TRIBUNE: AfCFTA and Pooling of Commercial advantages: the European Trojan Horse

« By signing an interim (Economic Preference Agreements) EPA with the EU with the aforementioned consequences, we are giving it market access in the regions without the consent of the other members. This situation will have unfortunate consequences for the implementation of the AfCFTA »

By Dr El Hadj Abdourahmane Diouf *

For trade liberalization to produce the desired effects, it is essential to put in place fair rules. The international community has arrived at the following consensus: for international trade to work, the actors should give each other the same advantages, without discrimination. It is the principle of the Most Favored Nation (MFN) which wants that each time one gives a commercial advantage to a member, one gives the same advantage to all the other members of the organization, but provided, and it is very important that the member in question is in the same development category. All trade agreements contain this provision, with some nuance. For the African countries mainly classified in the category of LDCs, this provision is crucial. It allows them to claim a more favorable trade regime than developed and developing countries. But the EU doesn’t often hear it that way. It is deployed to stay outside the field of legal discrimination. The application of this MFN principle in the context of the implementation of the  could be called into question by European claims.

Breach of interim EPAs

Countries like the Ivory Coast, Ghana and Cameroon have signed interim EPAs. Their market with the EU is open without duty free or quotas. Their agreement includes an MFN provision that makes the trade benefits they receive or give extendable to their trading partner. However, these countries are members of entities which give themselves trade preferences at the regional level. UEMOA and ECOWAS for West Africa and CEMAC for Central Africa are customs unions with common external tariffs which ensure that all goods entering their borders hold a regional passport and are there. free movement, unrestricted. However, the individual EPA they signed with the EU, even bilaterally, offers it back door access to the entire customs union region. By signing an interim EPA with the EU with the aforementioned consequences, we are giving it market access in the regions without the consent of other members. This situation will have unfortunate consequences in the implementation of the AfCFTA. The preferential trade advantages between African countries which are supposed to help them gain in competitiveness are shared with all the countries of the European Union which become de facto a piece of Africa. From this point of view, these interim agreements are a breach opened on the ambition of continental trade integration brandished by the AfCFTA.

Coup de grâce of regional EPAs

Article 16 of the EPA between the EU and West Africa provides for the principle of mutualisation. It exists in the other five EPAs from other African regions. By insisting on the maintenance of the MFN clause in EPAs, the EU has waged a vanguard with a fine strategy with unerring results. It invokes its historic relations with Africa so as not to find itself in a position of trade weakness vis-à-vis other African trading partners. The EU is a bloc of developed countries. It is considered as such by the international community. It cannot claim similar trade treatment from potential competitors like India, China or Brazil which, despite appearances, are categorized as developing countries. They can therefore conclude trade agreements with Africa without the EU benefiting from an MFN effect. It is therefore in full awareness of its unfavorable legal situation at the multilateral level that the EU has « imposed » on African countries a mutuality system which means that it will never be able to receive commercial offers less interesting than other countries in development and from Africa. AfCFTA’s continental offer will be affected by non-native elements that hamper its competitiveness.

Commercial spite of emerging business partners

This achievement of the EU has a consequence in the diversification of the trade partnership of African countries. The risk for Africa of losing trade opportunities from major trading countries is great. China, Brazil, India, Turkey and similar countries have enough resources to compete with Europe. Their status as a developing country opens up a part of the African market that is inaccessible to Europe. This is a clear business advantage. The MFN clause in the EPA would oblige African countries to make Europe benefit from any preferential trade offers from these emerging countries. This misappropriated profit is an element of constraint for Africa’s emerging trade partners, who will prefer to deprive it of trade preferences so as not to indirectly « strengthen » the European competitor. The AfCFTA’s continental offer will then lose its appeal.

EPA in renegotiation?

The AfCFTA will only be able to deploy optimally and accelerate intra-African trade if the trade advantages between African countries and regions are secured. The MFN clause contained in the EPA is a sword of Damocles on African trade performance. The regional EPAs, fortunately, have not yet entered into force. This clause, apart from isolated cases of interim EPAs, is not yet producing its effects. It could never produce negative effects on intra-African trade if the African political authorities, who are also the same as those who set up the AfCFTA, decide to renegotiate the EPAs to be consistent with their new policy. continental trade. Among other reasons for calling into question the EPAs, the exit of Great Britain from the EU can be mentioned. It makes its market access offer obsolete and the EPA inconsistent at this stage.

AfCFTA in danger?

The AfCFTA is a huge opportunity to accelerate intra-African trade. The political authorities have understood this well. The negotiations were successfully concluded by the experts. Regional balances have been found. African priorities have been defined. Hopes are high. But this beautiful castle of the AfCFTA could collapse if the continental construction of an African market is skewed by elements of externality like European trade policy. In this case, it is expressed by a requirement of mutuality to which it is not legally entitled. The AfCFTA is a regional trade agreement whose trade preferences are protected from full pooling. The AfCFTA is a grouping of LDCs and developing countries that can make trade flexibilities among themselves, to the exclusion of all others, under the enabling clause of the WTO. The existence of a free trade area like the EPAs, which brings together developed countries and less developed countries and which is deployed in the African continental space, will be a Trojan horse that annihilates all the efforts made up to ‘now for African trade integration.

* Dr El Hadj Abdourahmane Diouf is an Expert in International Trade

** Source Financial Afrik