EU Spur African Growth, Instead Of Making More Bad Trade
The European Union had entered into an old-fashioned deal with many African countries before Donald Trump won the election. After almost a decade of negotiations the Southern African Development Community. Which includes Botswana and Lesotho as well as South Africa. Namibia, South Africa, Swaziland, and South Africa, signed the Economic Partnership Agreement with the EU’s 28 member states. Mozambique will become the sixth member of this agreement once the ratification process is complete.
The EPA intend to favor African countries. According to the European Commission, never before has the EU accepted this degree of asymmetry in trade deals.
However, some African and European delegates still question the fairness the deal. This is not surprising considering that the African countries have already grant. Duty-free access through the Commission’s Everything but Arms initiative. All signatories to the agreement will be grant 100% free access by the EU to its common market. South Africa will pay customs duties on 1.3% of its exports.
It Will Work African
As a coup, the granting of free access the huge EU market is celebrate as a major step. Towards the economic growth of the countries involved. Although there are no reasons to believe that the motives behind the European Union were not sincere. It is unclear if the intend effect will be achieve.
EU has used the agreement’s rationale to promote economic growth. It is argued that the removal of duty on intermediate products such electronics and automotive parts. That are use in more specialize consumer goods manufacturing will allow for cheaper imports.
EU claims the agreement will safeguard African production activities from liberalization, and allow domestic industries to mature. South African labor unions have been vocal opponents of further trade liberalization, which has attracted particular attention to the textile industry. Both Kenya and Ethiopia, which are both promising to become established textile-producing centers, are facing various obstacles from European customers, who are perceived as more demanding in terms of lead times, order size, quality, and other issues.
Cheaper And Better Quality
The EU’s textiles, which are cheaper and better quality than those from Africa, will likely reduce trade between African countries, limit the ability of manufacturers to make more varied products, and limit industrialization. Even though South Africa has a more sophisticated and established industry, its inter-regional textile exports only 12% to 14% are of total exports.
African producers will struggle if European imports are given duty-free treatment. Local businesses won’t be able to sell their goods at competitive prices. The agreement will also limit efforts by the continent to improve the industrial value chain and produce more final consumption goods. Consequently, Africa will continue to be a constant supplier of raw materials and a poor diversified economy, contrary the EPA’s ambitions.
Divide And Conquer African
Signatory countries also run the risk of losing the ability to collect duties from imported goods, which could lead to instability in their fragile economies.
According to the most recent World Bank figures Botswana relies on these tariffs to fill 47%, Namibia 22% and Lesotho 70% of their total tax revenue at borders.