Why Africa must keep an eye on new US, EU trade bloc

Posted on Updated on

This article first appeared in my column with the Business Daily, on May 31, 2015

The European Union and the United States are negotiating the Trans-Atlantic Trade and Investment Partnership (TTIP) which should create the largest free trade zone in the world, accounting for a third of global commerce.

TTIP(source: http://www.euintheus.org/wp-content/uploads/2013/01/iStock_000009920511Small-612×336.jpg)

Of course the question is how will this affect Africa and how can we benefit? Well, as it is currently structured, the rules of origin section of the TTIP will heighten the barriers faced by African countries exporting processed goods to the zone because at least 50 per cent of the value addition in a product must be produced in a TTIP state to benefit from tariff reductions. Such clauses discourage Africa from industrialising yet industrialisation is considered one of the most viable means of pulling millions of Africans out of poverty. Basically it’s the same old bias.

The TTIP also aims to harmonise product standards to a very high level. This is a mixed bag for Kenya which has significant horticultural exports into the TTIP zone. High standards may be a barrier at first as it will be more difficult for poor countries such as Kenya to comply with them; this may lock out African exporters. But eventually it will be of benefit for Africa to produce internationally competitive goods. Why should Africa be allowed to lag behind in the pursuit of excellence?

There are already calls for third party countries, particularly developing economies and Africa, to contribute to the TTIP and make recommendations that ensure they benefit.

But even such a position fails to realise a basic truth: the TTIP is not about creating an equitable and fair world, it’s about strengthening the Euro-American power. So while the specifics of the agreement matter, what the TTIP is truly saying is that the US and the EU are finally admitting and recognising the erosion of their control and influence over the global economic, political and social landscape. The TTIP is an attempt to rebalance the scales and make Euro-America economically all-powerful again.

the-race(source: https://modworld.files.wordpress.com/2010/09/the-race.jpg)

The TTIP is an indirect admission by both parties that their influence and clout has been receding in what has increasingly become a multipolar world with the emergence of competition from China, Brazil, India and even Russia in economic and political spheres. It will be interesting to see how China responds to this mega regional trade agreement and whether it leads to consent or contest of the new norms and rules. Africa should keep an eye on this.

So, how will the TTIP affect the continent? Well, we can only really begin to answer that question once we analyse the specifics but there is already one message Africa should get loud and clear: integrate economically.

The TTIP provides yet another compelling reason for the economic integration of the continent. But, as the outgoing president of the Africa Development Bank states, there are far too many regional and sub-regional funding initiatives that they can never gain critical mass and foster continental economic integration. The TTIP should provide an even deeper impetus for Kenya to push for intra-regional integration where the EAC integrates with Comesa and SADC and Ecowas. Integration should become an even stronger mission for Africa. Only then perhaps can Africa begin the process of agglomerating economic and socio-political clout in a New World order.

20111203_LDP002(source: http://www.economist.com/node/21541015)

Ms Were is a development economist; email: anzetsew@gmail.com; twitter: @anzetse

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s