Analyses eu-ecowas historical relation

Analyses eu-ecowas historical relation 1.1 INTRODUCTION EU-ECOWAS relations did not commence until 1975 due to the fact that ECOWAS only came into existence on May 28th 1975 with the signing of Treaty of Lagos by its member states (ECOWAS, 2010). However, prior to ECOWAS formation in 1975, some of its member states, particularly the Francophone countries such as Benin, Cote dIvoire, Mali, Mauritania, Niger, Senegal and Togo had been foundation members of Associated African states and Madagascar (EAMA). This group of countries had been actively involved in the ‘regime of association as enshrined in the Treaty of Rome (1957) which arranged a relationship between the former French and Belgian colonies with the EC (ACP, 2010). The early relationship with these ex-colonies became a key aspect of the process of European integration and also established the basis and rationale for subsequent arrangements (Reisen, 2007; Holland, 2002). The Commonwealth countries within the ECOWAS grouping such as Gambia, Ghana, Nigeria and Sierra Leone did not participate in EC cooperation programme until the UK accession to the EC in 1973. With regards to ex-colonies activities in EC cooperation programme prior to 1973, it had been a case of domination of development agenda by France (Holland, 2002). So, the inclusion of the ECOWAS Commonwealth countries was necessitated because the UK was keen to put its special trading preferences for bananas and sugar under the EC umbrella and to extend its assistance to some former colonies beyond bilateral support (European Commission, 2010a). Since ECOWAS establishment in 1975, EU-ECOWAS relations have been framed by the trade policy understandings as well as other development cooperation arrangements as contained in the partnership agreements that the EU has entered into with developing countries in Africa, Caribbean, and Pacific (ACPs) countries (World Bank, 2007; Oyejide and Njinken, 2002). The ACPs currently comprises 79 countries (48 African, 16 Caribbean and 15 Pacific). The EUs relations with the ACPs are today governed by the ACP-EU Partnership Agreement signed in Cotonou, Benin in June 2000 which came into force in 2003 (ACP-EEC, 2005). However, it has since been revised and the revised Agreement entered into force in July 2008. In a sense, both ECOWAS and ACPs are closely linked but the paper focuses on EU-ECOWAS relations with a view to unravelling its specificity in historical perspectives. 1.2 BACKGROUND OF ECOWAS ECOWAS is a regional group of fifteen West African countries, founded on May 28, 1975, with the signing of the Treaty of Lagos. ECOWAS is one of the pillars of the African Economic Community and its mission is to promote economic cooperation and integration. The overall objective of ECOWAS is to promote co-operation and integration in order to create an economic and monetary union for encouraging economic growth and development in West Africa (ECOWAS, 2010a). The grouping contains a very wide diversity of economies in terms of size, development and resources (EBID, 2005). There were 16 nations in the group until very recently when Mauritania voluntarily withdrew its membership from ECOWAS. The countries include the 7 UEMOA countries of Benin, Burkina-Faso, Chad, Cote dIvoire, Mali, Niger, and Senegal. Other non-UEMOA member countries are Cape-Verde, Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Nigeria, and Sierra Leone. The UEMOA is the French acronym of West African Economic and Monetary Union. It is an organization of eight states of West Africa established in 1994 to promote economic integration among countries that share a common currency, the CFA franc. In terms of achievements, UEMOA member countries are working toward greater regional integration with unified external tariffs than ECOWAS. It is both a customs and monetary union and has initiated regional structural and sectoral policies which ECOWAS is adopting. Within ECOWAS also, there is a West African Monetary Zone (WAMZ) which comprises a group of five countries (mainly English speaking) that plan to introduce a common currency, the Eco by the year 2015. The WAMZ was formed in 2000 to try and establish a strong stable currency to rival the CFA franc. Though, the desired goal is for the CFA franc and Eco to merge, with a view to giving all of West Africa countries a single stable currency (ECOWAS, 2010b). 1.3 OVERVIEW OF EU-ECOWAS RELATIONS ECOWAS shares a resemblance with the EU in its objective and modes of cooperation for regional integration among member states. Though, their history of establishment differs. Unlike the ECOWAS model, in which all countries came together at once (except Cape Verde which joined in 1976) to form an economic arrangement, only six countries initiated the current EU arrangement, while other European countries joined at different points through its enlargement and accession strategy (Alaba, 2006). It has often been argued that integration in the West African sub-region has largely been informed by the integration processes in Western Europe, primarily because of EUs ‘commitment to regional integration (Smith, 2008; Ogbeidi, 2010). A point of departure between the two groupings however, lies in their performances over the years. While their performances could be a reflection of the level of development of the member states that constitutes the membership of the sub-regional unions, the most important single factor is their level of commitment towards achieving their goals. Unlike the EU arrangement, commitment to various protocol meant to facilitate the achievement of the vision of ECOWAS has been very low and implementation targets have never been met. For example trade liberalisation within the ECOWAS region has been generally low and ineffective (UNCTAD, 2009). The same compliance failure applies to an ECOWAS protocol on free movements of persons, the right of residence and establishment which was agreed as far as back 1979 (World Bank, 2007). 1.4 TRADE AND ECONOMIC STRUCTURE OF ECOWAS WITH EU For virtually all ECOWAS countries, the EU is the main trading partner (Eurostat, 2008). This high dependence of the countries on the EU market is largely due to their historical links and the nature of their trade patterns which has often made them trade dependent (Fontagne, 2008; Greenidge, 1998). The economic structure of the West African sub-region is largely dominated by agriculture which is closely followed by mining. Agriculture contributed about 25.17%, to sub-regional GDP as at 2006, up from 24.19% in 1995, while mining accounted for 22.13% slightly higher than 21.45 in 1995. Trade contributed about 14.64% of the Groups GDP, down from 15.39% in 1995 (Ecostat, 2010). Most of the ECOWAS countries tend to be highly specialised in a few key products such as petroleum and a few unprocessed agricultural commodities such as coffee and cotton. ECOWAS is the largest trading partner of all the EUs sub regional groupings/cooperation. It accounts for about 40% of total trade with the EU by regions (Eurostat, 2008). Out of the fifteen ECOWAS countries, thirteen of these countries are ranked as Least Developed Countries (LDCs) while three are non-LDC (HDR, 2009). The non-LDC countries in the region are Nigeria, Ghana and Cote dIvoire. These 3 non-LDC countries and Senegal to some extent account for the bulk of trade relations with the EU. In 2008 EUs rankings of African countries in terms of value of goods traded, Nigeria and Cote dIvoire ranked the 4th and 10th for all EU imports while Nigeria, Senegal and Ghana were ranked 5th, 9th and 10th respectively for all EUs exports (Eurostat, 2009). West Africas main exports are oil from Nigeria (50% of West African exports) and agricultural tropical products (cocoa, bananas, pineapples, wood) mostly from Cà ´te dIvoire and Ghana (European Commission, 2009) while Senegal is noted for groundnut (Bergtold et al, 2005). For nearly all the countries the leading import items are heavy equipments, chemical and chemical products and textiles, rubber and metal products. 1.5 EU-ECOWAS EPA NEGOTIATIONS As mentioned earlier, EU-ECOWAS relations are governed by the agreements between EU and ACP group of States. In order to achieve their objectives, the relations between the two bodies have historically been framed by a series of conventions. For EU-ECOWAS relations, the most operative conventions are Lomà © Conventions (1975-2000) and Cotonou Agreement (2000-2020). The Lomà © Conventions (1975-2000) consist of four regimes of conventions from Lomà © I which was first signed in February 1975 in Lomà ©, Togo to Lomà © IV which ended in 2000. The Lomà © Conventions are a trade and aid agreement between the European Community (EC) and the ACP group of states. The first Lomà © Convention was designed to provide a new framework of cooperation between the then European Community (EC) and developing ACP countries. The Lome Conventions most important attribute is its non-reciprocity, which allows ACP exports duty free access to the European market while enabling the ACP states to maintain tariff barriers against European goods. It introduced the STABEX and SYSMIN system which were designed to compensate ACP countries for the shortfall in agricultural export earnings and mining industry activities respectively due to fluctuation in the prices or supply of commodities (ACP-EEC, 1995; 1975). The Lomà © Convention was a commitment to an equal partnership between Europe and ACPs (Holland, 2002). A critical review of the trade agreement/convention however, shows a perpetuation of unequal power relations between both parties. For example, the reciprocity clause has always been geared towards meeting export interests of European firms (Orbie, 2008) and the negotiation for the Lomà © convention itself was a reflection of Third World commodity power, which the EU was keen to preserve through its privileged access to these commodities via its ex-colonial links (Gibb, 2000). Nevertheless, Lomà © conventions have been considered as the hallmark of the EUs policy with the Third world and the most institutionalised of all EUs group-to-group dialogues. It marked a distinctive progression from a regime of association to what could be called a forum of partnership and cooperation (Hurt, 2003; Holland, 2002). It has also been argued by Crawford (2007) that Lomà © Convention is the most significant agreement for Sub-Saharan Africa. The Cotonou Agreement (2000-2020) is the most recent agreement in the history of ACP-EU Development Cooperation. It is based on four main principles: partnership, participation, dialogue and mutual obligations, and differentiation as well as regionalization (ACP-EEC, 2000). One of the radical changes and fundamental elements of the Cotonou Agreement concerns trade cooperation between EU-ACP states. This is not surprising given the fact that EU has exclusive trade competencies and trade policy instrument has been a key strategy of its external policy (Lightfoot, 2010; Orbie, 2008; Bretherton and Vogler, 1999). The most striking feature of the new trade cooperation is the fact that the non-reciprocal trade preferences have been replaced with a new scheme of Economic Partnership Agreements (EPAs). The EPAs are schemes aimed at creating a Free Trade Area (FTA) between the EU and ACP countries (ACP-EEC, 2000). The EPAs are a response to continuing criticism that the non-reciprocal and discriminating preferential trade agreements offered by the EU are incompatible with WTO rules. Apart from the issue of WTO compatibility, it was also argued that generous trade preferences were not enough for economic take off (European Commission, 1995). It was therefore seen as having achieved limited success in terms of promoting accelerated development in ACP countries. So, what does the EPA signify for EU-ECOWAS relations? The negotiations on an EPA between ECOWAS and the EU were launched in Brussels in 2002 (ECA, 2007). However, the negotiations have so far been inconclusive due to some concerns that the EPAs will lead to large trade imbalances in West African economies, as well as substitution of local and regional production by European imports (Perez and Karingi, 2007). The decline in import duties due to the preferential tariff elimination has also been a major concern for West African countries (Busse and Grobmann, 2004). In particular, the reciprocity condition implicit in the agreement, implied that at some time before 2020, the ECOWAS countries must have to open up their economies to imports from the EU countries. This may invariably lead to trade diversion, trade creation, loss of trade revenues and deindustrialisation (World Bank, 2007; Adenikinju and Alaba, 2005). In a study on the impacts of the EU-ECOWAS EPAs, Lang (2006) found that Ghana and especially Guinea-Bissau could lose up to 20% of their Government budget revenues in case of a full liberalisation of EU imports. Although tariff revenue falls were considered highest in Nigeria in absolute dollar terms, those two countries will be the most affected. In a similar study on the impacts of the EU-ACP EPAs in six ACP regions, Fontagne et al (2008:6-7), ACP exports to the EU are forecast to be 10 percent higher with the EPAs than under the GSP/EBA option. On average ACP countries are forecast to lose 70 percent of tariff revenues on EU imports in the long run. The most affected region is ECOWAS. The implication of a loss of tariff income would translate into public budget constraints and could therefore pose great developmental challenges for ECOWAS countries. Nevertheless, both Cote dIvoire and Ghana agreed and endorsed interim EPAs with the EU in December 2007 (European Commission, 2009). These agreements were principally put in place because full regional EPAs could not be agreed upon. Of these three largest trading partners with the EU, Nigeria opted out of an interim EPA. For now, the country can only benefit from the regular EU Generalised System of Preferences (GSP). This is far less advantageous than the nonreciprocal Lomà © preferences because the GSP covers fewer products and has stricter rules of origin (Hurt, 2003). Though the Nigerian Government has twice applied to be placed on the GSP+ status, the EU has rejected the applications purely for political reasons (Nwoke, 2009). The rest of the West African region is largely made up of Least Developed Countries (European Commission, 2009). They have an option not to negotiate since they have duty free access to the EU under the ‘Everything But Arms (EBA) scheme (Orbie, 2008; Bilal, 2007). The EBA is the differentiation component of Cotonuo Agreement made in the treatment of least developed countries (LDCs) and non-LDCs. For these thirteen countries, the EPA may not carry additional benefits over the EBA except for the technical and financial support that the former may carry (Adenikinju and Alaba, 2005). So, their level of commitment to signing full EPA is marginal. It needs pointing out that the small gains which might result from the EBA initiative are expected to fade away as a consequence of the EU negotiations on EPAs (Kohnert, 2008). Besides, the contentious nature of EBA scheme due to its unilateral introduction makes it less attractive (Bilal, 2002). As Flint (2008:60) argues the EU has highlig hted further problems facing policymakers by the split into separate blocs of LDC and non-LDC. This is very illustrative of EU-ECOWAS relations. From the foregoing, it is discernible that in effect, the EPA will play a significant role in terminating the ECOWAS group as the main development partner of the EU. Prior to the EPA negotiations, ECOWAS countries have not had great success at significantly enlarging trade amongst member states. Intraregional trade as a proportion of total trade remains much lower in African regional integration (UNCTAD, 2009). And, with the new EPAs strategy that seeks for unilateral negotiation in practice, trade improvement amongst member states is further undermined (Borrmann et al, 2005). Concisely, the EPA is detrimental to the cause of regional integration. For EU-ECOWAS, the two principles of reciprocity and deeper regional integration are likely to pull in different directions (Lang, 2006). 1.6 AID FOR TRADE AND DEMOCRACY PROMOTION IN EU-ECOWAS RELATIONS The Aid for Trade initiative emerged within the Doha Round out of the need to help all countries to benefit from trade i.e. to maximise the gains from trade. Yet, demand for, and capacity to absorb, aid for trade still exceeds available resources (World Bank, 2005). The EU Aid for Trade strategy adopted in October 2007 confirms the European commitment to provide EUR2 billion per year in Trade Related Assistance by 2010 and to increase spending for the wider Aid for Trade agenda (ECDPM, 2009). A review of Aid for Trade however shows that donors have achieved their pledges simply by applying the modified WTO-OECD monitoring rules, without initiating any new projects (Brà ¼ntrup and Voionmaa, 2010). So, for ECOWAS countries whose capacity building and supply-side constraints have been a major factor in the lack of competitiveness and the relatively poor trade and growth performance (AU, 2006), Aid for Trade can only be meaningful if it is translated into genuine fresh aid for utilisati on. Also, the issue of democracy promotion in EU-ECOWAS relations is more of rhetoric than accomplishment. Crawford (2005) argument that the EUs interests in Africa focus less on democracy promotion and more on the perceived burdens and security threats to Europe arising from political instability and conflict seems more instructive and matter of fact. 1.7 CONCLUSION The EPA negotiations to establish a Free Trade Zone between EU and ECOWAS in line with Cotonuo agreement for a period of 12 years have significant implications on the economies of ECOWAS countries. Given the structure and trade patterns of ECOWAS countries in which manufactures account for about 75% of the EUs export to ECOWAS, full liberalisation of their economies will result in loss of revenue, deindustrialisation and will make the countries to be more vulnerable in the global economy. It is less to be seen if the IEPAs/EPAs negotiations would engender trade that will result in development and poverty reduction for the West Africa sub region. The trade cooperation upon which EPAs is founded symbolises regional integration in principles but its strategy of interim EPAs among individual countries of the region and EBA for least developed countries encourages unilateralism in practice. 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