COVID-19 and trade justice: will this time be different?

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COVID-19 continues to spread across Africa. The United Nations Conference on Trade and Development (UNCTAD) has helpfully called for a $2.5 trillion coronavirus crisis package for the Global South. But global solidarity is not just important during the pandemic. It would be nothing less than a tragedy if, post-crisis, the previous unjust global economic order was simply restored.

There are many ways in which the global economy is unjust. Take international trade for instance. Last year, research by Action for Southern Africa (ACTSA) estimated that Southern Africa lost US$8.8 billion annually through trade-related illicit outflows. Tax havens and secrecy jurisdictions play a key role in facilitating these illicit financial flows. As a result, governments in Southern Africa are deprived of resources that could be utilised to realise the right to health, for example by investing in health workers and ventilators. In a more just world, therefore, tax havens and secrecy jurisdictions would face severe crackdowns.

Unjust trade policies also deprive Southern African governments of significant resources. The European Union’s (EU) economic partnership agreements (EPAs) provide an excellent example. In June 2016, the EU signed a full EPA with six Southern African countries (Botswana, Lesotho, Mozambique, Namibia, South Africa and Swaziland); Angola has an option to join the agreement in the future. Somewhat confusingly, the EU had signed an interim EPA with four other Southern African countries (Madagascar, Mauritius, Seychelles and Zimbabwe) in 2009. This interim agreement has been provisionally applied since May 2012; Comoros signed it in 2017 and started to provisionally apply it last year.

Non-governmental organisations and trade unions based in both Africa and Europe have severely criticised EPAs. Perhaps the most substantial grievance is that these agreements force African countries to open up their markets to cheap European imports and restrict their ability to erect new trade barriers. As a consequence, the policy space for African governments to choose which domestic industries to protect and which to liberalise is taken away. This in turn undermines efforts to diversify their economies, locking African countries into low productivity industries. The elimination of tariffs on European imports and the restriction on African export taxes also reduces customs revenues for African countries.

map of South Africa
Photograph: peonyandthistle/Unsplash

Another major concern is that the EPA negotiations ignored regional integration processes in Africa, as the negotiations did not take place on a block-to-block basis. As a result, existing customs unions were divided, which has caused tensions among African countries. In addition, the Most-favoured-nation clause in the full EPA is so broadly defined that it may hinder future trade agreements between Southern African countries and third countries (including some other countries of the Global South). This is because the Southern African countries would risk having to offer to the EU any further preferences granted to some third countries.

These are just two of the many areas where the EPAs fall down from a sustainable development perspective. Independent research finds that both the full and the interim EPAs will lead to negative net effects on output and employment. It is worth noting that the situation could get even worse, as the full EPA has a built-in negotiating agenda covering investment and services. This could lead to anti-democratic investor-state dispute settlement (a procedural mechanism that allows an investor from one country to bring arbitral proceedings directly against the country in which it has invested) and the privatisation of public services.

Such threats are particularly real as civil society participation in EPA-related discussions is virtually meaningless. Neither the full nor the interim EPA mentions civil society. The full EPA has a Trade and Development Committee, but the EU and group of six Southern African countries are still discussing how to involve civil society in it. It is crucial that civil society is allowed to speak out on all matters related to the EPA, and not only those that are narrowly construed to constitute ‘development’ issues. Genuine civil society participation in the interim EPA between the EU and group of five Southern African countries (the original four plus Comoros) looks even farther away.

In light of all these problems, it is clear that the UK government should have adopted a fundamentally different approach to trade policy in the post-Brexit era. Instead, Whitehall has chosen to replicate the EU’s EPAs with the two groups of Southern African countries noted above (see here and here). As a 2017 Traidcraft report argued: ‘if the [UK] government simply attempts to replicate the existing EU trade regime with developing countries, it would have ceded an opportunity to lead the world in introducing pro-development trade policy’.

Earlier this year, the UK government did announce a number of new ‘aid for trade’ initiatives. Yet these initiatives, like their EU equivalents, are largely geared towards enhancing the legitimacy of a crude free trade agenda that treats unequals as equals. They certainly do not compensate for the critical flaws in unjust trade deals.

Pledges by the UK and the European Commission to find a coronavirus vaccine are welcome – as long as any vaccine is accessible and affordable for all. But if we take a step back, it is obvious that the UK, other European countries and the wider Global North are giving with one hand while taking with the other. If all countries are to build resilience to crises and achieve the Sustainable Development Goals, things have to dramatically change, and not only in relation to trade policy. We need to forge a global economic system that is grounded in our common humanity.

 

Alastair Fraser is a lecturer in African Politics in the Department of Politics and International Studies. Article written with Sunit Bagree, Senior Campaigns Officer at Action for Southern Africa (ACTSA), the successor organisation to the Anti-Apartheid Movement.

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