The EPAs are a series of negotiations launched to create a free-trade area between the EU and the 6 regional economic communities in Africa, the Caribbean and the Pacific (ACP) group of countries. The first regional community to accede to EPA was the 15 member Caribbean Community (CARICOM), which did so as far back as October 2008.Eastern and Southern Africa have finalised their EPAs and are now working out the final ratification process. After more than a decade of negotiations, in October 2014, an agreement was reached in principle between ECOWAS and the EU on the finalisation of the Economic Partnership Agreement (EPAs). The ratification process has stalled, because, at the very last minutes, our own federal government decided that the whole thing is deleterious to our own long-term industrial and manufacturing ambitions. The Manufacturers Association of Nigeria (MAN) and other organised industrial groups have come out strongly against an agreement that they believe will do irreparable damage to our own infant industries and fledgling manufacturing sector.
Recently, our highly esteemed Vice-President, Professor Yemi Osinbajo was quoted as reiterating this official position of the government, to the effect that the administration will confer with MAN and other stakeholders before touching base with our ECOWAS colleagues on the ratification of the EPA agreement.
The so-called ‘infant industry argument’ is as old as Alexander Hamilton and Fredrick List. But it is becoming archaic as an economic argument — less and less credible in our twenty-first century integrated global marketplace. Making a song and dance about protecting inefficient local industries does no good neither for our industrial competitiveness nor for our ever-demanding consumers who want quality products at affordable prices. We have to be honest in owning up to the fact that the whole thing does not put our country in particularly good light with our ECOWAS sister countries who desperately want to finalise the agreement with the Europeans.
Of course, the negotiations began long before the current APC-led administration came to power. We therefore cannot blame them for many of the weaknesses that underpinned our negotiation strategies with Europe over the past decade. One thing that comes out clearly is the fact that we have never had a strategic trade policy. When the South Africans, for example, went into the same negotiations with the EU, they came armed with a well-articulated strategic trade policy. They knew precisely what their own vital interests were, what they wanted to achieve and what they were prepared to concede. South Africa also exercised bold leadership within the Southern African Development Community (SADC), matching the Europeans in technical preparedness, intellectual force and negotiating toughness. And they got the best for their region.
We in Nigeria have never had such a strategic trade policy. As often happens in our own case, wewent into the EPA negotiations virtually blindfolded by myopia and intellectual ill-preparedness. We did not mobilise enough of our economists, intellectuals, business community and civil society to contribute their ideas and practical proposals for a credible Nigerian position. We left things hanging awkwardly until the eve of the negotiations, when we began to pussyfoot like grossly incompetent people. It is a great embarrassment and does our international standing and regional prestige no good whatsoever.
I regard myself as a student of the economics and politics of European integration. I did my doctorate dissertation on Europe’s trade, finance and development policies in Africa, spending several lonely months doing field work in Copperbelt region of Zambia. I managed to get a book published by Routledge on the same subject. I lived and worked in Europe’s capital of Brussels for 5 years as a senior official of the African, Caribbean and Pacific Group, coordinating a EuropeanDevelopment Fund (EDF) portfolio exceeding €4 billion annually. I can claim to know as much of Europe and its institutions as anyone. I worked closely with the European Investment Bank (EIB) in Luxembourg which manages over €5 billion of our own funds targeted at investments in Africa, in addition to routine collaboration with the Secretariat of the European Council of Ministers, the Parliament and the Commission.
I appreciate how complicated our long history of relations with Europe have been. However much we may pretend to the contrary, the colonial legacy will almost always colour the Euro-African partnership. But we cannot also overlook the fact that Europe is the most generous donor to Africa, underwriting 70 percent of the African Union’s budget annually. Europe provides ODA to Africa that exceeds the order of magnitude of €3.5 billion annually. Europe, with its 500 million people and 28 member countries, is the single largest trading block in the world. It is also the richest single block in the world, with a GDP of US$18.5 trillion, ahead of both the United States (US$18 trillion) and China (US$11.4 trillion). Europe’s may be a rather aging population, and its economy of late has been struggling to come out of the doldrums, but it is nonetheless a region of considerable technological dynamism and innovation.
The New Europe, in spite of the growing army of so-called ‘Eurosceptics’, is an enormous achievement. No one who has keenly followed the changing fortunes of the Old Continent can fail to be impressed with the extraordinary rebirth of this continent that had been torn by horrendous bloodletting twice in the span of a generation during the last century. There is a sizeable proportion of Europeans, particularly in Britain, who resent the idea of closer political integration, but they do not realise that it is a worthy price to pay for the peace and prosperity that the citizens of Europe have enjoyed since the Rome Treaty 1958.
As an African, I have always been conscious of the fact that Europe conquered our people using the ruse of trade, first, in human souls, and then by gunboat diplomacy. Some would insist that the days of informal empire are still with us, as exemplified by the iniquitous web of informal empire that France has woven around like a Gordian over the nations of ‘Francophone’ West and Central Africa. Old attitudes and old prejudices die hard.
But let’s get back to the facts before us. Before now, African countries enjoyed a regime of non-reciprocal trade with Europe, in which our goods enjoyed basically duty-free access into European markets. That was before the rise of the World Trade Organisation (WTO). Under WTO, non-reciprocity has been outlawed in international trade law. At the level of the ACP, we agreed with the EU more than a decade ago that we would begin a series of trade negotiations that will lead to a free trade area between our two regions. Ironically, the Europeans had expressed preference for a continent-to-continent approach to the trade negotiations. But most of our countries insisted that that they would prefer to negotiate within the framework of existing regional economic communities. We ended up shooting ourselves in the foot, unwittingly splitting up our continent, to all intents and purposes.
Over the past decade, the negotiations have been far from easy. In the case of ECOWAS, we had to await the implementation of the Common External Tariff (CET) which was enunciated way back in 2006, but only came into legal force as late as January 2015. When the EU had threatened to erect barriers against some commodities coming into their markets, Ghana and Côte d’Ivoire rushed to sign an interim EPA arrangement so as to protect the traditional markets for their cocoa industry.
The ECOWAS region is made up of fifteen countries in West Africa, comprising the eight Union économique et Monétaire Ouest Africaine (UEMOA) members (Benin, Burkina Faso, Cote d’Ivoire, Guinea Bissau, Mali, Niger, Senegal and Togo). These countries belong to the franc Zone and use the French-backed franc as a common currency. Their treasuries are literally run from La Banque de France, with the French having first refusal for major government contracts. The other grouping within ECOWAS are the Lusophone nation of Cape Verde and the English-speaking countries of Nigeria, Ghana, Guinea, The Gambia, Liberia and Sierra Leone.
It is a miracle that our region has surmounted so many divisions and suspicions to become one of the most successful regional economic communities on the continent. Our region has established probably the most successful regional architecture for regional peacekeeping and conflict-resolution. Some progress has been made in democratisation, human rights and the rule of law. But formidable barriers remain in the area of trade and free flow of goods and services. One of the key objectives of ECOWAS is to increase the share of intra-regional trade from the current level of 12% to some 40% by the year 2030. ECOWAS industrial policy aims to “maintain a solid industrial structure, which is globally competitive, environmentally friendly and capable of significantly improving the living standards of the people by 2030”.
Nigeria, with its nearly 200 million people, accounts for 75 percent of the regional GDP. Our country aspires to become an advanced industrial-technological economy in the coming decades. The question before us is whether EPA with Europe will advance or hinder these national and regional economic aspirations.
During a November 2015 lecture to the EU-Nigeria Business Forum in Lagos, visiting EU Trade Commissioner Cecilia Malmströmpassionately harped on the positive benefits of EPA for Nigeria and ECOWAS. She argued that the creation of a free-trade area between our two regions will not only enhance trade but also bolster prosperity and jobs. It would also help drive the diversification of our economies that is so essential to building a more prosperous Africa.
Those who insist that Europe stands to gain more from the EPAs than Africa have a point. According to some estimates, EU stands to gain a stupendous €100 billion in increased exports into our continent while our continent may experience only an additional €50 billion in trade-creation. For countries like ours, non-oil exports constitute a mere 5 percent of our total exports. What is more, Europe maintains a formidable array of standards and sanitary and phyto-sanitary requirements that might be a herculean task for many of our countries to meet up with.
There is also the welter of subsidies that underpin the European Common Agricultural Policy (CAP) that might make it more difficult for our peasant farmers to compete on fair and equal terms with European farmers. I used to joke to my Dutch friends that typical Friesland cow, weighing one ton, enjoys a better standard of living than the average Nigerian. The Europeans would insist that there are possibilities of escape clauses being built into the EPAs to ensure that local livelihoods are protected while fledgling industries will be able to enjoy some measure of protection within some agreed periodicity.
West Africa accounts for more than 42% of total trade between the EU and Africa. It is therefore no surprise why Europe attaches much importance to reaching an agreement on EPA with ECOWAS. They are the suppliers of a large part of our industrial machinery while our region accounts for a large part of the imports of agricultural and fisheries products. European annual exports to ECOWAS stand at approximately €35 billion while our exports to the EU account for €40 billion.
For my part, I believe now is the time to bring the long drawn-out saga to a close. Our monocultural dependence on oil has proven to be more of a curse than a blessing. The diversification of our economy is an imperative that we must pursue with zeal and conviction. Developing new tradable commodities and securing global markets must be a part and parcel of our long-term development strategy. For better or worse, we share a continental neighbourhood with Europe and we share a destiny dictated by the forces of history, geography and geopolitical necessity.
To be brutally honest, the Europeans themselves have not shown themselves to be men of good faith, if truth be told. I had occasion to sit in the same room with succeeding trade commissioners from Peter Mandelson of Britain to Karel De Gucht of Belgium. They approached the trade negotiations with iron fists like Roman Emperors dishing out diktats to the hoi-polloi of the conquered territories. I always asked myself quietly, “My, God, do they think we are damned fools, these people!”
For the past two years, no agricultural products from Nigeria have been allowed access to European markets, ostensibly because our products do not meet EU standards. For 50 years of doing business with Europe, they never knew our products did not meet their standards. Until now. It is difficult not believe that these are not punitive measures being meted out on our country for our failure to ratify the EPA agreement and for seemingly holding ECOWAS hostage. Commissioner Malmström was dangling the sum of €6.5 billion as the sum of the development fund that would be provided to West Africa if we agreed to finalise the negotiations. We have been suitably unimpressed.
Whilst I will insist that we must never, under any circumstances, be stampeded into reaching an agreement, we must put on our thinking caps and make enough concessions to reach an agreement that is fair and just and in the interest of our nation and of West Africa as a whole. There are no perfect treaties anywhere in the world, and least of all in the trade area. It is sometimes advisable to take the plunge while putting in enough escape clauses to ensure that we have the room to renegotiate aspects that do not harmonise with the welfare of our people or our vital economic interests.
I take a cue from the experience of Singapore, when, at a difficult time in the history of his country, Lee Kuan Yew, the nation’s founding-father and first prime minister, took the solemn decision to open up his country’s economy to the outside world. Singapore suffered at the beginning, but in the end, the country was the better for it. Competition forced the Singaporean business community to innovate and improve or perish. The pressures of global competition can be an enormous burden; but they can also be a boon for progress. Today, Singapore is home to nearly all the Fortune 500 companies. Without possessing any oil of its own, the Singapore Petrochemical Complex on Jurong Island is the third largest in the world, producing more than 1.5m barrels of refined petroleum per day.
Singapore stands at the cutting-edge of the high-tech sector, a global leader in water purification, environmental technology, pharmaceuticals and ICT. Singapore welcomed foreign businesses, traders and investors from Europe and elsewhere to come and do business in their country. They subjected their own local industries to the pressures of global competition while investing in human capital, nurturing the skills of their young people and building an enabling environment for common prosperity. Above all, they strengthened the capacity of their ‘watchman state’ in terms of rigorous institutions that regulate the economy and ensure that it works for the good of the people and the future of Singapore. It is the stuff of which economic leadership is made.
Obadiah Mailafiya
