[Debate] (Fwd) "Africa on the brink of disintegration" - Third World Network-Africa

[Patrick Bond]

(A superb newsletter with many crucial statements by civil society.)

African Trade Agenda

Third World Network-Africa Volume 3 Number 1 May 2009

INSIDE

FALL-OUT FROM EPA NEGOTIATIONS
Africa on the brink of disintergration
pages 1-4

UNCTAD PUBLIC SYPOSIUM:
Regionalism – the south’s exit strategy from global crises
pages 4-6

EPA Negiations-Regional State of Play
pages 6-9

Advocacy File
pages 9-11

Dateline Africa
pages 12-13

Global Round-Up
pages 13-15

Notice Board
page 15


FALL-OUT FROM EPA NEGOTIATIONS
Africa on the brink of disintegration
by Tetteh Hormeku, TWN-Africa

Pressures in the negotiations for the Economic Partnership Agreements 
(EPAs) with the European Union have, over the past two weeks, pushed two 
more regional economic groupings in Africa to the brink of 
disintegration. This adds to the two other regions which have already 
been under stress since the beginning of 2008.

On June 4 in Brussels, the EU signed an interim economic partnership 
agreement with Botswana, Lesotho, Mozambique and Swaziland against the 
wishes of Angola, Namibia, and South Africa. This has made imminent an 
acrimonious break-up of Africa’s oldest customs union, the Southern 
African Customs Union (SACU).

Such an eventuality also raises doubts over the merger, scheduled for 
next year, of SACU and the Common Market of Eastern and Southern Africa 
(COMESA) into a single customs union under the Southern African 
Development Community (SADC).

On its part, the Economic Community of West African States (ECOWAS) is 
facing the unwelcome prospect of another key member country, Ghana, 
giving in to pressure to go it alone in a partnership agreement with the 
European Union. The sub-regional grouping concluded in May that 
disagreements between it and the EU meant that the June deadline for 
concluding its comprehensive EPA could not be met.

After the signature of a similar stand-alone agreement between Cote 
d’Ivoire and the EU, a decision by Ghana to sign its own EPA with the EU 
would undermine the region’s attempt to have a common agreement with the 
European Union which meets the differential development levels and needs 
of countries in the region. As the ECOWAS Commission President, Ibn 
Chambas warns, West Africa would feel the pain if they fail to have a 
common agreement. “Our region will have different trade agreements with 
the European Union that will adversely affect our regional integration 
process”, he stated.

Meanwhile, the decision on June 8 by the Common Market of Eastern and 
Southern Africa (COMESA) to adopt a common external tariff is set to run 
the gauntlet of the contradictions generated by the grouplets into which 
the community has split around the EPAs. Each of the two grouplets is 
working out its own tariff arrangement with the EU. Experts believe that 
this situation will lead to the same tensions among member countries 
over tariff revenue which have now exploded in SACU (see below)

And in Central Africa, resentment still persists over Cameroon’s failed 
bid to foist its bilateral interim EPA with the EU on the rest of the 
region.

In a word, in all the regional economic communities which are meant to 
serve as the building blocks of Africa’s economic integration, the 
corrosive potential of the EPAs is coming into effect at a frightening 
speed. All this is a far cry from the high-minded declarations with 
which all parties opened the negotiations in 2000 – with claims that the 
EPAs would be instruments for deepening Africa’s regional integration.

Reacting to the signature of the interim agreement by the four Southern 
African countries on June 4, South Africa declared that it would tighten 
its border controls with Botswana, Lesotho and Swaziland (who, together 
with South Africa and Namibia, form SACU). The country also raised the 
need for reassessing the distribution among the member countries of 
revenues from the customs revenue pool.

South Africa’s actions are legally supported under SACU rules which 
prohibit members from striking new trade deals with third parties 
without the consent of the other members.

South African Trade Minister Rob Davis said that tightening border 
controls was necessary to prevent European goods enjoying easier rules 
of origin or lower tariff levels in the signatory countries from 
entering South Africa as a result of the SACU regime.

The Minister was particularly concerned with the textile sector, which 
the country is keen to protect. Here changes in rules of origin could, 
in the view of the Minster, lead to European products entering the South 
African market without undergoing any more transformation than the 
addition of buttons or change of labels.

“We would not be allowing them to come into the SA market, and if that 
means that we have to introduce border controls issues with Botswana, 
Lesotho and Swaziland and they have to do likewise, then so be it,” the 
Minister is reported to have said.

Review of the distribution of the customs revenue would be necessary 
because the countries which have signed the interim agreement will be 
letting goods into the community at a lower customs rate, thereby 
reducing their contribution to the customs revenue pool. This will 
logically affect their share of the pool.

Reduction of the revenue could devastate the treasuries of the countries 
concerned. Lesotho earns about 60% of its state revenue through the SACU 
revenue-sharing arrangement; while Swaziland earns as high as 70%. 
Compensating for such loss through taxation could lead to a doubling of 
VAT rates and the tripling of corporate taxes.

Even relatively affluent Botswana earns about a third of revenue from 
customs transfers. Diamond on which the country heavily depends is also 
hit by the global crisis. On Wednesday June 3, the African Development 
Bank extended its biggest ever loan facility, of $1.5 billion loan to 
Botswana to help the country cope with the financial crisis. The country 
may still be in discussion with the World Bank for similar support.

Clearly for these countries, the cost of the signing the IEPAs is 
getting to crisis proportions.

The other members of SACU (South Africa and Namibia), together with 
Angola (the other member of the Southern African configuration 
negotiating EPA with the EU), refused to sign the interim agreement with 
the European Union because the EU was unwilling to integrate a 
memorandum of understanding reached by the parties as a legally binding 
part of the agreement.

Though by a different route, ECOWAS seems headed in the same direction 
as SACU.

The ECOWAS region as a whole is locked in disagreement with the EU over 
fundamental elements of the EPA.

Key among these differences is the percentage of European goods that the 
region is prepared to allow in duty free entry, as well as the period 
over which such liberalisation should take place. While the EU insists 
on 80% being allowed in duty-free entry over a period of 15 years, West 
Africa insists on 60% over a period of 25 years.

Other issues of conflict concern the Most Favoured Nation Clause, by 
which the EU is demanding any favourable treatment that the region 
subsequently grants other major economies should be automatically 
extended to the EU, as well as how to deal with issues such as services, 
investment and intellectual property.

West Africa’s fundamental disagreement with the EU over these issues was 
affirmed at the May 12-16 meeting of the EPA Ministerial Monitoring 
Committee in Abuja, Nigeria, which concluded in view of this that the 
June deadline was not realistic.

The region’s insistence on 60% of tariff liberalisation is meant to cope 
with the needs of countries as diverse as the Gambia and Nigeria. For 
small Gambia, which depends heavily on import revenue, and which has 
very little by way of export capacity, the scope of tariff 
liberalisation is critical since the effect will be one-sided 
destruction of its revenue, with nothing to gain in return by way of 
exports.

Nigeria represents about 60% percent of the region’s market and its 
manufacturing capacity and potential, and yet exports little more than 
petroleum products to the EU. Thus it is keen to protect its economy 
from being a dumping ground for cheap European goods with devastating 
consequences for the manufacturing sector and its future.

Maintaining the regional balance has been under strain since December 
2007 when, under what observers have described as undue and sometimes 
illegal bilateral pressure from the EU, Cote d’Ivoire and Ghana agreed 
interim EPAs with the European Union. The terms of these agreements were 
contrary to the West African common position. Both of them provided for 
80% of tariff liberalisation for EU goods over a period of 15 years. The 
deals also accepted other controversial EU demands such as MFN and 
export taxes.

Both countries have looked to the subsequent conclusion of an 
ECOWAS-wide agreement as a means for alleviating some of the onerous 
terms of their interim agreements. Especially in the case of Ghana 
which, unlike Cote d’Ivoire has still not signed the interim agreement 
it initialled in 2007, the prospect of a better ECOWAS deal has served 
as means for the new government to avoid having to sign and implement a 
deal agreed by an earlier regime, and whose terms seem to contradict the 
policy options and perspectives for which it was voted into power.

The new government has faced mounting pressure since it assumed office 
in January from the EU to sign the interim deal. The passing of the June 
deadline for the ECOWAS-wide deal has brought the prospect of Ghana 
succumbing to EU pressure a step closer.

Such a development would not only unravel the efforts so far by the 
ECOWAS Commission and key member countries like Nigeria and Senegal to 
reconcile the pressures on Cote d’Ivoire and Ghana within a collective 
regional perspective.

Furthermore, if Ghana succumbs, then with Cote d’Ivoire having already 
signed its interim EPA, the second and third largest economies in the 
region will be open to influx of duty-free EU goods. Nigeria’s concern 
over the effects of EU goods on its domestic market would then 
inevitably increase. Experts worry that Nigeria’s response will be a 
legitimate resort to a practice it has used in the past: restricting 
entry of identified goods into its market, in an attempt to stem the 
inflow of cheap EU goods. The last time it applied a similar measure, 
Ghanaian manufactures felt more than an unwelcome pinch in uncomfortable 
places. Indeed on some calculations, over two-thirds of manufacturing 
jobs in Ghana are in enterprises whose major export market is Nigeria.

In addition, differential tariff regimes between the EU and Ghana, the 
EU and Cote d’Ivoire, and between the EU and the other countries of West 
Africa pose undue complication and actual dangers to the application of 
the ECOWAS common external tariff which have just been adopted, 
especially over the question of revenue sharing and the question of 
equitable support for small and vulnerable economies within the zone 
that this implies.

A similar but more advanced situation confronts COMESA. The region has 
just adopted a common external tariff. However, as a result of the 
interim EPAs, the member countries are now split into two groups, EAC 
and the ESA, each of which has different tariff arrangements with the EU.

For both regions, the emerging acrimony in SACU over tariff revenue and 
its sharing may be a mirror of their future disintegration.

The possibility of such a future is itself evidence that the far higher 
cost of the EU’s push to conclude EPAs at all cost is the fate of 
Africa, its countries and people and their individual and collective needs.

Namibian Industry Minister Hage Geingob spoke for many when he denounced 
the EU’s methods and approaches which led to Botswana, Lesotho, 
Mozambique and Swaziland breaking ranks with the rest of SACU. “We might 
be small, but we are still a sovereign state. You cannot smoke cigars in 
boardrooms in Brussels and bulldoze us,” he said.

For EU Trade Commissioner Baroness Ashton, on the other hand, the 
agreement which came into being through splitting a once solid regional 
grouping in two was “a vote of confidence in the process that we have 
put in motion to build a strong and lasting economic relationship”. All 
par for the course of getting a good deal for Europe.

[*With material from IPS reports of June 4, 5, 8.]

***

UNCTAD PUBLIC SYMPOSIUM
Regionalism – the south’s exit strategy
from the global crises
by Gyekye Tanoh, TWN-Africa

UNCTAD Secretary-General Dr. Supachai Panitchpakdi has strongly 
emphasized regionalization in the global south as an overriding priority 
in the current global crisis.

Speaking at UNCTAD’s first ever Public Symposium held 18 and 19 May 2009 
on: ‘The global economic crisis and development – the way forward’, 
Supachai gave particular prominence to regional-based initiatives such 
on regional trade integration in Latin America and Asian financial 
integration.

He stated: “I cannot emphasize enough the need for regional activities 
at this moment. I certainly would attach the greatest importance to 
regional initiatives for integration, not Free Trade Areas. More 
integration at the regional level, including financial integration – 
local payment systems, pooling of reserves, and the swap system among 
central banks – these are all important aspects of regional financial 
integration measures. More of these are needed”.

Supachai cautioned against developing countries over-reliance on global 
responses such as those proposed and being implemented by the G20 and 
the IMF, recalling that “having experienced past crises in Asia, I know 
how far enthusiasm at the global level can be maintained – not long!”

The UNCTAD Secretary-General’s views, which were central in his 
discussion of an “exit strategy” from the global crisis, were in 
consonance with the overwhelming consensus among the 360 representatives 
from civil society, the private sector, academia and parliamentarians 
drawn from every continent, as well as UN member states and key UN 
agencies who participated in the conference.

This emphasis on regionalism by the conference was in sharp and explicit 
contradistinction to processes – such as free trade areas (FTAs) - that 
envisage regional arrangements as simply locking in regional economies 
and markets as spheres for ‘business as usual’ globalization of free 
markets and uncontested neo-liberal policies and practices.

It was also a significant departure from uncritical calls to complete 
the ‘Doha Round’ of the WTO, and the undifferentiated chorus against 
‘protectionism’ by all countries – North and South, which were among the 
outcomes of the April G20 summit in London, the IMF and World Bank 
‘spring meetings’ in Washington DC later that month, and previously 
echoed by the Committee of Ten African Finance Ministers and Central 
Bank Governors set up to lead Africa’s response to the global crisis. 
The African committee also endorsed further financial liberalisation.

Instead, the UNCTAD forum drew attention to the threats posed by WTO 
financial services negotiations (under GATS) to developing countries’ 
capacity for crisis response and exit, and suggested a suspension as 
well as a roll-back of the current GATS agenda.

Elaborating further, other speakers pointed out that FTAs, such as the 
EU-Andean ‘Economic Partnership Agreement’ prohibited Andean states from 
setting up micro-credit banks. In contrast, EU banks operating in the 
Andean region are liberated from the obligation of setting up 
subsidiaries that require thresholds of investment, equity, capital 
requirements and liabilities, as well as other performance requirements 
to make their operations more complimentary to Andean countries’ 
financial policy. Rather, under the ‘EPA’ EU banks need not commit more 
than setting up a ‘ skeleton branch’, with little local commitment or 
regulatory control, reminiscent of the liberalization that allowed 
Lehman Brothers’ branch in Britain to export all its capital back to the 
United States, just as it was in the process of declaring insolvency on 
September 14, 2008.

Africa and other developing regions are experiencing huge repatriations 
and retrenchments of financial resources from western banks to their 
original home bases. As a result of these reversals and losses in flows, 
together with loss of trade earnings, developing countries as a whole 
face losses of more than $2 trillion for this year.

The conference agreed that genuinely appropriate policies now demanded 
greater leeway for public policy interventions, mediation and 
coordination across the board – from financial sector reform, through to 
development finance policy and institutions, to capital controls and 
coordination to stabilize currency exchange rates and rationalize the 
accumulation of foreign reserves and their beneficial deployment towards 
developing countries’ fiscal and investment needs. Another requirement 
was the removal of IMF loan conditionalities and an overhaul of their 
pro-cyclical monetary and fiscal policies.

Regional and national level initiatives had to be complemented by 
radical reform of international financial institutions and finance 
circuits to give these countries greater weight and space for autonomy. 
As a first step, there had to be complete moratorium on external debt 
payments by developing countries. Dr. Supachai asserted that this “is 
just compulsory, not only necessary”.

Demba Dembele, a civil society campaigner from Africa demanded the 
complete cancellation of African and LDCs debt, a demand that resonated 
with many participants.

Pedro Paez, member of the Stiglitz Commission and former Minister of 
Economic Coordination for Ecuador, emphasized that the ‘reciprocal 
liberalization and national treatment’ requirements of FTAs/EPAs is 
effectively and always ‘active discrimination against the local’ (i.e. 
local economic actors and entities from the South) not just in finance 
and other services, but in the goods market as well, citing the uneven 
impact of the food crisis on developing countries agricultural sector 
and their food security as compelling evidence.

“The trade-related issues [such as rules on Investment and Government 
Procurement] in FTAs attack all the possible foundations for automatic 
stabilizers in developing countries’ balance of payments. These 
distortions are what ‘Free Trade’ means today. [On this basis], the 
future of North-South relations is completely unsustainable” he added.

African civil society, represented by the Africa Trade Network (ATN), 
called for a halt to the EU-ACP Economic Partnership Agreements, and 
joined the conference in stressing the re-orientation of North-South 
trade on the basis of “non-reciprocal and preferential market access for 
LDCs and other developing countries”. The forum questioned “the wisdom 
of unregulated integration into the global economic and financial 
system”, given its severe unevenness and imbalances and the pronounced 
vulnerability of developing countries and regions that were “the most 
open and the most dependent on external trade and foreign investment 
(FDI)”, pursuing the latter in a “race to the bottom”.

For Africa, this over-dependence on external trade, especially of export 
reliance on a narrow basket of primary commodities and a narrow range of 
external markets, such as the EU in particular, has resulted in a 40% 
collapse in Africa’s trade. According to the African Development Bank, 
this translates into a loss of export earnings of $251 billion in 2009 
rising to $277 billion in 2010. African government revenue’s will suffer 
decline of $18.6billion from losses in trade taxes this year alone.

A projected 28 million ‘formal sector’ jobs will be lost on the 
continent during the current crisis, and an additional 27million will 
become absolutely poor, adding to the tens of millions of Africans 
pushed into this state because of the food crisis of 2008, and the 
hundreds of millions already subsisting on less than $1 a day, who will 
also suffer further drastic cuts in their ‘incomes’ and living 
‘standards’. The situation of women as well other low income and 
disadvantaged groups such as the urban poor trapped in the informal 
economies, rural agricultural populations and the youth were 
particularly urgent and should become the main focus not just for crisis 
responses but also as the reference point for longer term ‘systemic 
reform and transformation’ for sustainable development.

In his closing remarks, Supachai returned to these themes with an even 
stronger accent. He warned that the mainstream crisis packages from OECD 
countries and the IFIs would only address imbalances in the North by 
creating even more imbalances for the South, referring to existing 
indications of a new and devastating imbalances in food supply and 
energy security, among others. He recalled the ‘post-Financial crisis in 
Asia [in 1997/1998] was a return to business as usual, and “see where we 
are now, only 12 years later we are facing the mother of all recessions, 
because this [boom and bust cycle] is the nature of the market”.

He ended with a call for comprehensive change based on work in the 
regions and on prioritizing elements of redistribution including social 
safety nets which were in “serious shortage” during and after the Asian 
crisis of the nineties.
.
***

EPA Negotiations
REGIONAL STATE OF PLAY

by Christabel Phiri, TWN-Africa


CENTRAL AFRICA
Countries in the Central Africa region negotiating with EU on the 
Economic Partnership Agreement include Cameroon, Central African 
Republic, Chad, Congo, Democratic Republic of Congo, Equatorial Guinea, 
Gabon, and São Tome é Principe. In 2007, Cameroon initialled the interim 
EPA and signed the IEPA in 2008, whilst the rest of the countries 
continued to access EU markets through Everything but Arms for Least 
Development Countries and EU Generalized System of Preferences for 
developing countries.
The Cameroon Interim EPA includes trade in goods, development 
cooperation, rules of origin and the commitment to negotiate trade 
related areas. The text on trade in goods still contains points of 
divergence such as on export taxes, regional levies or the MFN clause. 
Central Africa has tabled a common market access offer for goods that is 
being used as a basis for negotiation as well as its own draft text on 
development cooperation.
Negotiations on Development cooperation provisions are still continuing. 
There are still divergences between the expectations of the Central 
African Region and feasible linkages with existing European Community 
and EU Member States development cooperation instruments, including Aid 
for Trade packages under which the EU will support accompanying measures 
to the EPA

EASTERN AND SOUTHERN AFRICA (ESA)
The ESA configuration negotiating the EPA with European Union had 
initially 15 countries before 4 countries broke away to form the East 
Africa Community (EAC) configuration. The remaining eleven (11) 
countries negotiating under the ESA configuration now include 
Madagascar, Comoros, Ethiopia, Zambia, Zimbabwe, Mauritius, Malawi, 
Djibouti, Seychelles, Sudan and Eritrea.
Six of these countries-- Comoros, Mauritius, Madagascar, Seychelles, 
Zambia and Zimbabwe -- have initialled an interim EPA with the EU. The 
rest do not have interim EPAs but, as least developed countries, are 
enjoying the Everything But Arms Status.
(In effect, of the 15 countries that started the original negotiations 
with the EU as ESA in 2003, we now have three different groups.)
The content of interim agreements includes market access, fisheries, and 
rules of origin, development, and trade defence and dispute settlement 
mechanism.
Negotiations on the comprehensive EPA have continued since 2008 and have 
included trade related issues competition, intellectual property, 
investment, public procurement and sustainable development. There are 
some contentious issues in the IEPA still under discussion between ESA 
and the European Union. ESA has been pushing for revision on articles on 
quantitative restrictions, export taxes, standstill clause, and 
protection of future infant industries and also rules of origin 
especially on the aspect of cumulation with all ACP states.
Another area of contention is on the special safeguard clause for 
agricultural products; ESA has proposed automatic mechanisms based on 
price and volume triggers to deal with price fluctuations and import 
surge. On “Substantially All Trade” the EC has insisted that the 20% 
exclusion is sufficient to protect sensitive sectors in ESA states. ESA 
has reiterated that the specific needs of LDCs should be taken into 
account in the negotiations.
On services negotiations, a joint text has been tabled and negotiations 
are still on-going. ESA has attached importance to mutual recognition, 
mode 4 and temporary labour mobility issues (“enhanced Mode 4”) and has 
rejected to negotiate investment in services
On transparency in public procurement, ESA has indicated to the EC that 
it will not take any obligations, whilst the EC has stressed it is 
looking for concrete rules on transparency. On the other trade related 
areas negotiations and exchange of views intellectual property, 
sustainable development, investment, competition, negotiations and 
exchange of views are still ongoing.
ESA has confirmed its decision to host the signature of IEPA in 
Mauritius; the date for signing will be considered at the ESA council 
meeting scheduled for the 4th of June 2009.

EAST AFRICAN COMMUNITY (EAC)
The EAC group, comprising Uganda, Kenya, Rwanda, Burundi and Tanzania, 
initialled the interim agreement in 2007. This interim agreement covers 
trade in goods and fisheries A commitment was taken by both parties to 
continue negotiations on services, investment, agriculture, rules of 
origin, Sanitary and Phyto-sanitary Standards (SPS), Technical Barriers 
to Trade (TBT), customs and trade facilitation and other trade-related 
rules in order to conclude a full EPA.
Over the next 25 years, EAC will liberalize 82.6% of imports from the EU 
by value (65% by 2010, 80% by 2023 and the remainder by 2033).The EAC 
interim agreement is the only IEPA which preserves the EAC right to 
continue levying existing export related taxes.

EAC has launched negotiations on the comprehensive EPA and are hoping to 
conclude by July 2009. The negotiations cover services, investment, 
competition, development intellectual property rights and transparency 
on public procurement.

ECONOMIC COMMUNITY OF WEST AFRICAN STATES (ECOWAS)
The ECOWAS region plus Mauritania are negotiating the EPA with the EU. 
ECOWAS region includes the following countries (Benin, Burkina Faso, 
Cape Verde, Gambia, Ghana, Guinea, Guinea Bissau, Ivory Coast, Liberia, 
Mali, Niger, Nigeria, Senegal, Sierra Leone, and Togo). In 2007, two 
countries, Ghana and Cote d’Ivoire, initialled the interim agreement. 
Cote d’Ivoire signed the agreement end of 2008. Ghana has not yet signed 
its “stepping-stone” agreement and is under immense pressure to do so. 
It is expected that a full regional EPA agreement will supersede these 
two agreements
The interim agreement for Ghana and Ivory Coast include trade in goods, 
development cooperation, trade defence, Technical Barriers to Trade, SPS 
measures, and trade facilitation and dispute settlement.
The West African region is still preparing its common market access 
offer for goods and draft texts on services and development cooperation 
are also under preparation. Negotiations over Rules of Origin are also 
ongoing. ECOWAS negotiators are looking for simplifications that could 
help West Africa develop, such as the "simple transformation" for 
textiles products (already contained in Council Regulation 1528/2007).
Negotiations on other trade related rules such as competition or 
consumer protection are moving slowly. ECOWAS remain opposed to 
including chapters on social issues, environment and public procurement.
In the recent ECOWAS Ministerial Monitoring Committee, ECOWAS officials 
have demanded a financing plan for development projects from the EU 
before signing the agreement. Unresolved issues include the 0.5 per cent 
community levy, which the EU wants removed but which constitutes the 
financial livewire of ECOWAS. The EU also insists that the Most Favoured 
Nations (MFN) clause craved by ECOWAS is against the spirit of the EPA.
The ECOWAS region is also demanding a secure unequivocal commitment from 
EU member- states to contribute to the funding of development programmes 
to ameliorate the effects of the pact on the sub-region. The committee 
also proposed that contributions to the EPA Development Programme 
(PAPED) should be "adequate and accessible" beyond the commitment 
already made in the European Development Fund (EDF). ECOWAS ministers of 
trade and finance also called for the "rapid mobilization of resources 
to implement priority projects" that will improve the competitiveness of 
the sub-regional economy as it opens to EU goods.
On liberalization, only between 60 per cent of the regional economy 
should be affected over a transition period of 25 to 30 years preceded 
by a five to seven-year period of moratorium. They also urged the ECOWAS 
Commission to ensure linkages between the market access and the 
commitment expected from the EC on the financing of the development 
projects. The conclusion of the full EPA has been pushed to October 2009.

SOUTHERN AFRICAN DEVELOPMENT COMMUNITY (SADC)
SADC has 15 member’s states but only 7 member states out of the 15 are 
negotiating EPA with the EU. The seven countries include Mozambique, 
Angola, Swaziland, Namibia, Botswana and Lesotho. 5 of these, Botswana, 
Lesotho, Namibia, Swaziland and Mozambique, initialled an interim 
agreement with the EU. The interim agreement includes provisions on 
market access, commitment to continue negotiations of the full EPA and a 
development chapter.
The EU market access for the SADC EPA States that initialled the IEPA 
has been granted under an EU Council Market Access Regulation which was 
adopted on 20 December 2007. This regulation allows the preferences to 
continue as an interim measure pending the coming into force of the 
Interim EPA. Angola and South Africa did not initial the Interim EPA and 
continue to receive EU preferences under the EU’s ‘everything-but- arms’ 
(EBA) initiative and the South Africa-EU Trade, Development and 
Cooperation Agreement (the TDCA).
Following the initialling of the Interim EPA in 2007, SADC EPA States 
were faced with a number of critical challenges regarding moving to the 
next stage of signing and implementing the Interim Agreement. In 
particular, it became necessary for Botswana, Lesotho, Namibia and 
Swaziland (BLNS) as Southern African Customs Union (SACU) members to 
explore options on how to implement the Interim EPA without South 
Africa, the remaining member of the SACU, in a manner that does not 
undermine the integrity of the customs union.
While it is possible for the BLNS countries to implement the IEPA 
without South Africa, the need to preserve the cohesion of the SADC EPA 
States became imperative. The SADC EPA States instead opted to strive 
towards reaching a solution that would ensure a regionally coherent 
outcome that would accommodate all the SADC EPA States as a way forward 
on the EPA process. This agreement on the way forward is, however, based 
on the understanding that existing market access for those countries 
that have initialled the Interim EPA should not be undermined or 
compromised in the process. The SADC-EU EPA still has unresolved issues, 
including Export taxes, Quantitative restrictions, Food security, Infant 
industry protection, free circulation of goods, most favoured nation 
clause, and Definition of Parties. Angola, Namibia and South Africa 
(ANSA) have raised concerns on some provisions of the IEPA,
Despite these divergences and concerns with the IEPA, the four members 
of SADC region -- Botswana, Lesotho, Swaziland and Mozambique -- signed 
the interim EPA on 1st June 2009. Angola, South Africa and Namibia opted 
not to sign the IEPA.


Advocacy File
(Statements of civil society organisations on burning issues of concern 
to Africa)
I

COSATU CALLS FOR REJECTION OF EU-SADC INTERIM ECONOMIC PARTNERSHIP AGREEMENT
30 APRIL, 2009

The congress of South African Trade Union commends the government of 
South Africa and Angola for refusing to sign the European Union-SADC 
Interim Economic Partnership Agreement (IEPA) negotiations for a free 
trade area between SADC member states and the EU. COSATU also urges 
Namibia, which is wavering to follow their lead and refuse to sign. The 
federation however condemns those governments including Botswana, 
Lesotho, Swaziland and Mozambique which have caved into the pressure of 
the EU and signed an agreement that is totally against the interests of 
the people of these poverty-ridden countries.
The purpose of the IEPA is purportedly to create a legal framework for 
trade relations between SADC and the EU because of the expiry of the 
Cotonou Agreement preferences in 2007, which was said to contravene the 
World Trade Organization (WTO) because it gave special tariff 
preferences to African countries and not to all WTO countries. The 
urgency of the agreement is allegedly based on the need to create 
certainty among investors and to avoid a WTO challenge.
However the hidden purpose of the agreement is to open SADC markets to 
foreign competition whilst the SADC countries including SA are not ready 
to compete on an equal basis with foreign industries.

COSATU’s main concerns on the EU-SADC IEPA are:
The entrenchment of the neo-liberal macroeconomic policy framework that 
undermines the rights of workers and the poor
Fragmentation of efforts towards regional and continental integration
Devastating effects on SACU
Removal of policy space for countries to pursue industrial development
The potential to worsen the impact of the economic crisis
Non involvement of civil society and labor groups in the negotiations
The clandestine nature in which the negotiations have been conducted
(For full text, go to: www.cosatu.org.za)

II
SEATINI STATEMENT TO THE COMESA SUMMIT ON THE ESA-EC ECONOMIC 
PARTNERSHIP AGREEMENTS NEGOTIATIONS, 1ST JUNE 2009
The Common Market for Eastern and Southern Africa (COMESA) held its 13th 
Heads of State Summit and Government in the resort town of Victoria 
Falls, Zimbabwe from the 28th May to 8th June 2009 under the theme 
Consolidating Regional Economic Integration through Value Addition, 
Trade and Food Security. In the run up to the summit SEATINI developed a 
statement as an input to the summit raising concerns and recommendations.
Concerns
The ESA countries (as represented by their officials) have confirmed 
their decision to host the signature of the interim EPAs and that they 
are already considering discussing the dates of such a ceremony when the 
outstanding and contentious issues in the interim EPAs have not been 
addressed and resolved.
The contentious issues arising from the interim EPAs include, inter 
alia, involve far reaching commitments on tariffs reductions the 
freezing of export taxes that ESA countries have been using, the 
requirement that ESA countries should not increase duties on products 
from the EU beyond what they have been applying (standstill clause), 
liberalising “substantially all trade”, bilateral safeguards (for infant 
industry protection)-all these issues are still under negotiations. We 
take the precautionary principle and reiterate that nothing is agreed 
until everything is agreed.
The EC has insisted that the first priority should be the signature of 
the interim EPA. The EU main interest is in market access which they may 
achieve in interim EPAs. This limits the scope of focussing on the real 
issues of interest to ESA countries that need attention before the 
signature. ESA countries should resist the pressure of rushing to sign 
the interim EPA when it is clear they will be mortgaging national and 
public assets to the EC.
Recommendation
A moratorium be put in place on EPAs negotiations until the ESA 
countries have put in place adequate institutional mechanisms to deal 
with trade liberalisation as recommended by the African Union, UNCTAD, 
the United Nations Economic Commission for Africa among others.
ESA countries focus on developing its regional market, steps that have 
already been taken by consolidating the gains of the COMESA FTA, the 
Customs Union and the move to form a single FTA with the East African 
Community (EAC) and the Southern African Development Community (SADC)
In light of the high food and energy prices, the climate crisis and the 
current global recession triggered by the financial crisis, ESA 
countries MUST reverse most of the commitments they have agreed under 
the IMF/World Bank SAP policies, the World Trade Organisation and the 
so-called interim Economic Partnership Agreements. This will allow the 
countries to implement favourable home grown policies that are in tandem 
with their development priorities.

(for full text go to: www.seatini.org)

III
DECLARATION BY CIVIL SOCIETY AT THE 2009 ANNUAL MEETING OF THE AFRICAN 
DEVELOPMENT BANK, DAKAR, MAY 12, 2009

We, representatives of African civil society organizations from more 
than 20 countries and their partners from the North, met in Dakar from 
10 to 12 May 2009, on the occasion of the 44th Annual Meetings of the 
African Development Bank (AfDB). During that meeting, we reviewed the 
intervention of the AfDB in several African countries and its role in 
the resource mobilization for the continent’s development.
We analyzed the multifaceted international crisis which is hitting hard 
Africa and the role of the AfDB in mitigating the effects of that 
crisis. We also examined the AfDB’s relationships with African civil 
society, with the African institutions and the international financial 
institutions, namely the World Bank and the International Monetary Fund 
(IMF).

Our analysis and in-depth discussions led us to the realization that the 
AfDB has strayed away from its original mission as an institution 
dedicated to the promotion of the welfare of the African populations and 
to the continent’s development. In our opinion, the AfDB seems to 
transform itself into a clone of the multilateral financial 
institutions. Its criteria for project selection give priority to return 
on investment over the satisfaction of the basic needs of the African 
populations. It has adopted neoliberal theories and advocated market 
fundamentalism. It has contributed to promoting liberalization and 
privatization policies which have aggravated the economic and social 
crisis of the continent. In the African debt crisis, the AfDB took no 
significant initiative, contenting itself with endorsing the initiatives 
proposed by the World Bank and the IMF

In spite of the discredit of the neoliberal system, as illustrated by 
the ongoing deep international financial crisis, the AfDB continues to 
advocate policies that are rejected in many regions of the world, 
including in developed countries. We are of the opinion that the AfDB 
has a wrong reading of the financial crisis and of its consequences for 
Africa

The process that led the AfDB to stray away from its original mission is 
most likely associated with the opening of its capital to non African 
countries. The latter have an influence beyond their share in the 
capital. In fact, they have a real veto power on the orientation and 
policies of the AfDB.

Despite claims of good intentions, the AfDB does not have a real policy 
of dialogue with civil society, preferring non transparent policies in 
order to avoid critiques on the part of African citizens.
In light of these observations, we, the participants to the Dakar Forum, 
strongly think that a radical change is necessary in order for the AfDB 
to reclaim its original mission. In that regard, it must put an end to 
imitating the World Bank and the IMF. It must keep its autonomy relative 
to these institutions, in its thinking as well as in the design of its 
economic policies.

In a similar vein, it should break with the current policies whose 
failure is too obvious and whose consequences have been disastrous for 
the African continent. .

For this, the AfDB should proceed to a clear and courageous analysis of 
the real causes behind the failure of the neoliberal system and 
contribute to challenging it on the African continent. It should promote 
policies of food sovereignty and support family agriculture instead of 
encouraging investments in bio-fuel.

In short, the AfDB should move toward the search for an autonomous 
development paradigm for Africa. In cooperation with the Economic 
Commission for Africa (ECA) and the African Union Commission, it should 
help African countries recover their sovereignty on the design and 
implementation of their development policies.

It should promote an autonomous thinking on Africa’s development by 
integrating the contributions of African researchers and social 
movements. The institutionalization of civil society participation in 
the activities of the AfDB may contribute to the changes that are called 
for.

The Bank is a public African institution using African taxpayers’ money. 
Therefore, it should be accountable to the African people. We, 
participants to the Forum, demand our involvement in the Bank’s 
mechanisms in terms of project identification, monitoring and control.

We demand:

The adoption of an effective information disclosure policy

The reinstating of the independent evaluation mechanism on environmental 
issues

Taking into account African countries’ long term financing needs for 
sustainable development

Yes to a Bank in the service of the development and welfare of the 
African people!

No to a Bank acting as a clone of the World Bank and IMF!


Dateline Africa


BOTSWANA
Botswana handed record $1.5bn loan
(London, Financial Times, June 4) The African Development Bank on June 3 
announced its biggest ever loan facility – a $1.5bn (€1.06bn, £910m) 
loan to Botswana – in a deal that it said reflected the impact of the 
global financial crisis and economic slowdown in Africa.
Botswana, one of Africa’s best-managed economies, has been devastated by 
the fall in the price of diamonds, its main export.
After several years of running budget surpluses the country faces a 
budget deficit equal to 13.5 per cent of gross domestic product in the 
current financial year. “The case of Botswana illustrates the impact 
that the financial crisis is having on even the best managed economies 
in Africa,” said Donald Kaberuka, the AfDB’s president.
“The crisis which is affecting African countries through different 
channels is increasing demand for support from international financial 
institutions.
“I am delighted that the bank has been able to respond quickly and 
flexibly in this unique case.”
Although Botswana’s situation is extreme, recent weakness in commodity 
prices and potential falls in income from economic aid and remittances 
paid by migrant workers have left a number of developing economies 
vulnerable to current account problems..
This is the first such borrowing from the AfDB by Botswana in 17 years.
Previously, Botswana had several times contributed to the replenishment 
of the African Development Fund, the soft loan window of the Bank Group.

EGYPT
Drop in tourism adds to Egypt's woes
(Cairo, Arab Finance, May 19) A slump in tourism is aggravating Egypt's 
economic woes and affecting the lives of those who depend on the 
industry for a living. About 20 percent of Egypt's foreign currency 
earnings come from tourism. In 2008, almost 13 million foreign tourists 
visited Egypt, taking in its pharaonic and Islamic sites along the River 
Nile. But now, the drop in revenue is hitting the country hard. Tourism 
is the main source of foreign currency earnings, along with revenue from 
the Suez Canal and remittances from Egyptian workers abroad.
The trickle of tourists has some guides working, but economists say an 
18 percent drop in the number of foreigners coming to Egypt, thus far in 
2009, has hotels, tour operators, and even shop owners complaining.
Twelve-point-six percent of the total work force directly and indirectly 
works in the travel industry and from every $100 that's generated to 
Egypt the tourism or travel industry share is $19.30.

GHANA
Owning up to the credit bite
(Accra, IPS, Jun 9) Official statements at the outset of the global 
financial crisis that Ghana was insulated have been confounded. Finance 
and Economic Planning Minster, Kwabena Duffuor admitted in March "the 
downturn in the advanced economies in 2009 is expected to have a 
negative effect on the country’s exports and thus our external balance. 
Weak demand for exports and weak commodity prices imply less export 
revenue.
Also expected are shortfalls in remittances, a slowdown in donor support 
and private capital inflows as a result of the global recession.
In May, the Central Bank governor, Paul Acquah, told journalists the 
bank's research showed inward transfers - to non-governmental 
organisations, embassies, service providers, and to individuals through 
banks in the first quarter of 2009 totalled 1.98 billion dollars, a 7.3 
percent decline compared to the same period in 2008.
Sampson Akligoh, economic analyst at Databank Asset Management Services 
in Accra told IPS that the global credit crisis has imposed some direct 
and indirect effects on the Ghanaian economy, including the “tightening 
of inter-bank credit as most of the big banks are no longer offering 
credit," he added.


NIGERIA
Nigeria and Benin tackle the global financial crisis
(Lagos, Daily Independent, June 10) Nigeria and Benin Republic have 
directed their bi-national commission to map out strategies for 
ameliorating the effect of the global economic meltdown on the bilateral 
trade fortunes of both countries. The directive was given at the 
bilateral talks between President Umaru Yar'Adua and his Beninois 
counterpart, Boni Yayi, at the Presidential Villa, Abuja, on Tuesday.
After a closed door meeting between the two leaders, Yar'Adua told a 
joint press conference that the impact of the global meltdown was the 
sole item on the agenda of the parley between him and them.


African Development Bank tries to triple capital base

(London, Financial Times, May 12 2009) The African Development Bank is 
seeking to triple its capital base to accommodate surging demand for 
emergency loans from African states and businesses hit by falling export 
income and sharp declines in foreign investment and remittances.

Donald Kaberuka, the AfDB’s president, will put the plans to the bank’s 
annual general assembly in Dakar this week in one of the first tests of 
developed countries’ commitments to financing an economic rescue package 
for Africa.

The Group of 20 industrialised nations agreed at last month’s summit in 
London to $50bn (£33.1bn) of aid, on top of existing commitments, to 
mitigate the impact of the global downturn through increased lending 
from international financial institutions, including the World Bank, IMF 
and AfDB. Economic growth across the continent will fall to 2.8 per cent 
this year, less than half the rate forecast before the global slowdown 
began, the AfDB said in its annual outlook for Africa, published with 
the Organisation for Economic Co-operation and Development on Sunday.

In an interview with the Financial Times, Mr Kaberuka said the better 
performing African states had, in the current climate, been priced out 
of international capital markets.

The AfDB was, he said, therefore being called upon to play a greater 
role in keeping the engines of growth going. It is setting up a $1.5bn 
emergency liquidity fund to address short-term funding gaps.
By the year’s end it must also replenish its concessional lending arm, 
the African Development Fund.

“Because we are being called upon to do more in the private sector as 
well as sovereign lending we need a stronger capital base. “But also 
there are countries that were beginning to access the capital markets. 
Now they are coming to us. We are able to go to the capital markets and 
raise the money and we can onlend to them,” he said.
On 2008 figures, the bank, which owes its triple-A rating to its large 
capital base and a track record for prudent lending, had total capital 
of $3.6bn. An increase would require foreign donor shareholders to stump 
up more funds.

The proposals, which Mr Kaberuka said should match commitments made to 
the Asian Development Bank, are likely to foster a heated debate among 
African member states and foreign donors over how funds are allocated 
and the lending conditions are attached.


Global Round-Up

GENEVA
Call for "global jobs pact" amidst rising job losses (SUNS, Jun 2) The 
International Labour Organization's ninety-eighth tripartite conference 
gets under way from 3-19 June amidst the latest ILO labour market 
projections showing a further increase in the number of unemployed, 
working poor and those in vulnerable employment.
The conference is expected to consider an emergency "global jobs pact" 
designed to promote a coordinated policy response to the global jobs 
crisis. "We are seeing an unprecedented increase in unemployment and the 
number of workers at risk of falling into poverty around the world this 
year," said ILO Director-General Juan Somavia.
Some 4,000 representatives of government, and employers' and workers' 
organizations will be attending the ILO conference. The agenda of the 
conference has been re-organized at short notice in order to focus on 
the global jobs crisis. The conference will discuss a range of measures 
and policies to promote employment and enterprise development, and 
extend social and other protection to persons affected.
In its latest Global employment Trends Update of May, released ahead of 
the conference, the ILO has revised upwards its unemployment projections 
to levels ranging from 210 million to 239 million unemployed worldwide 
in 2009, corresponding to global unemployment of 6.5% and 7.4% 
respectively. The ILO report projects an increase of between 39 and 59 
million unemployed people since 2007, as the most likely range.

LONDON
Poor harvests keep tea on the boil
(Financial Times, June 8) Tea prices have hit record highs, rising 
almost 35 per cent in the past 12 months, because of the impact of 
simultaneous droughts in the main exporting countries. Sharp output 
falls in India, Kenya and Sri Lanka have come as demand remains robust 
in spite of the impact of the economic crisis, exacerbating last year’s 
deficit. “Major black tea producing countries have continued to record 
lower production ... owing to dry weather conditions,” said Sicily 
Kariuki, managing director at the Tea Board of Kenya, the industry 
regulator.

MANAGUA
Nicaragua can't afford to cut poverty rate
(IPS, Jun 9) The global recession, internal economic contraction and 
loss of vital international aid are further distancing Nicaragua, one of 
the poorest countries in the Americas, from the Millennium Development 
Goals (MDGs).
In late 2008 the president of the Central Bank, Antenor Rosales, 
forecast three percent GDP growth for 2009. In January he revised the 
estimate downward, to between one and two percent.
The non-governmental Nicaraguan Foundation for Economic and Social 
Development (FUNIDES) predicted in March that GDP would shrink by 
between 0.4 and 1.7 percent. It also estimated that between 30,000 and 
50,000 people would lose their jobs, and between 33,000 and 64,000 
people would sink into poverty this year.
In this Central American country of 5.7 million, 47 percent of the 
populations live on less than two dollars a day, according to the United 
Nations.
The Nicaraguan economy is based on agriculture and livestock, and its 
main sources of revenue are exports of grains, meat and meat products, 
textile manufacturing, tourism, and remittances from workers living abroad.


NEW DELHI
India’s cheapest car rides on government subsidies
(IPS, Jun 5) India’s Tata Motors, makers of the ‘cheapest car ever 
made’, say they have received more than a million bookings for the first 
batch of cars said to roll out of its factory in a few months.
But an internal document that was leaked to the media says the Gujarat 
government is providing Tata Motors subsidies worth a substantial six 
billion dollars for locating its plant in the western Indian state.
The company is a part of the Tata Group, an industrial empire with 
interests in steel, hotels, chemicals, computer software, 
telecommunications, energy and various consumer products, with an annual 
turnover exceeding 60 billion dollars.
The Nano is a rear-engined, four-passenger car aimed primarily at the 
Indian market. Pitched at between 2,500 and 3,500 dollars, the 
manufacturers claim the car provides affordable transportation together 
with a low carbon footprint.
Environmental activists and concerned citizens have argued that these 
would be tantamount to supporting relatively privileged sections of the 
second-most populous country on the planet and would go against 
principles of equity in the world’s largest democracy.
With per capita income at 1,000 dollars, a bicycle is even today a 
prized possession for the poor while a two-wheeled scooter or motorcycle 
is what many middle-class Indians aspire for. While petrol is not 
directly subsidised, car owners (mainly middle and upper classes) pay 
very little or almost nothing for parking, on road tax or for cleaning 
the environment - in other words, their personal transport is indirectly 
subsidised.






WASHINGTON
One in five American children sinking into poverty
(IPS, Jun 3) U.S. children's quality of life is expected to decline 
through 2010 due to the impacts of the financial crisis, said a new 
report by the Foundation for Child Development (FDC), released on 
Wednesday. According to the report, progress in U.S. children's quality 
of life has fluctuated since 2002, and began a decline in 2008 as a 
result of the recession.
The Child Well-Being Index (CWI) is an annual evidence-based composite 
measure of trends over time in the quality of life for U.S. children 
from birth to age 18 conducted by Duke University's Foundation for Child 
Development Child and Youth Well-Being Index Project. It tracks changes 
as compared to 1975 base year values.
This year, the Project also produced a Special Focus Report that offers 
projections of the impact the recession is likely to have on children's 
well-being through 2010, based on analysis of past recessions.
"America is doing a really bad job relative to other countries," said 
Reihan Salam, a fellow at the New America Foundation, referring to the 
well-being of U.S. children. The percentage of children in poverty is 
expected to peak at 21 percent and more than eight million children, or 
27 percent, are expected to have at least one parent working full-time 
year-round in 2010