November 29, 2010 / 5:01 PM / 9 years ago

Q+A: Troubled trade ties between EU and Africa

BRUSSELS (Reuters) - The European Union and Africa are holding a summit in the Libyan capital Tripoli on Monday and Tuesday, with regional security, energy policy, immigration and development on the agenda.

Europe’s troubled trade talks with Africa are not formally part of the program, but the issue has been raised, with the two blocs unable to agree free-trade agreements after years of negotiations.

Following are some questions and answers looking at the state of EU-Africa trade relations.

WHY IS TRADE SUCH A CONTENTIOUS ISSUE?

The European Union, the world’s largest trading zone, wants its former colonies in Africa, the Caribbean and the Pacific to open their doors to European goods and services in return for duty-free access to European consumer and commodities markets.

Negotiations on so-called Economic Partnership Agreements started in 2002 and were due to conclude in 2007.

So far none of Africa’s five regional groupings, or either of the Pacific or Caribbean groupings, has fully implemented an EPA with the European Union.

WHY DOES EUROPE CARE?

China, Brazil, Russia and India are striking ever more far-reaching deals with countries such as Angola, Sudan, Nigeria and Kenya for trade in minerals and energy.

With GDP growth of as much as 10 percent in some African countries and the World Bank predicting an unprecedented economic takeoff for the continent, the prospect of a growing consumer base among Africa’s billion-strong population is of keen interest to EU exporters and investors.

The value of trade in goods between the EU and Africa stood at 278 billion euros in 2008, according to the European Union’s statistics agency Eurostat.

WHAT DO AFRICAN LEADERS WANT?

African leaders say EPAs will swamp their states with European goods and services, destroying nascent local industry.

African leaders have united against Europe, calling for the continuation of duty-free access to EU markets — which the EU granted to poor African states on a temporary basis in 2007 — while EPA negotiations continue.

They also want an extension of EU duty-free status for more prosperous African nations such as South Africa and Nigeria, and equal tariff cuts for poor and rich African states.

Failing agreement, African leaders have warned that “African countries may have to discontinue the EPA negotiations” — a threat repeated by Libyan leader Muammar Gaddafi at the summit.

WHAT DOES EUROPE WANT?

So far the European Union has demanded that African states open 80 percent of their markets to European goods and services.

The 27-country EU also wants its tour operators, banks and telecommunications firms to set up shop in Africa, and for African nations to adopt European standards on governance, the environment and competition law.

Increasingly, Europe also wants access to African agriculture, commodities and energy markets. The EU says EPAs will benefit African nations by allowing them to develop their exports to Europe and its 500 million people.

EUROPE’S NEXT MOVE?

Exasperated with the stalled talks and China’s growing hold on the continent, the EU may back down on its demands — though how dramatic such a climbdown will be remains to be seen.

EU trade chief Karel De Gucht has told Reuters the EU may scale back its demands on Africa’s banking, telecom and other services sectors, and back down on some legislative demands.

Yet in a confidential letter to EU foreign and trade ministers De Gucht suggested more radical moves:

“The issues we need to address are ... to decide either to discontinue negotiations or to accept agreements with a lower level of ambition,” De Gucht wrote in September.

With no easy exit from the impasse, trade talks in South Africa and Namibia scheduled for this week have been called off.

(For more EU-Africa trade statistics, please click:http:// epp.eurostat.ec.europa.eu/statistics_explained/index.php/Africa-EU_-_economic_indicators,_trade_and_investment#Trade_in_ epp.eurostat.ec.europa.eu/statistics_explained/index.php/Africa-EU_-_economic_indicators,_trade_and_investment#Trade_in_ goods)

Reporting by Juliane von Reppert-Bismarck

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