A revival dictated by necessity
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CTA. 2005. A revival dictated by necessity. Spore 118. CTA, Wageningen, The Netherlands.
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The negotiation of free trade agreements with the major trading blocs, and especially with the European Union, is fueling a revival of interest in ACP regional economic communities. But it remains to be seen if the creation of these accords will translate
The impetus for regional integration has increased in recent years. The 2002 launch of negotiations for the Economic Partnership Agreements (EPA) between the EU and ACP countries on a regional rather than a national basis, has helped promote the cause of regional integration, an issue which has long featured on the agenda for discussions on economic development strategies for these countries. The oldest ACP regional economic communities date back more than 30 years. They were designed to encourage and strengthen trade between member countries, especially for agricultural and agro-alimentary products, their main resources. However, the results have fallen far short of expectations. According to the United Nations Economic Commission for Africa (UNECA), intra-regional trade accounts for 9% of total trade in West Africa and just 4% in Central Africa. In the case of West Africa s economic and monetary union, the Union économique et monétaire ouest-africaine (UEMOA), the continent s most advanced region in this sense, the figure is 12%. By contrast, in the EU more than half of all trade is conducted between member states. Within the Central African economic community, the Communauté économique d Afrique centrale (CEMAC) and the area covered by the Indian Ocean Commission (IOC), intra-regional trade has actually declined in the past 10 years, according to official figures. Trade also remains weak within the Caribbean Community (CARICOM), since many of the islands produce similar products. Everywhere, international trade has the upper hand over regional trade, even though official figures do not cover all transactions in countries where a sizeable share of commerce remains informal. Fewer taxes, more headaches In some cases, customs duties have been scrapped within regional groupings which, like the UEMOA, have set up customs unions. In others, they are on the verge of being eliminated, as planned by the Southern African Development Community (SADC) and the Pacific Island Country Trade Agreement (PICTA). However, non-tariff barriers often prove to be the most serious obstacles to regional trade, especially for fresh perishable products. The increase in red tape to be negotiated for road transport there are about 30 checkpoints between Dakar and Bamako the pitiful state of the roads themselves, and their complete absence in some countries, go far towards explaining these poor results. Very often, progress towards free trade is hampered by a lack of political will. Many countries are reluctant to abolish customs duties which make an important contribution to their national budgets. The ACP countries are also concerned about the prospect of lower customs duties on imports from Europe, which will come into effect together with the EPAs in 2008. Neither seasonal differences in production schedules nor differing levels of food security are enough to stimulate trade between countries of the same region. Only differences in trade or monetary policies have any real influence, as in the case of trade between Benin and Nigeria. Even so, considerable progress has been made to liberalise trade within regional ACP blocs, at least at the institutional level. In Africa, the goal is to establish a single common market on the continent by 2028. At the same time, other initiatives to foster regional integration are under way, in an effort to improve living conditions for rural dwellers and boost agricultural productivity. Regional information systems make it easier to sound the alarm quickly, for example in cases of livestock epidemics. Exchanges of data, be it on food security or pest control efforts, have the same effect. Other plans are in hand, including an information system for markets in West Africa, which should encourage trade by publishing information on prices and on the availability of products in the region. Common agricultural policies One of the most striking developments of the past few years is the progress made towards regional integration through the creation of common agricultural policies. The most recent example is that of the West African common agricultural policy, the Politique agricole commune ouest africaine (ECOWAAP), adopted in January 2005 by the conference of West African heads of state and government. It is a wide-ranging initiative which seeks to harmonise procedures for land access, natural resource management, assistance for farmers and access to credit. The improvement of regional infrastructures is another crucial element. In CEMAC countries, a number of new roads are being built to improve transport in the region. In East Africa, work will soon be starting on the Mombasa-Nairobi-Addis-Ababa Road Corridor Development Project. The African Development Fund (ADF) estimates that the scheme will increase trade in the region by 500%. Whilst these efforts towards integration are undoubtedly needed, the regional markets appear to be lacking enough sufficiently remunerative outlets to develop the economic fabric of ACP countries. That is why these countries also seek to maintain or win export markets as a source of foreign currency, in Europe, America and Asia. For them, it is not so much a question of choosing between regional and international markets as establishing solid regional markets before liberalising trade with the rest of the world, and especially with trading blocs of the North. This is the main focus of current discussions between the EU and Africa, since the EU believes the EPAs will be a driving force for regional integration. A mushrooming of regional blocs But the choice of regional communities is a delicate issue. In Africa, there are 14 regional groupings half the countries belong to two groups and 20 belong to three. In southern Africa, the countries of the SADC are divided into two distinct groups which negotiate separately. In the Caribbean, the EU negotiates with the Organisation of Eastern Caribbean States (OECS), which represents eight countries and is itself part of CARICOM, which has 15 member states and also takes part in negotiations for the Free Trade Area of the Americas (FTAA). In the Pacific region, the EU is supporting development of the PICTA free trade zone and is also conducting EPA negotiations with it, since PICTA is an ACP-Pacific grouping. The Pacific Islands also belong to the Pacific Agreement on Closer Economic Relations (PACER) group, which includes Australia and New Zealand, on which they are economically dependent to a large extent. Differences in levels of economic development within regional groupings pose further problems. The least developed countries already have tariff-free access to the European market. Once the EPAs have been concluded, there is a risk that these may no longer be able to protect themselves against competition from imported products. Already, a number of farmers belonging to the Economic Community of West African States (ECOWAS) claim that the Common External Tariff (CET) set up by UEMOA is too low. As a result, some countries are reluctant to adopt it. According to a recent UK parliamentary report on international development, the timetable envisaged by the EU for the opening up of ACP markets less than 3 years is too rushed to enable regional groupings to become sufficiently strong to withstand outside competition. The flood of Chinese textiles, which dealt a blow to local European industries after the market was opened up at the beginning of January 2005, shows how hard it is for even the best organised regional groupings to protect themselves. But do ACP countries have any choice? Photographic credits: © Jade Sénégal; © Syfia International.
SubjectsMARKETING AND TRADE;
- CTA Spore (English)