An edited version of the following article was published in the Daily News of Tanzania on October 11, 2016.
EPA, ISDS are definitely EA’s greatest enemies (/index.phs/analysis/54359-epa-isds-are-definitely-ea-s-greatest enemies)
Diplomacy certainly has its place in international affairs. However, when a state’s vital national interests are at risk what is needed is straight talking, not diplomatic niceties – and straight talking is what I intend to do in this article.
The so-called Economic Partnership Agreement (EPA) and Investor State Dispute Settlement (ISDS) mechanisms are two of the greatest threats facing the East African people since independence – possibly greater than poverty, ignorance and disease. Why? Because, unlike these well-recognised threats which can be overcome through effective domestic initiatives, it will be next to impossible to overcome or reverse the dire consequences of the EPA or ISDS once institutionalized.
ISDS is a system which legalises foreign corporations to claim millions or billions of dollars from governments which pass laws impinging upon their anticipated corporate profits, in effect proscribing those governments from passing legislation that protects their citizens and the environment. And ISDS is an integral part of the Economic Partnership Agreement between the EU and the East African region which makes EPA a real threat to sovereignty of the region and its individual countries.
For example, Argentina was forced to pay Vivendi, a French conglomerate, US$ 100 million after the Government intervened to save their citizens from overcharging for water and waste-water services. Another French company, Veolia, sued Egypt for US$82 million for raising the minimum wage, while a Swedish company, Vattenfall, sued Germany for 4.7 billion euros after its Parliament voted to phase out nuclear power following the Fukushima nuclear disaster in Japan. And there are many more such cases in progress at the moment. In fact, since 1994 over 127 cases have been brought against 20 EU member states.
Under the EPA East Africa would not be able to do trade with the rest of the world without seeking permission from the European Union first. Whether such permission would be granted or not is largely beside the point; the real question being what is the point of being independent if we cannot make such basic decisions ourselves? Moreover, 88% of the world’s trade is outside the European Union so where is the logic of confining ourselves to such a small market? Furthermore, in the last ten years the only regions that have not experienced growth are the European Union and Antarctica!
In addition, tying East African trade to the EU, the region would have its own industrial development severely curtailed due to the opening up of our markets to an influx of heavily-subsidized, industrial products from the EU, a condition of the EPA. At a time when the future economic development and stability of Africa depends on its ability to exploit its own resources the last thing needed is a strangle-hold on industrial development in the region.
Aside from ruining the prospect of industrial development the EPA will also damage East African agriculture which will face stiff competition from the EU’s heavily-subsidized food produce. So as to pull the wool over the eyes of East African negotiators the EU has inserted Article 78 (2) which commits the European Union not to send subsidized foods to East Africa. However, when all EU farmers are assisted by large subsidies, where is the EU going to get food-stuffs that are free of subsidy for export to East Africa?
Moreover, East Africa has the potential to become a formidable exporter of oil, gas and helium. Future losses in revenue by exporting all these resources without levying export taxes are incalculable. Again, to fool the East Africans, the EU has provided Articles 15 (2 & 3) which allows EAC States to impose temporary export tariffs which may or may not be renewed after review by The EPA Council. Why would East Africa’s decision to tax her own resources be subject to the European Union’s approval? Are we still going to be independent nations or colonies of the European Union through this monster called the EPA?
In his article published in the Daily News of 28/07/2016, Mr. Benjamin William Mkapa, Tanzania’s third President, questioned the logic of exiting a trade arrangement whereby a state exports its products to a region without reciprocation in order to enter into one where reciprocity applies. He wrote: “The cost for the country and the EAC region would have been higher than the benefits. As a Least Developed Country (LDC), Tanzania already enjoys the Everything But Arms (EBA) preference scheme provided by the European Union i.e. We can already export duty-free and quota-free to the EU market without providing the EU with similar market access terms.”
As a matter of fact, Mr. Mkapa has written two seminal articles in this subject. The one referred to above entitled: “EPA has never made much sense for Tanzania.” and the other published on May 4, 2012, “Economic Partnership Agreement between European Union and African countries”. These two articles should be an essential reading by all policy-planners and decision-makers in the East African region, but notably those now negotiating this Agreement. In these articles, Mr. Mkapa has excellently examined the EPA question from all angles.
East Africa does not need trade pacts like the EPA in order to trade and the aims and objectives of ISDS have been changed from the original aims of reassuring the safety of foreign investment in Third World countries to replacing rule by elected and accountable governments with rule by unelected, unaccountable multinational corporations across the globe, mainly of US origin.
These multinationals have been trying for many years to tie the EU itself up into the Trans-Atlantic Trade and Investment Partnership (TTIP) with the US. However, TTIP has recently collapsed with France, and then Germany, pulling out of an agreement which was clearly not in their interests. Why then should East Africa now seriously consider signing up to a similar trade pact with the EU?!
The Presidents of East Africa must reject being bought and used by multinational corporations against their own peoples. Under the Transatlantic Treaty and Investment Partnership (TTIP), which like the EPA carried ISDS conditionalities, foreign corporations would have been granted powers to neutralise the powers of Presidents, Prime Ministers or Chancellors and to neutralise the powers of national parliaments and of national courts – in effect a coup d’etat. Is this what we want for East Africa?
Now one could well ask here why any politician would ever agree to enter into an agreement which puts their nation into such an economic and political strangle-hold? One can only conclude that any such leader has been ‘bought’ by the external parties who would benefit, which are certainly not the nation and people they were elected to serve.
The Kenyan Government has been recruited by the EU to cajole the rest of East Africa into signing this pernicious agreement, allegedly to save the flowers growers of Kenya. But what is at stake here is so much bigger and more serious that if necessary let us abandon the East African Community project rather than reduce ourselves to colonies of multinational corporations in order to maintain the idea of Pan-East Africanism. Our individual national freedoms and industrial development are of far greater importance.
It is a great insult to the intelligence of Tanzanian leaders for the European Union to request them to sign an Agreement which will result in a loss of 45% of its income over a 25 year period. Would the European leaders have acquiesced to such an agreement had the situation been reversed? Of course not.
If the EPA is not signed, Tanzania, Uganda, Rwanda, Burundi and South Sudan will still enjoy the duty-free and quota-free access to the European Union market through the Everything But Arms preferential scheme; while Kenya will lose Market Access Regulation but will still keep the Generalised Scheme of Preferences which largely eliminates tariffs. In other words, East Africa will gain nothing by signing the EPA but will lose everything, including the region’s plans for industrialisation. Therefore, the price of signing is simply too high.
The European Union is using the age-old colonial technique of ‘divide and rule’. In this case they have decided to make it look like Kenya will be the greatest loser if the EPA is not signed. This is aimed at destroying East Africa’s collective bargaining concept enshrined in the East African Community scheme. But according to Mr. Mkapa’s article cited above: “If no EPA is signed, the extra duties charged to Kenya exports amounts to about US$100 million a year. Is this worth signing an EPA for?”
What the Government of Kenya needs to take into consideration is that East Africa would lose some US$2.9 billion in the first 25 years if we sign up to this venture. So Kenya’s unilateral signing and ratification of this agreement is both unfortunate and makes a mockery of the Kenyan Vice President Mr. William Ruto’s recent assertion in Dar-Es-Salaam: “Our decision to move together is a decision that is not debatable.”
If the East African leadership truly value their countries’ independence then they should unanimously reject the EPA and simultaneously invoke the procedures for exiting from entanglement with the ISDS. They should at this point remember how hard-won their independence was in many cases and not put their nations at risk of being crippled and re-colonised through such agreements.
The online edition of this article attracted the following comments:
There are many issues with the EPA but ISDS is not one of them. It’s not included in the EPA. Read the text.
Does EPA explicitly state the mechanisms of conflict resolution? Don’t you think ISDS may be brought in by involved players in the field in the course of transacting business? We already have examples of (Independent Power Supplies, e.g. IPTL and other players already), even if not connected with EPA. A weak and improperly negotiated agreement could just be what these players need to bring in ISDS.
A good food for thought. Hard hitting, but straight to the point. Very simple language used with no jargon to confuse, which is hallmark of presentations in defence of EPAs. But one wonders, how can supposedly very intelligent and apparently patriotic individuals advocate for such lopsided agreement? How come they do not see landmines laid down everywhere in those agreements? I was against this all along, mostly by intuition. But I think now I have more clarity on the dangers inherent with the agreement. I will need to see an equally well argued pro agreement to balance this. I’ll save this piece for further reference.
Thank you, sir.
Kasome, Mr. Mkali says a whole lot, if not all. He’s on top of things. I’ll not try to shape your opinion, but his take can be trusted.
You will wait and search for as long as you want for anything that’s pro and convincing as to prove that there will be benefits for us.
However, to each their own. I’m glad that even though we have the EAC, in matters like this the individual member-states can still go in some things, alone. We don’t risk being, “the family that stands together, goes everywhere together”.
- HARID MKALI:
I wish to let you know that I have read all the articles – 146 of them in total.
Now, I would advise you, or anybody interested in this subject, to google: “EU EAC EPA – factsheet”; and from the European Union’s own Website you will read about 14 areas of the so-called cooperation and, everyone of it has been elaborated upon except item number nine (9) which simply reads:
No. 9: rules for dispute settlement.
For your information that is where the ISDS is hidden, and they have not gone into detail deliberately for fear of opening the eyes of people like you.
ISDS mechanism is so discredited nowadays that a mere mention of it makes any clear thinking person to recoil.