Trade relations between Europe and Africa have been well-documented. A lot of work has already been carried out to highlight the ways in which the scope, challenges and prospects of European-African commercial links have evolved over time. In many ways, we cannot read or analyse the trade relations between Europe and Africa without first placing them in the context of relations between Europe and the ACP countries. From 2000, following the first Europe-Africa Summit held in Cairo, the trade relationship between Europe and Africa entered a new phase. It should be noted however, that for the most part, this continues to be facilitated through the rules and instruments of EU-ACP cooperation, of which Africa is just one of the components.
Trade relations between the two continents have evolved through history under the influence of strategies and policies that were initially imposed on Africa by Europe, then developed for Africa by Europe, and that are now made in collaboration with Africa. These relations take their form and content from mechanisms originally established during colonisation that were largely maintained until independence.
Two major periods can be identified: one running from 1975 to 2000 and the other from 2000 to the present day. The former was characterised by the signing of the Lomé Convention and the introduction of non-reciprocal trade preferences. The latter, which began in 2000 with the conclusion of the Cotonou Partnership Agreement, provides the framework for new trade cooperation that is to be built around the Economic Partnership Agreement (EPA).
The analysis below addresses the issues and challenges emerging from these two moments and provides a framework from which to understand the evolution of trade relations between sub-Saharan Africa and Europe.
Trade preferences: mixed economic results against a background of historical misunderstandings
The stated objectives of non-reciprocal trade preferences were to strengthen the productive capacities of ACP countries, to contribute to the expansion and diversification of exports, to increase and maintain sustained economic growth and to stabilise export earnings through the control of price fluctuations and external shocks. After several decades of implementation, the results are mixed. Despite these preferences, the share of ACP countries in EU imports fell from 7% to 3% between 1975 and 2000.
As is the case for all ACP countries, African exports to Europe consist almost exclusively of raw and largely unprocessed materials, including mineral resources and agricultural commodities. Conversely, in the same period, they imported most of their food and capital goods needs from Europe.
Another feature of this period consistent with present day realities is the primacy of their economic links with Europe to the detriment of trade between African countries themselves. Each of these countries traded more with Europe than any country within its own regional integration community. Although this trend has been changing in recent years, it still constitutes the rule in most cases.
The failure of non-reciprocal trade preferences amidst the rapid and profound changes to the system of global trade governance, including the rules of the World Trade Organisation (WTO), called for radical changes in ACP-EU relations. Two months after the Africa-Europe summit, the Cotonou Agreement was concluded on 23 June 2000. It forms the backbone of the current partnership between the European Union and the 79 ACP states.
The Economic Partnership Agreements: a liberalisation ambition out of reach for African LDCs
In its component relating to economic issues, the Cotonou Agreement announces that Europe would be negotiating a series of Economic Partnership Agreements (EPAs) with African regions. It also sets out modalities for their implementation alongside procedures to guide negotiations. In 2002, these were launched at an all-ACP level before being adopted at a regional level the following year. The contexts in which they have been conducted have been complex and difficult, and EPAs have emerged as the most significant point of divergence and contradiction between Africa and Europe in recent years.
The significant technical divergences that emerged at the outset of the negotiations, in both form and substance, continued to override the political will to achieve ambitious or rapid EPAs. Europe's demands were deemed too ambitious, disproportionate and unfair in relation to the economic capacities of African states, most of which belong to the category of least developed countries (LDCs).
By demanding an 80% opening of the ACP regions' market over a period of 15 years, the effort towards liberalisation imposed by the EU on these countries proved to be unrealistic. This is in light of their relative insufficiencies in productive capacities and a lack of economic diversity. By accepting the EU's demands for such ambitious liberalisation, the LDCs, which constitute the majority of African states, would forego trade benefits granted by the WTO in the framework obtained at a multilateral level. Despite its initial presentation as an instrument that could enhance integration, the EPA ultimately functioned to disintegrate regions. This can be seen in the emergence of several different trade regimes between members of the same region and Europe.
Overlap between the EPA and the AfCFTA: an additional challenge
Another potential challenge of the EPA is its overlap with the African Continental Free Trade Area (AfCFTA). The AfCFTA is designed to establish an intra-African regime of preference and to present African countries with the possibility of granting one another trade benefits without the involvement of third countries. However, this can only be optimally deployed if trade benefits between African countries are secured. Opening the markets of several African countries and regions to the EU at the same time could result in trade diversion. The EU, which enjoys substantially similar trade benefits under the EPAs as those obtained by African countries through the AfCFTA, would then be a direct competitor in the African market.
In addition to this constraint, the inclusion of the most-favored-nation (MFN) clause in the EPA could pose a threat to the AfCFTA. This clause obliges African signatories to extend more favourable trade benefits to Europe than to any other major trading partner. This provision is clearly intended for emerging countries that compete with Europe in the African market. It does not, however, explicitly exclude other African countries, meaning that signatory countries could also be required to extend any benefits granted to them under the AfCFTA to Europe as well. Failure to do so incurs the risk of being sanctioned by the dispute settlement mechanism contained within the EPA. The activation of this clause in the EPA could undermine the efforts of African countries to diversify their partners. For some EPA countries, the enforcement of this depends on the will of the EU since nothing in the text of the agreement they have signed prohibits it.
What place is there for North Africa in the Africa-Europe and Europe-OACP partnership?
North Africa is the EU's most important partner on the African continent. It provides almost half of the trade between Africa and Europe. Its trade with Europe is growing steadily. Imports increased from EUR 60 billion to EUR 78 billion between 2008 and 2018. Exports to Europe reached EUR 73 billion in the same period. These trade relations are backed by the Euro-Mediterranean Agreement and several other specific agreements between the EU, Morocco, Algeria, Tunisia and Egypt.
Despite being an integral part of the African continent, North Africa is not included in the OACP group or covered by the Africa Protocol of the EU-OACP Agreement. This protocol covers 49 out of the 55 African states. On the other hand, by being members of the AU and by participating in discussions within the framework of Africa-Europe cooperation, North African countries have their own cooperation framework with Europe through several Euro-Mediterranean countries. The standards implicated in this overlap of agreements is not without consequences for the coherence of both African and European commitments.
This impacts the management of the partnership’s financial instruments. For while Africa is allocated an envelope of EUR 32 billion under the new European financial instrument of The Neighbourhood, Development and International Cooperation Instrument (NDICI), North Africa is separated from the rest of the African continent. Instead, it is integrated into the European neighbourhood policy, forcing it to share its allocated envelope of EUR 22 billion with other Eastern European countries.
As a result of these arrangements, African countries will need to maintain efforts to reconcile existing legal frameworks and to deepen dialogue with the EU in order to avoid duplication or worse, contradictory commitments or decisions.
Making a new start…
The loosening of economic ties between Africa and Europe can be seen in the steady decline in Europe’s share of Africa’s foreign trade beginning in the 1980’s and diminishing further throughout the 2000’s. From a position of quasi-monopoly in the aftermath of independence, Europe has seen its share gradually disappear to China, other emerging countries and also to Africa itself. Although it is still emerging, real intra-African trade is experiencing an evolution.
However, Europe is still the continent's lead trading partner. In 2018 its share represented 32% of Africa's trade in goods with an estimated value of EUR 235.5 billion. This placed it ahead of China, which accounted for 16% of Africa's trade, and the United States of America, which accounted for 6% share of Africa’s trade.
Taking the outcome of the non-reciprocal trade preferences and the deadlock of the EPAs into consideration, many actors in Africa and Europe have called for a re-foundation of the economic and trade partnership between them based on new principles and bases. Trapped by history, colonial concerns strongly determined the establishment of structures, rules and trade institutions. These must undergo revision in order for trade to function in the present day and to reflect the broader economic, social and geostrategic transformations that are underway in the world.
Africa and Europe have a common future to build. Achieving this ambition first requires a change in behaviour. For Europe, this means abandoning the paternalism that underlies its relations with Africa and moving away from a spirit of conquest towards one of sharing. Africa must also move away from limiting logics or views of itself as being only a supporting hand or receiver of aid. Instead, it should move towards utilising its assets and potential by positioning itself as a true commercial partner. A change of methods is needed to move away from the utilitarian, short-term and free-trade expectations that led the EU to impose unjust EPAs in the first place, towards strategies that are rooted in co-production, sustainable partnerships and the co-construction of Euro-African value chains. This option would make it possible to move on from the limitations of existing trade preferences towards more productive ones that are better adapted to current economic realities.
About the Author
Dr Cheikh Tidiane Dieye is the founder and executive director of the African Centre for Trade, Integration and Development (CACID). Dr Dieye is also a member of the West African EPA Negotiating Committee and several other ECOWAS Technical Committees. In addition, Dr. Dieye is a lecturer at the University of Dakar and Ziguinchor (Senegal), University of Abidjan (Côte d’Ivoire) and Trade Capacity Building and Training Centre in Tanzania. He is also a course director at the United Nation Institute for Economic Development and Planning. Cheikh Tidiane Dieye holds a PhD in Development Studies from Graduate Institute of International and Development Studies in Geneva.
