Stuck in the Doldrums – EU-Africa Trade Deals

Taken from the September edition of europeinfos

Screen Shot 2017-10-14 at 15.58.43The blueprint for a patchwork of trade agreements between the EU and African nations has not been achieved. This is because existing and proposed arrangements are based on an economic paradigm that fails to deliver authentically sustainable development, argues Henry Longbottom SJ.

Current political negotiations for trade deals between the EU and African countries seem unable to catch the trade winds which blow towards the equator from the northern hemisphere. These gusts of air have been a Godsend to countless merchant sailors in Europe’s trading history. In contrast, the EU’s grand vision for a patchwork of so-called “Economic Partnership Agreements” (EPAs) with developing countries in the Global South appears to be stuck in the doldrums.

Run aground – African Economic Partnership Agreements

Nigeria, Africa’s largest economy, has so far not been persuaded to sign the West Africa EPA. The most recent failure is the impasse on the proposed EPA with five countries comprising the East African Community. Almost scuppered last year when Tanzania pulled out of negotiations at the eleventh hour, the deal suffered a further blow in May when only two presidents turned up for a rescue summit held in Dar es Salaam.

 EPAs originate from the trade chapter of the Cotonou Agreement signed in 2000, an overarching framework between the EU and a group of countries, mostly former European colonies, within Africa, the Caribbean and the Pacific, known as the “ACP”. Replacing the 1975 Lomé Convention, the Cotonou Agreement contains lofty provisions aimed at reducing poverty, promoting sustainable development, and integrating ACP countries into the world economy. Revised every five years, recent amendments to the Cotonou Agreement include measures to combat criminal impunity through the International Criminal Court.

Under the Lomé Convention the EU gave favourable market access to ACP countries and were thus deemed to infringe World Trade Organisation rules. EPAs on the other hand aim to replace arguably paternalistic policies with the principle of reciprocity, requiring both parties to open their markets. Therefore, under EPA arrangements, the EU generally gives immediate duty and quota free access to all products from its partner countries. However, in contrast to Free Trade Agreements (FTAs) between the EU and more economically developed countries, EPAs do not require ACP countries to fully liberalise their markets, and the degree of liberalisation depends on their level of development. Very often, sensitive products, especially certain agricultural commodities, are excluded from EPA provisions.

Given these laudable aims of EPAs, why have they often failed to get off the ground? A major problem is that EPAs are falling short of their two stated aims, namely regional ACP co-operation, and sustainable development.

 Choppy waters – Regional cooperation and sustainable development

With regard to regional cooperation within EPA groups, conflicts exist between EPA provisions and other EU trade arrangements. For example, the very poorest African countries, such as Tanzania, already benefit from duty-free and quota-free access to EU markets under the “Everything But Arms” initiative. Although this trade policy could be withdrawn at any point by the EU, at present its existence means there is little incentive for very poor countries like Tanzania to open up its market through an EPA. On the other hand, relatively economically richer nations like Kenya who do not benefit from Everything But Arms are keen for the security of an EPA to protect against devastating scenarios arising such as when the EU temporarily imposed tariffs on Kenyan cut flowers in 2014.

But an even deeper concern is whether EPAs actually facilitate sustainable development. Many Africans think not. For example, Nigerian campaigners against an EU-west Africa trade deal argue that a reduction in tariffs will make imported machinery cheaper and thus undermine domestic industrial growth. EPA provisions effectively tie the hands of governments, restricting their ability to formulate their own industrial policies and collect revenues from tariffs – an important source of income for nations where other forms of taxation are difficult to raise. Such factors have led to the type of charge levelled by John Magufuli, Tanzania’s president, that EPA provisions resemble a “form of colonialism”.

An underlying worry explaining the reluctance of some African leaders to sign up to EPAs is their suspicion that the biggest winners in such “partnerships” will be European exporters. Their worry is well founded. EPAs may boost exports of commodities like sugar, meat and dairy products from better-off African nations. However, EPAs appear to do little to address the fundamental injustice of Africa being caught in the trap of being primarily an exporter of raw materials. The coffee trade illustrates this. The bulk of Africa’s coffee exports to the EU consists of unrefined green coffee beans. Whilst it is estimated that in 2014, Africa earned about $2.4 billion from the trade, this figure should be contrasted with the value of processed coffee re-exports accrued by Germany which for the same period stood at approximately $3.8 billion.

This is one of many examples of the way that existing economic arrangements are stacked against African nations being able to add value to their exports by processing or manufacturing its raw materials.

The need for greater intra-African trade

Unless and until Africa-EU trade agreements can redress these structural economic obstacles to investment in African economies, they are unlikely to prove effective in achieving sustainable development. In the meantime, African leaders are perhaps justified in placing more hope in the African Continental Free Trade Area (CFTA) approved by the African Union in 2012.

Due to a highly fragmented market, intra-regional trade within Africa is a mere 18%. Bringing together 54 African countries with a population of more than one billion people and combined GDP of more than US $3.4 trillion, the CFTA may prove a surer way of growing local economies and protecting ACP populations against the turbulence of rising and falling tides of the global market.

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Campaigning against ‘conflict’ minerals

The following article was published in the Caritas in Action column in the Catholic Times (UK) on 21st July 2017.

Screen Shot 2017-10-14 at 15.42.12The dark histories of some of the shiny items adorning our bodies has been popularised by recent Hollywood films and celebrity-backed campaigns. This has permitted the concepts of ‘conflict’ diamonds and ‘dirty’ gold to enter the public consciousness. But what about those other precious, and increasingly indispensable objects, found in our pockets and bags? The sad truth is that our mobile phones and other electronic gadgets contain materials that come at a hefty human and ecological cost.

Thanks to a campaign led by a coalition of organisations, in which Catholic groups have played a central role, the link between digital products and human rights abuses has been exposed. Through public awareness-raising events, enabling affected communities to speak out, and by lobbying politicians, the coalition has succeeded in getting the European Union to introduce legislation to combat the trade of illegally mined metals.

Many precious metals like tin, tungsten, and tantalum – vital for components used in electronic equipment – are mined in areas of the world affected by armed conflict. The Democratic Republic of Congo (DRC) is an example of a country that is incredibly rich in mineral deposits, but has been fought over by warring factions for decades. Whilst armed groups in the DRC do not mine the mineral themselves, they force local miners to hand them over for a fraction of the price that they fetch in the international market. The commodities eventually find their way into the international market, into products manufactures in other countries, before ending up on the shelves of our high street shops. A tragic reality is that international trade in minerals is helping finance human rights violations and accompanying environmental degradation in areas of the developing world.

Consumers here in Britain often feel paralysed by such information. What can we do practically to avoid complicity with such injustice?

Pope Francis’ encyclical on “our common home”, Laudato Si’, is a resource for engaging with this kind of dilemma. On the one hand it proposes radical solutions. Individually, the encyclical proposes an “ecological conversion” whereby we are to avoid getting caught in “a whirlwind of needless buying and spending” (§203). Pope Francis highlights the effectiveness of boycott campaigns, reminding us “purchasing is always a moral and not simply an economic act” (§206). On a macroeconomic level, the encyclical urges reform of systems to encourage less consumerist models of life (§112). On the other hand, Laudato Si’ encourages more subtle, incremental changes. In particular, Pope Francis encourages the work of civil society groups who engage with citizens and political institutions to promote the common good.

This Laudato Si’ approach has inspired British Jesuits to engage in the fight against conflict mineral. Through three partner organisations: Jesuit Missions UK, the Brussels-based Jesuit European Social Centre (JESC), and the Spanish development charity ALBOAN, Jesuits in Britain have lent their weight to a campaign that resulted in the European Parliament passing a historic law earlier this year. The legislation requires companies to carry out investigations (known as “due diligence”) to ensure that imported minerals are not linked to conflict or human rights or ecological abuses.

Whilst a regulation emanating from Brussels may seem very remote from what is going on in grass root communities both here in the UK and in the developing world, the Jesuits have tried to bridge the gap. Taking advantage of our global reach, we have been able to connect the experiences of those directly harmed by conflict minerals with European organisations advocating for action. For example, drawing on the experience of its partners on the ground, Jesuit Missions lobbied key UK MEPs and the UK Government, urging them not to water down proposals when they discussed it with the European Commission. Online resources have been developed for schools designed to create awareness among young people about the connection between everyday objects and the problems associated with the exploitation of natural resources. Mobilising individuals via Facebook and Twitter campaigns has also been instrumental in pressurising policy-makers to support controls on conflict minerals.

A central message of Laudato Si’ is the interrelatedness of our world. Just as humanity’s wellbeing is contingent on the health of the natural environment, so the (true) flourishing of economically affluent societies is dependent on respect for the human dignity of all. The conflict minerals trade is a good illustration of this integrated reality. The campaign, in which church groups have stood alongside secular organisations, is an example of how connecting various stakeholders can yield successful outcomes, and help combat a form of inaction which Laudato Si’ terms the “sin of indifference”.

The recently adopted EU legislation on conflict minerals is far from perfect, and its effectiveness will hinge on how it is implemented. In a post-Brexit world, UK citizens and Church group will have an important role to ensure the UK Government honours, and indeed goes beyond, measures agreed at a European level.

Henry Longbottom SJ

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Jesuits against conflict minerals

This week yielded a breakthrough for campaigners against the importation of conflict minerals into the European market.  The EU has finally agreed to introduce legal requirements on companies to check their supply-chains.  Whilst the EU’s proposed regulations are not all advocacy groups like the Jesuit European Social Centre had hoped for, they are at least a start.  Below is a Q&A on the subject.  A bit more background on the Jesuit involvement is available in an article on the Jesuits in Britain website.

EU Conflict Minerals Regulation Q&A

What is the latest?

On 22nd November 2016, the EU issued a text for a proposed law (“regulation”) designed to restrict the importation of so-called “conflict minerals”. This is the fruit of years of campaigning by faith and civil society groups, including JESC. We have joined others in calling for the introduction of legally-binding obligations requiring companies to ensure that imported minerals are not linked to conflict or human rights abuses.

Why is it significant?
For the first time in history, companies will need to carry out checks on the origin of “3TG” minerals, namely tin, tungsten, tantalum, and gold. 3TGs are vital for a range of everyday consumer items like laptops, mobile phones, engines, and jewellery. Many 3TGs are sourced from regions of the world, especially Central Africa, which are affected by deadly conflicts. A tragic reality is that the trade in minerals often helps finance human
rights violations. The proposed regulation attempts to remedy this situation.

eu-conflictIs it all good news?

Sadly no. The final version of proposed regulation is severely limited in scope and contains a number of loopholes which will blunt its effectiveness. For example, in contrast to the EU Parliament¹s more rigorous draft of 2015 that reflected relevant OECD Guidance, the proposed regulation applies only to imports of raw minerals. Thus companies do not have to carry out checks for components or finished products containing 3TGs. Another weakness is that the regulation¹s provisions only “bite” when certain volume import threshold are reached, meaning that a great number of companies will escape having to comply with the legislation. Further problems arise from the ability for companies to outsource their obligations to certain private industry bodies. Worryingly, inadequate mechanisms exist to scrutinise these industry bodies.boy-digging_400

When happens next?

The proposed regulation will be voted on by the EU Council and Parliament. Once passed, there will be a lengthy “phase in” period before the legislation must be complied with by companies. Early indications suggest the regulations won¹t come into full effect before 2021. So in the meantime, faith and civil society groups will continue to apply pressure on political leaders and business leaders to support further strengthening of measures to combat the trade of conflict minerals regulation.

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