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Recent coverage of the Economic Partnership Agreement (EPA) being negotiated between the EU and the West African region has shown that a number of misapprehensions remain in circulation. Consequently, the European Commission Delegation here in Nigeria would like to set a few things straight.
Firstly, a number of sources have accused the EU of 'bullying', alluding to a 'hidden agenda' in forcing the EPA on Nigeria.
Let's be clear about this – no one will try and force Nigeria to sign anything. In fact it would be both morally wrong and short-sighted to do so. Nigeria dominates the West African region (our most important ACP trade partner) both economically and politically. It plays a critical role in regional stability, and is one of our key partners globally.
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Why then the pressure?
This deadline of December 2007 is not set by the EU, but by the fact that legal protection for our existing trade arrangements is running out. The existing transitory arrangements of the Cotonou Agreement break WTO rules, but have been covered by a WTO exception or 'waiver'. The existing arrangement will no longer exist at the end of 2007: this had been jointly agreed when we signed the Cotonou agreement in June 2000.
So the end of the present Cotonou transitory regime also automatically means the end of the waiver. There is no other option than to apply the standard rules, the same offered to all developing countries like Nigeria, which is the Generalised System of Preferences (GSP). Under GSP, Nigeria would have to pay higher customs duties on an estimated 15% of its non-oil exports to the EU, including shrimps, cocoa and textiles. This may lead to Nigeria losing these export markets altogether, to lower cost competitors.
The EPA is the preferred solution, as identified in the Cotonou agreement, and no country has requested an alternative. It is first and foremost about building regional markets, to boost economic growth. It aims to enhance economic governance by sharing a set of rules to facilitate trade and to attract investment in non-oil production, thereby creating jobs. Its content and overall intention is the polar opposite of the de-industrialisation and mass-impoverishment depicted by some commentators.
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What are the facts?
The EPA does not require 100% free trade between Nigeria and the EU – not now or ever. The EU will completely and immediately open itself to Nigerian imports, but Nigeria does not have to do the same. In fact Nigeria will have many years (at least 12-15) to gradually open its economy, allowing for the nurturing of sensitive and growing industries.
Even after this period, Nigeria will be able to continue protecting a very large proportion of its non-oil production, including most of its agricultural, fishery and industrial products. In addition, a new 'safeguard clause' allows Nigeria to temporarily reintroduce duties on EU imports, if they are negatively affecting an emerging industry.
The EU will also remove export subsidies on any goods where Nigeria has removed tariffs, ensuring that they will not be competing against subsidised goods. Incidentally, trade between Nigeria and the EU is also almost entirely complementary – that is to say we are not producing the same products, and thus are not in competition.
As the region's giant, Nigeria is well placed to benefit from the increased regional trade and other opportunities that the EPA provides. And increased regional trade will mean more choice, better quality and lower prices. Not just for consumers, but for industry too, who rely on markets for their production inputs as much as markets for their exports.
The EU, as Commissioner Michel has often underlined, will be providing substantial funding to support this process, including financing to offset any losses caused by reducing tariffs, and support to improve the competitiveness of Nigerian industry. Our West Africa programme amounts to over 85 billion Naira, with a large proportion of this devoted to the EPA. Moreover, the EU supports the Euro-African Partnership for Infrastructure, working to interconnect regional markets. In addition, EU countries have pledged to increase global aid for trade to €2bn euros a year by 2010, with a focus on Africa and the EPAs.
We believe that the EPA is the best possible response to the pressures of globalisation and development - protecting developing countries' trade preferences whilst gradually integrating them into the world economy. It will have its short-term costs as well as benefits, but there are no other alternatives.
Nigeria has long been the benevolent big brother in the region. It must decide with an eye for regional as well as national interest. For example, a Nigeria-backed EPA agreement could safeguard trade preferences for countries such as Ivory Coast and Ghana, which stand to suffer greatly if these preferences are lost.
Fundamentally however, it is of course Nigeria's decision if and when it signs. If Nigeria and other West African states feel that different arrangements suit the region better, then so be it. Our doors will remain open.
- Tom Millar is the Head of Section Politics, Economics & Trade, Information & Communication in the Delegation of the European Commission to Nigeria, Abuja.
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We should all be benefiting from trade. But half the world's population are living in poverty. The answer? Trade justice: make international trade work for the poor so they have a chance to work their way out of poverty. That's what the Trade Justice campaign is all about. However the G8 meeting in July barely touched on the issue of trade and we were told to wait for the ministerial meeting of the World Trade Organisation (WTO) in December.
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The WTO sets the rules of trade between its 148 member nations, over two thirds of whom are developing countries. The Ministerial Conference is the ultimate governing body of the World Trade Organisation. The trade ministers and other senior representatives of all member countries that can afford to send someone will attend. The UK will send government ministers and a delegation, but our formal negotiations take place through the EU, the largest trading bloc in the world.
The WTO has already agreed in principle that their agreements should be biased in favour of poor countries, so that they have a better chance of using trade as a way out of poverty. The sticking point is how to turn this principle into a reality. The last set of talks, in 2003, collapsed with no agreement because a coalition of developing countries, the G21, led by China, India and Brazil, organised themselves and stood up to the EU and the US, holding out and ultimately walking away because they were not happy with the deals being offered.
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The trade talks, in Hong Kong on which started 13th December, could be divided into three main areas:
- Industrial, covering manufactured goods
- Services, covering industries such as banking, health and tourism
- Agricultural produce
The pressure from the EU and US will be on the first two areas. The developed countries want to gain access to the “emerging markets” in services and manufactured goods, of developing countries. However the priority for most developing countries are the agricultural talks, in particular the unfair subsidies provided to Western farmers, and so a deadlock is likely.
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Trade justice campaigners are continuing to provide the UK government with evidence of the damage caused by the opening up markets in countries not yet able to cope with unfettered free trade. Research by the UN has confirmed that, of the world’s least developed countries, those states which have opened up their trade regimes most dramatically have also seen the greatest increases in poverty over the past ten years.
From rice farmers in Ghana to factory workers in India and beyond, out and out trade liberalisation is highly detrimental to the needs of poor people and the environment. The amount that poor countries currently lose in income through unfair trade rules is 14 times greater than they receive in aid. But still our government continues to press for greater access to the markets of developing countries for UK exporters.
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'My husband died because rice could not sustain our family. We had no money for medical bills and he died at home. Many rice farmers have been forced to leave the fields.'
Ernestina Doku, a widow with three children
Over 60% of Ghana’s population rely on farming for a living. In return for a loan, the International Monetary Fund and World Bank told the Ghanaian government that they should stop supporting their own farmers and open their borders to more imports. US rice suddenly flooded the country, along with tinned tomato paste from Italy,and frozen poultry from the EU.
Ghana was also told it could no longer help its own farmers with cheap seeds and fertiliser. Yet the West heavily subsidises its own farmers, encouraging them to grow much more food than they need. The excess is then dumped on developing countries at prices so cheap it's impossible for local farmers to compete. Over the past three decades, Ghana's rice industry has collapsed. Farmers struggle to make a living and unemployed villagers flock to the cities. 35-40 per cent of rice is now imported from the US. The government estimates that it spends US$100 million a year on rice imports, despite the fact that large areas of northern Ghana could produce rice for the local market, if they received the necessary investment.
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Who are the IMF and World Bank?
The IMF and World Bank are two big international institutions that lend money to poor countries. They also produce reports about countries' economies which are often used to decide how much aid poor countries receive.
For the last 20 years the IMF and World Bank have used their power as creditors, debt collectors and the gatekeepers of aid to make countries cut support and protection for vulnerable producers and infant industries. This has had a devastating impact on poor people.
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What needs to be done?
The IMF and World Bank need to stop forcing poor countries to cut the support and protection they give to vulnerable people and new industries. Governments of poor countries should be allowed to introduce policies that will benefit the poorest farmers and industries. But ensuring this happens will require major reform to the way that the IMF and World Bank operate and the way they are managed. We’re calling for the UK government to stop funding these organizations until they change, and redirect the money so that it actually helps poor people.
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Are we against any conditions being attached to aid and debt cancellation?
It is important that aid and money from debt cancellation is used to help poor people and is not wasted or stolen. Therefore there should always be checks and balances to make sure money is spent properly.
However poor people and their representatives are best placed to decide how the money should be spent and check that money is used well. Rich countries should support initiatives that give poor people a greater say.
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Do we want to close the IMF and World Bank down?
No, there are important roles for a reformed IMF and World Bank, but they will not be able to perform these roles well unless there is major reform.
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What role does the UK government play?
Gordon Brown, the chancellor of the exchequer, chairs the influential International Monetary and Financial Committee within the IMF, and is the UK governor.
"None of my younger children are in school... I just can;t afford it. I feel full of shame sometimes because I know I cannot meet my family's needs even though I work very hard."
Inodil Fils is a rice farmer from Haiti. In 1995 the Haitian rice market was opened to foreign imports as a result of an IMF programme that was presented as a condition for receiving aid. Overnight Inodil lost his livelihood. He is one of half a million people in Haiti who relied on rice as part of their income.
Hilary Benn, the secretary of state for international development, is the UK governor of the World Bank.
The UK says that it is pushing for reform of the IMF and World Bank, but they have made little progress. The UK government has taken action to cut the damaging economic policies attached to UK aid – now they need to take action at the IMF and World Bank.
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Who agrees?
Norway's government has recently said that its aid shouldn't be used to force poor countries to cut support and protection for poor people. It has announced that some of the aid it gives to the World Bank will in future go through development programmes and emergency aid measures managed by the UN instead. Meanwhile, countries such as Argentina, Brazil and Russia are freeing themselves from IMF diktats by paying off their loans early.
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Are these events just for Christian Aid campaigners?
These events are for everyone who agrees with our trade justice demands. Christian Aid is organising these events because our call for IMF and World Bank reform is urgent. It’s so important, we want everyone to join in!
So bring as many people as possible.
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Has this got anything to do with Make Poverty History?
Yes! In 2005, as part of the Make Poverty History campaign, tens of thousands of people campaigned for trade justice, debt cancellation and more and better aid. This campaign to reform the IMF and World Bank is linked to all three of those demands.
Trade justice is about ensuring poor countries are not forced to adopt freetrade policies and can choose the right trade policies to reduce poverty and support development. The IMF and World Bank are major culprits in terms of forcing poor countries to adopt free-trade policies and denying them a fair choice.
They do it by attaching conditions to aid and debt cancellation -– undermining the benefit that poor countries get from the aid and debt cancellation. It's like giving with one hand and taking with the other.
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