a bilateral Free Trade Agreement, expected to be concluded by the end of this year.
Elsewhere, the African, Caribbean and Pacific group of countries
have entered into the second phase of negotiations for Free Trade
Agreements with the European Union (EU), euphemistically dubbed the
Economic Partnership Agreements.
These developments follow shortly after the collapse of the
trade negotiations at the World Trade Organisation (WTO) last
September in Cancun, Mexico.
Since the Cancun debacle, both the US and the EU have vowed to
shift their emphasis away from multilateral trade negotiations
towards bilateral negotiations through which they can exercise more
economic and political leverage over developing countries.
The South African-European Union FTA, which was concluded in
1999, and the SACU-US agreement currently under negotiation are
likely to serve as models for future FTAs with other African
regions.
Both the US and EU seem to follow a strategy of establishing
FTAs wherever possible, using them to gain concessions beyond those
covered by the WTO, while at the same time setting precedents that
will push WTO policy further in the direction of rapid trade
liberalisation.
Lobbied by powerful, profit-driven transnational corporations,
the US-EU trade officials will seek to coerce African countries to
open up their (African) markets, while holding on to protectionist
measures in their domestic economies.
Given the asymmetric power relations in the donor-recipient
relationship between industrial and developing countries, and
without the unity among the latter that led to the deadlock in
Cancun, Africa has little to win but everything to lose in these
negotiations.
Among the issues on the US agenda for the upcoming negotiations
are market access for US exports, as well as liberalisation of
investment rules, trade in services, government procurement and
trade-related intellectual property rights.
'Investment' and 'government procurement' are two of the 'new
issues' on which developing countries refused to start negotiations
at the WTO.
Not only would negotiations on these issues put immense pressure
on resource-constrained developing countries but they all hold
severe implications for the development processes in poor
countries.
African analysts are concerned that under current US-EU
proposals FTAs with industrial countries will result in the
following:
* The collapse of local manufacturing ventures as a result of
competition from cheap subsidised US-EU products, leading to
increased unemployment and a regression in industrialisation
efforts on the continent.
Dumping of cheap US-EU agricultural surpluses will threaten
agriculture and agri-processing industries as well as food security
and the livelihoods of poor farmers.
* Significant declines in government revenue as a result of the
elimination of import taxes on US-EU products.
This will result in less spending on social services and human
development and probably also in higher tax burdens for citizens in
order for governments to make up for lost revenues.
* Strong protection for investors that would restrict the
ability of governments to regulate investment, giving leeway to
transnational corporatios to trample on workers' rights and
environmental regulations.
* Opening up of government tenders to US-EU competition: local
companies that derive their income from government contracts will
have to compete with transnational corporations for government
tenders.
Corporation profits will be repatriated as a result of
"investment protection" agreements.
* Intellectual property provisions that block access to
affordable medicines and undermine public health, i.e. the ability
of governments to combat diseases such as HIV-AIDS.
* Transnationl corporations taking over the provision of basic
social services as a result of selling off essential public
services to foreign companies under privatisation arrangements: the
provision of health, education and other basic social services to
low-income groups will be threatened, resulting in increased
poverty and social decay.
* Declines in inter-regional trade due to "trade diversion":
countries in the region will lose markets among their
neighbours.
Instead of regional co-operation, there will be increased
competition among countries of the region to attract 'investment'
from the US-EU at ever-increasing costs to the host country.
The above analysis shows that entering into FTAs with advanced
industrial nations will not only be detrimental to current
development efforts on the continent but will also have a
retrogressive effect on socio-economic achievements in
post-colonial Africa.
The erosion of domestic production capacity, the destruction of
jobs, increased poverty and social decay cannot prepare the
continent for a better future.
Indeed, by entering into agreements that will drastically
curtail space available for independent policy formulation and
hence the capacity of government to intervene in their own
economies, Africans will effectively collaborate in perpetuating a
process of dispossession set in motion by colonialism and, in fact,
retreat towards 'unfreedom'.
The 'voluntary' surrender of sovereign governance powers,
achieved through the long struggle for decolonisation waged with
the transnationals will further subjugate the continent to the
worldwide dominance of international capital, and is likely to
render African governments operationally impotent.
What then can be done? Further trade liberalisation vis-a-vis
industrial countries has never been part of any African development
agenda.
African thinkers have been putting more emphasis on an internal
path of development.
Instead of engaging in contra-developmental processes, African
countries need to use their scarce resources to promote and
strengthen current regional and continental integration
efforts.
Available human and financial resources must be utilised to iron
out the structural and organisational impediments to a rapid
regional economic integration.
Rather than surrendering sovereignty to international capital,
African governments need the political will to relinquish a degree
of autonomy to regional integration bodies (e.g. SADC, Comesa and
Ecowas).
Moreover, the continent will have to identify and pursue
mutually beneficial areas of South-South co-operation (e.g.
mutually beneficial trade, investment and communications links)
while, together with other developing countries, persistently
working towards the long overdue reform of the skewed multilateral
trade system.
Greater collaboration among regional institutions of the global
South (for example, ASEAN, SADC, Mercosur, Caricom etc.),
especially in research, sharing of information and policy
co-ordination, will improve the position of developing countries in
their efforts to strengthen the UN system, democratise
international institutions and work towards fair and mutually
beneficial global trade relations.
* Cons Karamata is a researcher with the Labour Resource and
Research Institute (LaRRI).
These developments follow shortly after the collapse of the trade
negotiations at the World Trade Organisation (WTO) last September
in Cancun, Mexico. Since the Cancun debacle, both the US and the EU
have vowed to shift their emphasis away from multilateral trade
negotiations towards bilateral negotiations through which they can
exercise more economic and political leverage over developing
countries. The South African-European Union FTA, which was
concluded in 1999, and the SACU-US agreement currently under
negotiation are likely to serve as models for future FTAs with
other African regions. Both the US and EU seem to follow a strategy
of establishing FTAs wherever possible, using them to gain
concessions beyond those covered by the WTO, while at the same time
setting precedents that will push WTO policy further in the
direction of rapid trade liberalisation. Lobbied by powerful,
profit-driven transnational corporations, the US-EU trade officials
will seek to coerce African countries to open up their (African)
markets, while holding on to protectionist measures in their
domestic economies. Given the asymmetric power relations in the
donor-recipient relationship between industrial and developing
countries, and without the unity among the latter that led to the
deadlock in Cancun, Africa has little to win but everything to lose
in these negotiations. Among the issues on the US agenda for the
upcoming negotiations are market access for US exports, as well as
liberalisation of investment rules, trade in services, government
procurement and trade-related intellectual property rights.
'Investment' and 'government procurement' are two of the 'new
issues' on which developing countries refused to start negotiations
at the WTO. Not only would negotiations on these issues put immense
pressure on resource-constrained developing countries but they all
hold severe implications for the development processes in poor
countries. African analysts are concerned that under current US-EU
proposals FTAs with industrial countries will result in the
following:* The collapse of local manufacturing ventures as a
result of competition from cheap subsidised US-EU products, leading
to increased unemployment and a regression in industrialisation
efforts on the continent. Dumping of cheap US-EU agricultural
surpluses will threaten agriculture and agri-processing industries
as well as food security and the livelihoods of poor farmers. *
Significant declines in government revenue as a result of the
elimination of import taxes on US-EU products. This will result in
less spending on social services and human development and probably
also in higher tax burdens for citizens in order for governments to
make up for lost revenues. * Strong protection for investors that
would restrict the ability of governments to regulate investment,
giving leeway to transnational corporatios to trample on workers'
rights and environmental regulations. * Opening up of government
tenders to US-EU competition: local companies that derive their
income from government contracts will have to compete with
transnational corporations for government tenders. Corporation
profits will be repatriated as a result of "investment protection"
agreements. * Intellectual property provisions that block access to
affordable medicines and undermine public health, i.e. the ability
of governments to combat diseases such as HIV-AIDS. * Transnationl
corporations taking over the provision of basic social services as
a result of selling off essential public services to foreign
companies under privatisation arrangements: the provision of
health, education and other basic social services to low-income
groups will be threatened, resulting in increased poverty and
social decay. * Declines in inter-regional trade due to "trade
diversion": countries in the region will lose markets among their
neighbours. Instead of regional co-operation, there will be
increased competition among countries of the region to attract
'investment' from the US-EU at ever-increasing costs to the host
country. The above analysis shows that entering into FTAs with
advanced industrial nations will not only be detrimental to current
development efforts on the continent but will also have a
retrogressive effect on socio-economic achievements in
post-colonial Africa. The erosion of domestic production capacity,
the destruction of jobs, increased poverty and social decay cannot
prepare the continent for a better future. Indeed, by entering into
agreements that will drastically curtail space available for
independent policy formulation and hence the capacity of government
to intervene in their own economies, Africans will effectively
collaborate in perpetuating a process of dispossession set in
motion by colonialism and, in fact, retreat towards 'unfreedom'.
The 'voluntary' surrender of sovereign governance powers, achieved
through the long struggle for decolonisation waged with the
transnationals will further subjugate the continent to the
worldwide dominance of international capital, and is likely to
render African governments operationally impotent. What then can be
done? Further trade liberalisation vis-a-vis industrial countries
has never been part of any African development agenda. African
thinkers have been putting more emphasis on an internal path of
development. Instead of engaging in contra-developmental processes,
African countries need to use their scarce resources to promote and
strengthen current regional and continental integration efforts.
Available human and financial resources must be utilised to iron
out the structural and organisational impediments to a rapid
regional economic integration. Rather than surrendering sovereignty
to international capital, African governments need the political
will to relinquish a degree of autonomy to regional integration
bodies (e.g. SADC, Comesa and Ecowas). Moreover, the continent will
have to identify and pursue mutually beneficial areas of
South-South co-operation (e.g. mutually beneficial trade,
investment and communications links) while, together with other
developing countries, persistently working towards the long overdue
reform of the skewed multilateral trade system. Greater
collaboration among regional institutions of the global South (for
example, ASEAN, SADC, Mercosur, Caricom etc.), especially in
research, sharing of information and policy co-ordination, will
improve the position of developing countries in their efforts to
strengthen the UN system, democratise international institutions
and work towards fair and mutually beneficial global trade
relations. * Cons Karamata is a researcher with the Labour Resource
and Research Institute (LaRRI).