EPA Hobson's Choice

EPA, a veritable Hobson’s choice, Mr Mandelson
By E. Ablorh-Odjidja, Ghanadot

The Economic Partnership Agreement (EPA) between the EU [European Union] and Third World countries is to take effect beginning 2008. With it, The EU hopes to create trade reciprocity with developing nations.

Reciprocity is the word used, but in reality what is happening is an arm twisting exercise against Third Word countries in an attempt to offer them a choice that has already been used under colonialism.

The rationale for this new trade arrangement is that it would help end poverty in developing countries, while allowing rich countries to benefit if they could sell more of their goods and services in the developing world.

But what can the Third World offer Europe other than the agricultural products that the EU subsidizes her farmers to produce cheaply?

Developed countries are wealthier because they are at the high end of the world trade pole. Not only are they massive producers of agricultural products like corn, wheat and cotton, but they dominate the world of heavy industry too. Receipts in trade dollar amounts heavily favor their industries and manufacturing services and assure their dominance in this field for decades to come.

Stated bluntly, the two worlds are not on equal footing in trade and as such it is impossible for true reciprocity to take place between them without some concessions that intensely favor the Third World first. The EPA grants none.

One cannot trade bananas for tractors or life saving pharmaceuticals for cocoa beans and claim you are on equal footing with your trading partner, especially when you don’t even get to set the price for your own product.

But in the name of reciprocity, the EU is demanding that Third World countries, mostly former European colonies, sign this EPA agreement or perish by the end of January 2008.

As reported in Ghanadot.com on Sept. 19, Mr Peter Mandelson, the EU Trade Commissioner, “warned that there would be no legal basis for the extension of existing preferential trade terms between the EU and the 78 African, Caribbean and Pacific countries if the two sides do not initial new Economic Partnership Agreements (EPA) before the end of 2007.”

The threat in Mr. Mendelson statement was real; except he failed to note why the developing nations were not rushing to the table with pens ready.

By September 27, 2007, Mr. Mendelson was ready to repeat his warning in an on-line BBC publication. He said “former European colonies . . . could miss out if they do not sign up to new trade deals” and that “those who relied on exports of goods such as bananas and fish faced a risk to their livelihoods.”

The cruel part of this statement was that the message was directed at a constituency of exporters in the Third World whom non-compliance with EPA agreement would hurt most. The intent was to prod them to put political pressure on their home governments, the very entities in the Third World the EU was negotiating with, to force them to sign the deal. Thus the unethical hand of the EU was revealed in Mr. Mendelson's statement.

Since 2001, Third World governments have been demanding for a trade agreement that lowered trade barriers to agricultural exports from developing countries and which also ended subsidies paid to farmers in rich countries, some say to the tune of some $300 billion a year, in exchange for a fair trade deal, but the effort to date has been to no avail.

Ironically, the EU, through Mr. Mandelson, has revealed more zeal in the recent efforts to force Third World governments to sign the EPA deal than she is known to have shown in her willingness to end farm subsidies to rich European farmers; never mind the fact that ending farm subsidies in Europe would boost agricultural production faster in the Third World and help end poverty sooner in places like Africa.

But the reason why the EU has taken this approach is obvious; the EU has the most to gain in an EPA deal that fosters competition with the fragile economies of the Third World.

In the good old days of the colonies, there were no barriers to the flow of trade to and from the metropolises of Europe. There was market integration as virtual part of the colonial regime, the inherent key of which was a force that settled both developed and developing markets on the “comparative advantage” stage.

In time, the “comparative advantage” meant each partner produced goods in the field in which he excelled. Soon, the colonized became the “hewers of wood and drawers of water.”

This trade partnership called for under the EPA agreement is the same as the one in the colonial arrangement. For the current Third World, the choice is one that good old Mr. Hobson in his horse stable could not have improved.

Thus EU countries would flood Third World markets with cheap products from their modern and efficient industries and industries in the Third World, with aging and antiquated machinery, would be forced to compete and collapse. The result can only be detrimental to wealth acquisitioning in Africa.

On the flip side, in the EU markets, very little will be gained by Third world goods; bearing in mind that most of the agricultural products from the Third World would be undercut by European subsidies to her farmers. Thus the benefits, if any under the EPA arrangement, would already have been gutted!

But such is the world when one refuses to learn. The EPA concept is the same trade arrangement as was during colonial times. The colonial dependency, disturbed by the granting of independence, is about to be reinstalled under the guise of a different name.

If only Africa could have a common market, it could then say to Mr. Mandelson that any restriction or imposition of tariff on her products by Europe, in the absence of the EPA signing, would be met with the same on theirs. Then Africa can go ahead and open her markets to India, China, Japan, America and others who decide to play fair.

E. Ablorh-Odjidja, Publsiher www.ghanadot.com, Washington, DC, September 30, 2007 /Permission to publish: Please feel free to publish or reproduce, with credits, unedited. If posted at a website, email a copy of the web page to publisher@ghanadot.com . Or don't publish at all.

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posted 1 October 2007