Why Economic Partnership Agreement with EU is apt

Vibrant sustainable economic growth, job-creation and lasting development in Nigeria and sub-Saharan Africa depends significantly on increasing the competitiveness, knowledge, innovation and creativity of African entrepreneurs through expanded economic freedom and partnership. Nigerian support for Economic-Partnership-Agreements (EPAs) with Europe and indeed America (AGOA) is critical to Nigeria’s efforts to replace poverty with economic freedom and […]

Vibrant sustainable economic growth, job-creation and lasting development in Nigeria and sub-Saharan Africa depends significantly on increasing the competitiveness, knowledge, innovation and creativity of African entrepreneurs through expanded economic freedom and partnership. Nigerian support for Economic-Partnership-Agreements (EPAs) with Europe and indeed America (AGOA) is critical to Nigeria’s efforts to replace poverty with economic freedom and prosperity in the country and indeed the continent. These trade and development agreements are the drivers of Change that will kick-start reform and help strengthen rule of law and fight against corruption, thereby attracting foreign direct investments (FDIs) to help create a “virtuous-circle” of economic growth and development.
Economic-Partnership-Agreements (EPAs) are trade and development agreements between the European-Union (EU) and African, Caribbean and Pacific (ACP) countries to create a free trade area (FTA). They are a response to non-reciprocal, preferential and incompatible trade agreements offered by the EU, which do not conform to World Trade Organization (WTO) rules. EPAs, key element of Cotonou Agreement of year-2000 under ACP-EU Development Cooperation, were to take effect from 2008, but in April 2014 at Addis Ababa, Ethiopia during African Union Ministers of Trade Conference ahead of the October 1, 2014 deadline for signing of the EPA; the establishment of the Common-Free-Trade Area (CFTA) by 2015; extension of African Growth and Opportunity Act (AGOA) by the American Government for 15 more years; and Africa’s strategic response to WTO negotiations, among others, African leaders rejected the Agreement, saying it would impact industrialisation and job-creation.
The EPAs set out to help ACP countries integrate into global world economy specifically designed to provide trade co-operation on areas such as services and standards beyond conventional free-trade agreements, focusing on ACP development, taking account of their socio-economic circumstances and include cooperation and assistance to help ACP countries implement the Agreements. It is also to open up EU markets fully to allow ACP countries 15 (and up to 25) years to open up to EU imports while providing protection for the sensitive 20% of imports.
Although, African leaders rejected signing the Agreement, it is necessary to look critically at the issues, thus  the Manufacturers of Nigeria (MAN) claimed that Nigeria does not need EPA now until it has been adequately industrialised enough to compete with EU. But what MAN forgets is that Nigerian industrial sector requires FDIs, Service Corporation and Standards to be able to adequately compete globally. EPA will provide all that and create competitive advantage.
The MAN further argued that 30 years of preferential market to EU have not had the intended effect of helping ACP countries diversify their economies. MAN should know that the EPAs precisely are direct response to non-reciprocal, preferential and incompatible trade agreements that existed before and are now being reviewed to give new impetus and economic opportunity to ACP countries.
Others argued that ACP countries presently attract only a small portion of the world’s FDIs, warning that any attempt to coerce the country to sign EPA would only kill the manufacturing sector. EPAs are not coercive; rather, they are based on mutual corporation and partnership in line with global security. Addressing poverty and job-creation in Africa is in the EU and American interest, as it would virtually reduce migration and refuges to Western Countries as being witnessed today. More so, EPAs will attract large portion of the world’s FDIs to ACP countries.
Some argued that Nigeria, a commodity-goods-producer, can only export agricultural products to Europe while Europe will export industrial goods such as machinery, etc. Currently, we import machinery and including tomatoes worth N16 billion naira annually because we lack the capacity to produce, store or process them. EPA will force Nigeria to build capacity and become industrial hub to produce quality products for export.
It is further argued that EPA will de-industrialise Nigeria and create more unemployment. Already cheaper finished products from China flood Nigerian markets through imports, dumping and smuggling, killing Textile Industries for example. EPA will spark another economic activity in Nigeria such that was seen in China and India some years back.
Moreover, EPA will increase more trade ties within the African Region. The Agreement has provision for five-yearly reviews and under its Terms, West Africa will have more flexibility to use foreign components while still benefitting from free-access to EU market and will be able to shield its sensitive agricultural products from European competition either by keeping tariffs in place or, when necessary, by imposing safeguard measures. To support local agricultural production, EU will not subsidise any of its agricultural exports to West Africa and it has a Development-Assistance-Package of at least €6.5 billion for West Africa during 2015-2020.
Nigeria, the largest economy in Africa, huge population and oil reserves is still marred with poverty, bad governance and issue of Credibility. Nigerians have come to believe that their government not only condones corruption, but facilitates it. Signing the EPA will push for a realistic review of these challenges and address them.
Already, many African states like Ghana, Kenya etc., have decided to sign the EPAs. West Africa accounts for 40% of total trade between the EU and all the ACP-regions. European annual exports are worth approximately €30 billion while West African exports account for €42 billion. The agreement should increase this figure even more in favour of African partners.
Africa-China economic romance should not be seen as a saviour for economic prosperity. This is not to oppose Nigeria-China relations. In fact Nigeria’s trading relationships with other countries are beneficial since there are gains to benefit from them. That is why signing economic-partnership-agreement (EPA) with European-Union is apt as it will expand our economic horizon, and propels Nigerian entrepreneurs to raise standards to compete globally while having access to cheap funds and technology.
Dr. Adamu is an ICT specialist and writes from Kaduna.