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How EPAs can undermine African agriculture

The market-opening Economic Partnership Agreements (EPAs) the EU is negotiating with African, Caribbean and Pacific (ACP) countries could spell harm to the ACP economies, not least to their small farmers and food security. The following extract from a report by international farmers’ rights NGO GRAIN examines the grave threat posed by the EPAs.

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“A tonne of cocoa is roughly $1,300, while one 4x4 vehicle is now about $120,000. So you need about 92 tonnes of cocoa to exchange for one 4x4. But to get one tonne, you will need not less than 20 acres of land. The average cocoa farmer in Ghana has only around 2-3 acres, meaning it would take him or her well over 500 years to produce enough cocoa to buy a 4x4.” – John Opoku, human rights lawyer and activist, Ghana

This statement highlights the dire terms of trade that Africans and other peoples of the Global South deal with on a daily basis. Since time immemorial, nations in the Global South have entered into unfair trade agreements with the rest of the world – keeping them in perpetual poverty. The nature of trade that follows these agreements and the benefits are always one-sided. Of specific interest are the so-called free trade agreements (FTAs) that keep popping up. One such FTA is the Economic Partnership Agreement (EPA).

Since September 2002, African, Caribbean and Pacific (ACP) countries have been negotiating EPAs as reciprocal trade arrangements with the European Union (EU) under the Cotonou Agreement. These EPAs are aimed at further liberalizing the economies of former European colonies, a move that would have far-reaching implications for farmers, fisherfolk, miners, workers and consumers across the concerned regions.

Before EPAs, the ACP countries had preferential trade arrangements with the EU. One of these arrangements was the Everything But Arms (EBA) initiative which offered unilateral non-reciprocal market access for least developed countries (LDCs) to the EU, thereby granting LDCs duty-free and quota-free market access to the EU. Despite this opening, ACP countries rarely ever managed to fill the allowable export quotas to the EU under the EBA. Uganda, for instance, has a 5,000-metric-tonne quota for sugar but its exports to the EU never attained this amount, partly because of the EU’s stringent rules of origin and supply-side capacity constraints.

The premise used by the EU to switch from the EBA to the EPA with the ACP countries was the argument that preferential trade was not in compliance with World Trade Organization (WTO) rules. This was a ruse, as exceptions to WTO rules are always possible. The idea really was to push liberalization further into the three regions for the benefit of European capital (exporters first, investors over the longer term), by creating a global market with the same rules everywhere. The ACP countries would supposedly reap more growth, jobs and technology transfer as a result.1

In fact, the promises surrounding the EPAs are not any different from the ones that we saw and heard regarding the much-heralded great things to come that were housed in the now-failed Structural Adjustment Programmes (SAPs) – effects of which are still being felt today! Both are rooted within a colonial framework which allows transnational corporations of the EU and the Global North to extract raw materials from these countries under their own terms. As with all FTAs, the EPAs need to be analyzed and understood as a series of interlinked events that are negotiated one after another with the sole purpose of crippling emerging economies.

Instead of pursuing bilateral FTAs with all 79 ACP countries, Europe divided the ACP countries into seven blocs – West Africa, Central Africa, Eastern and Southern Africa (ESA), East African Community (EAC), Southern African Development Community (SADC), the Caribbean and the Pacific. The process was touted as a way to promote regional integration. However, since it started in September 2002, much division and acrimony has been created, deadlines have gone unmet and the current situation (Figure 1) is quite messy, especially in the African continent.

How the EPA affects food and farmers in Africa

Since inception, the EPA has been mired in controversy. This stems from certain clauses that have been included in the agreement which pose serious threats to human rights and force the privatization of critical sectors in national economies. This is particularly true in most African countries. Along with undermining national sovereignty, EPAs have destabilized regional integration processes, strangled local industries and withdrawn policy space from civil society. Of specific interest are the effects of the EPA on Africa’s agriculture, especially smallholder farming, which is the backbone of most African economies.2

Smallholder farmers on the African continent account for 90% of all farms but have access to only 15% of the continent’s agricultural lands; also, smallholder farmers supply 90% of the seed used on the African continent. Smallholders provide 80% of the food supply in these regions, while close to 43% of agricultural labour in Sub-Saharan Africa is comprised of women.

Also, it is estimated that the fisheries and aquaculture sector employs close to 13 million people in Sub-Saharan Africa. Pastoralism is a livelihood for 50 million people, 12-22 million of whom are in the Horn of Africa. Alongside this backbone, a plantation sector dominated by big capital produces export crops such as bananas, sugar cane, cacao, pineapple, tea and coffee.3

African smallholders produce to feed their local communities and markets, and do not have the capacity nor a real interest in producing for Europe. Under the lopsided free trade rules, the EU has lucrative access to African markets through the export of processed food products. Conversely, African countries are bound to the less lucrative and less sustainable business of exporting raw agricultural products such as coffee and cotton to EU markets.

Liberalizing the EAC market means that cheap and subsidized products from the EU can freely flow into the region, and ultimately cripple the industrial sector. Therefore, they have a lot to lose from an FTA with Europe that would see European foods displacing their own and that would open the door to European companies establishing more plantations, fish farms and other agricultural export operations that affect their access to land, water, seeds and markets.4

Experience already shows that agreements with Europe are not there to benefit Africans but to open up their borders for European companies to come in and produce for their own market.

Take the case of East Africa, where this arrangement is already affecting the food security of many and destroying the natural environment. East Africa is home to Lake Victoria, the second largest freshwater lake in the world. The lake has a variety of fish which are a source of livelihood for many across the region. Yet, ordinary East Africans can no longer afford fish. They can only afford to buy the pocket-friendly mgongo wazi (fish skeletons). Mgongo wazi are remnants from fish firms that process Nile perch for export. This, coupled with the production of flowers, cocoa, cotton, string beans and coffee, ensures that African production is essentially export-oriented towards the EU.

The EPA negotiations were meant to promote liberalization of African economies as well as increase access for European companies to African markets. As such, African countries, like many ACP countries, were obliged to progressively open their markets to European products, as illustrated in the EAC liberalization schedule (Figure 2).

On the face of it, the schedule caters for the protection of infant industries and sensitive products. On careful examination, however, glaring contradictions in the schedules cannot be missed. For instance, on one hand, the EAC has protected maize flour at a duty rate of 50%. Yet, on the other hand, maize starch, which is a by-product of maize flour, has been liberalized. These contradictions equally apply to other products like potatoes. With such a liberalization schedule, value addition through agro-processing will be constrained and food security compromised given the supportive linka ges between agriculture and manufacturing.

The colonization of agricultural markets in Africa

Some of the EU countries are also part of the G7’s New Alliance for Food Security and Nutrition, which is directly supporting the expansion into Africa of major agribusiness companies like Bayer and Unilever. By extension, these countries are part of the agenda of increasing EU access to African markets so that they can sell their pesticides, transgenic seeds and cheap processed foods.

Seed companies are facing saturated markets in North America, Europe and Japan. They are therefore increasingly pressuring Africa to open up its markets for their products. For example, Syngenta’s chairman Ren Jianxin aspires to double the size of Syngenta in the next 5-10 years. Ren has already indicated that his expansion will happen mostly in India and in African countries.5

This context makes African countries more vulnerable to many unwanted products, including the infiltration of genetically modified organisms (GMOs). Once corporations and their lobbies succeed in getting some countries to accept them, it will be difficult for other African countries to say no. In many countries, GM foods are promoted as the panacea to food security.

Anne Maina, from the Kenya Biodiversity Coalition (KBioC), is concerned about the escalating infiltration of GMOs into Kenya.6 Despite an existing ban on the importation of GMOs into Kenya, the country has had little control over the entry of GMO foods, especially in times of food shortage. For this reason, in 2017, Kenya’s National Biosafety Authority (NBA) publicly warned traders on the continued importation of corn-based products like cereals, certain cornflakes brands and popcorns. Kenya has the strongest economy in East Africa and can set a precedent vis-a-vis other countries in the continent, particularly Nigeria and Ghana which are taking steps to improve national provision for biotechnology and biosafety.7

Under the EPAs, countries are expected to cut tariffs heavily. The EAC, for example, has committed to liberalizing 80% of its market for EU imports over a 15-year period. This includes raw materials and capital goods which already enjoy duty-free status. Such a move would expose the agricultural sector to unfair competition from the EU, which would undoubtedly shake the very core of regional trade, and displace local farmers due to competition from cheap products from the EU. For that reason, sensitive products will be excluded from tariff elimination and remain protected for now.

Dairy is one of the most sensitive products, as Africa is well supplied by small producers who cannot compete with subsidized European agribusiness. On a positive note, some regions have opted to protect their dairy sectors. In East Africa, all dairy products will be excluded from liberalization if the EPA is signed. For example, once the Kenyan government realized that the livelihoods of close to 600,000 dairy farmers would be negatively affected by the importation of milk powder and dairy products from the EU, it opted to list dairy products as a sensitive product. In West Africa, dairy is excluded except for powdered milk, of which Nigeria is the biggest importer. In the case of South Africa, some meat and dairy have been excluded, but not all.8

Fisheries are another sector threatened by the EPAs in African countries. Tariffs for trade in fish products are clearly designed to protect EU-based fish processors and provide them with as much flexibility as possible for sourcing fish products at the lowest price in African markets. As a result of the enormous differential between the tariffs for processed and unprocessed fish products to enter EU markets, African fisheries are forced to export unprocessed fish at low prices, while tinned fish products from the EU flood local markets.

Liberalizing the fisheries sector does not have any benefits at all for small-scale fisherfolk. Instead, what is being witnessed are increased cases of locals who cannot afford fish, illegal fish trawling around the coastal areas and decline in fish stocks due to over-fishing.9

Agreement to negotiate rights for the seed industry

The EU-African EPAs only concern trade in goods for now. But they do contain a clause which says that in five years’ time, the parties will negotiate further chapters under the Rendezvous Clause. That Clause stipulates that parties should undertake to conclude negotiations in other issues within five years, once the agreement comes into force. This includes negotiations in areas of services, investment, government procurement, trade and sustainable development, intellectual property rights and competition policy.10

On intellectual property, if the Caribbean EPA is any model, African states can expect that the EU will present new rules that go beyond current international standards as established under the WTO. They will be asked to adopt the rules of the International Union for the Protection of New Plant Varieties (UPOV), which provide patent-like rights for plant breeders, to boost profits for multinational seed companies, and possibly join the Union.11

Agreement to give more rights to foreign investors

It is unclear how far the EU will go in demanding the liberalization of investment rules that EU companies enjoy under similar deals in other regions, including the powerful investor-state dispute settlement (ISDS) scheme. ISDS is a procedural mechanism that is provided for in international agreements on investment. It allows foreign investors to bring a case directly against a state where they have invested in before an arbitration tribunal, if they feel that the state has breached the rules set out in their agreement. If the latest negotiations are to be taken as models, the EU may push for the widest liberalization possible along with a modified version of ISDS that the EU secured in its recent trade agreement with Canada.

One major concern will be land. FTAs tend to promote the concept of “national treatment”, which means that foreign investors should receive the same treatment as national ones. Unless African states take a stand on this, the EPAs could make it illegal to restrict access to farmland by foreigners. Beyond land, liberalizing rules on investment will ensure that European agribusiness companies and major retail chains – from Nestle and Danone to Carrefour – get ample benefits from building their presence in Africa. The devastating effects on the agricultural sector extend to the other sectors, the reality of which is mind-blowing!

Due to the unfair trade deals, the local food processing industry is in decay or struggles to grow in most African countries. In parallel, the farmers’ capacity to produce food for their own communities and local markets is compromised and, with it, food sovereignty. The predominance of export-oriented cash crops in Africa is one of the signs that colonial exploitation is alive and well, 50-60 years after the independence of many African countries.

Production and processing

“If somebody is trying to plan with you based on where you are today when you are planning to move somewhere else, it will be wise to look ahead and make sure that the agreement anticipates where you are going. The problem with the EPA is that it does not anticipate where we want to be as an industrial economy.” – Okechukwu Enelamah, Nigerian Minister of Industry, Trade and Investment12

Africa’s manufacturing share is, without a doubt, so small that it has led the African Union (AU) to launch an initiative titled Action Plan for Accelerated Industrial Development in Africa (AIDA). AIDA was adopted in 2007. If manufacturing is already struggling, an EPA will not be the magic potion that Africa needs to grow its manufacturing sector.

When it comes to manufacturing, signing an EPA means that industry and products have to strictly adhere to European standards before they can be accepted for export to the EU. As John Opoku puts it, adhering to standards really means prioritizing Europe’s manufacturing sector at the expense of Africa’s. He argues that “even ordinary palm oil standards have to be met before they allow you to export. Fish has to meet certain standards, otherwise we cannot export fish. So you find that it became a means of restricting our production matrix and allow them to still bring their goods.”13

This is true for almost all African economies which are still exporting unprocessed products that eventually make it back to the same country processed and more expensive. For example, Kenya is one of the biggest producers of coffee but an ordinary Kenyan cannot afford instant coffee. It is precisely these reasons that Tanzania and Nigeria have advanced for not signing the EPA.14

What’s next

Another critical concern regarding the EPAs is Brexit. It is no secret that Britain is the biggest consumer of most products from most of these countries. For the EAC alone, Britain accounted for 35.5% of total EAC exports to the EU in 2015. Brexit calls for an immediate halt in the negotiations because the negotiating parties have changed. Africa Kiiza, from the Southern and Eastern Africa Trade Information and Negotiations Institute (SEATINI), argues: “We need to first assess the implication of Brexit … because we might not benefit, but the EU [minus Britain] stands to benefit in every way.”15

Despite the obvious disarray that exists, the EU continues to push hard for the most recalcitrant blocs like East and West Africa to sign the EPA. All of this is happening against the backdrop of the imminent negotiation of a successor to the Cotonou Agreement, which expires in 2020. The ACP states have already announced that they want to shift their trade and investment relations with the EU from a free trade to a preferential basis under the new agreement.

Further to this is the Continental Free Trade Area (CFTA) that was established by the African Union Summit in an attempt to fast-track the continent-wide trade integration element of the 1991 Abuja Treaty. The CFTA is an attempt by the African Union to create an African Economic Community. Among other aspects, it will negotiate issues around tariff elimination, rules of origin, non-tariff barriers, sanitary and phytosanitary standards, trade facilitation and trade in services. It is expected to be completed at the end of 2017.

The EPA is running into all kinds of hurdles like Brexit, a growing rise of nationalistic tendencies and xenophobia as well as other national processes that are overshadowing regional and international agreements. There is increasing opposition towards FTAs in Africa and beyond. Even within the EU, there is mass mobilization by people who oppose them. As a result, governments are barely able to pass these agreements.

These setbacks present a perfect opportunity to renew the opposition against the EPA and other upcoming FTAs like the post-Cotonou arrangement that is currently being developed. This is the moment when the whole FTA agenda in Africa needs to be challenged and groups need to come together to push for a new deal. The time is now for African countries to prioritize their citizens and put their needs first, before FTAs are negotiated and signed.

The above is extracted from “Colonialism’s new clothes: The EU’s Economic Partnership Agreements with Africa”, a report (August 2017) by GRAIN. The full report is available at www.grain.org. GRAIN is a small international non-profit organization that works to support small farmers and social movements in their struggles for community-controlled and biodiversity-based food systems.

References

1. Maria Donner Abreu (2013). Preferential rules of origin in regional trade agreements. Available at https://www.wto.org/english/res_e/reser_e/ersd201305_e.pdf.

2. GRAIN (2016). EU-ACP EPAs. Available at http://www.bilaterals.org/?-eu-acp-epas.

3. GRAIN (2014). Hungry for land: small farmers feed the world with less than a quarter of all farmland. Available at https://www.grain.org/article/entries/4929-hungry-for-land-small-farmers-feed-the-world-with-less-than-a-quarter-of-all-farmland.

4. Kenya Human Rights Commission. The ABC of EAC-EU Economic Partnership Agreements (EPA). Available at http://www.khrc.or.ke/mobile-publications/economic-rights-and-social-protection-er-sp/59-the-abc-of-eac-eu-economic-partnership-agreements-epa/file.html.

5. Kosei Fukao (2017). ChemChina completes Syngenta takeover, targets emerging markets. Available at https://asia.nikkei.com/Business/Companies/ChemChina-completes-Syngenta-takeover-targets-emerging-markets.

6. Interview with Anne Maina.

7. Gatonye Gathura (2017). Kenyans consuming genetically modified foods despite import ban – study. Available at http://rocketscience.co.ke/2017/05/02/kenyans-consuming-genetically-modified-foods-despite-import-ban-study/.

8. Kenya Human Rights Commission. The ABC of EAC-EU Economic Partnership Agreements (EPA). Available at http://www.khrc.or.ke/mobile-publications/economic-rights-and-social-protection-er-sp/59-the-abc-of-eac-eu-economic-partnership-agreements-epa/file.html.

9. Business Daily (2012). High cost reduces appetite for fish in the lake region. Available at http://www.businessdailyafrica.com/news/High-cost-reduces-appetite-for-fish—in-the-lake-region/539546-1640102-format-xhtml-io2vm1z/index.html.

10. SEATINI (2014). EU-EAC-EPA Implementation: Maximising the opportunities and minimising the risks.

11. GRAIN (2016). New trade deals legalise corporate theft, make farmers’ seeds illegal. Available at https://www.grain.org/e/5511.

12. Leadership Nigeria (2017). FG Taking Practical Steps to Make Economic Diversification a Reality – Enelamah. Available at http://leadership.ng/2017/06/05/fg-taking-practical-steps-make-economic-diversification-reality-enelamah/.

13. Interview with John Opoku (May 2017).

14. Interview with Justus Mwololo Lavi (June 2017).

15. Interview with Africa Kiiza (March 2017).

Third World Economics, Issue No. 644, 1-15 July 2017, pp10-15


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