The Echoes from AEFJN No. 30 - July August 2016 are now available online. Monitoring and Benchmarking EPAs
Economic Partnership Agreement (EPA) negotiations have been ongoing for years now and, although they are progressing at a slower pace than the EU would like, the number of signed EPAs is increasing. The most recent one is the interim EPA with some members of the Eastern and Southern Africa (ESA) group. Others are expected to follow in the next weeks or months. Although it remains important to follow the negotiation process itself, it is time to also start thinking beyond the actual negotiation and signing process and to begin focussing on what to do once EPAs are signed. The signing of EPAs does not mean that there is nothing to say or do about EPAs any more. In fact there is a lot to do for civil society and NGOs like AEFJN once the implementation of the EPA agreements has begun. Civil society has an important role to play in monitoring and benchmarking EPAs. The objective of monitoring and benchmarking is to verify if EPAs meet the objectives which were set for them. In other words we are asking what EPAs have brought to the Africans. The EU has always stated that EPAs were not mere free trade agreements, but an instrument to contribute to development and well-being in Africa. Through the monitoring and benchmarking process it will be possible to understand if this is true or just empty rhetoric.
The monitoring and benchmarking process becomes particularly relevant because EPAs such as the interim EPA with SADC foresee a 5-year revision clause and because they foresee the creation of a series of ad-hoc institutions, such as the Joint Council[1], to oversee and administer the implementation of the agreement and to issue recommendations and reports. In its activities the Joint Council is assisted by the Trade and Development Committee with senior officials coming from both sides. It will be important to present both the Council and the Committee with the findings of the benchmarking activities and to ask them to improve the agreement where needed. The EPA with the Caribbean countries, which is the only final EPA thus far negotiated, even foresees the creation of a Consultative Committee, where representatives of the civil society from both Europe and the Caribbean countries participate. At the moment it is not possible to say if the final version of the African EPAs will contain such a consultative committee. In any case it is important that civil society pushes for its inclusion.
Before entering into the practical aspect of it, a short definition of the terms employed may be helpful:
Benchmarking: The term benchmarking was first used by cobblers to measure one's feet for shoes. They would place the foot on a "bench" and mark out the pattern for the shoes. Benchmarking as a mechanism is derived from the discipline of strategic management and is the process of comparing the cost, productivity, or quality of a specific process or method to another that is widely considered to be best practice. The Chambers dictionary defines it as "something taken as a point of reference or comparison, a standard". Essentially, benchmarking provides a snapshot of the performance and helps you understand where one is in relation to a particular standard. The result is often a case for making changes in order to make improvements.
Monitoring: Monitoring is an umbrella term for all types of systematic recording, observation or surveillance of an operation or process by means of technical aids or other observation systems. The function of monitoring is to intervene in an observed sequence or process if it does not take the desired course or certain thresholds are not reached.
As already said, EPAs should be instruments of development in Africa. Economic growth is a necessary condition for development; however, economic growth alone is not sufficient.
In order to lead to development, growth has to benefit a large part of society and not just a few. In order to alleviate poverty in a sustainable way, it has to lead to the creation of jobs, the development of workers' skills, technological development, the development of business skills and an improvement in access to finance. As the poor in Africa depend largely on agriculture for living, an increase of productivity in this sector is vital to improve the overall well-being.
Distributing income growth among the working population at large in order to achieve real development will require that marginalized groups of society such as, very often, women benefit from improved access to education, property, employment, income. One way to measure the impact of EPAs on these aspects is to compare the statistical data of the moment the EPA came into force with the data of the months and years afterwards. However, for organizations like AEFJN it will be easier to collect testimonies of African people, who describe their experience after the implementation of EPAs, how it changed their life for better or for worse, how it affected their existing and future opportunities. This collection of real-life stories is probably the best way AEFJN can help getting the African voice heard and complement arid statistical data with an in-depth description of concrete cases.
Growth refers to an increase in the capacity to produce tradable goods, which can be sold on the domestic and foreign market. For developing countries, growth in the production for export of primary commodities and relatively unsophisticated manufactured goods will enable the import of growing amounts of technology and intermediate and final goods that cannot be produced at reasonable cost and of acceptable quality in the domestic economy. The increased output also needs, however, an increased demand to absorb it. This is directly related to international trade. EPA agreements with their focus on the elimination of trade barriers and free flow of goods are meant to create growth through increased export due to improved access to the EU market.
Growth in production is a necessary condition for economic development. Past experience shows that economic development is closely associated with economic diversification, notably modernization of agriculture and industrialization. On the export side, two variables will help us recognise if EPAs have brought benefits to African countries. The first one is the overall volume of trade with the EU; the second one is the composition of trade. Currently trade flowing from Africa is generally composed of raw materials and low value added primary products such as minerals, oil and basic agricultural products.
Economic indicators of growth and development are the increase in industrialization and labour productivity. Industrialization shifts production and employment from lower-productivity agricultural production to higher-productivity industry, in particular manufacturing industry. In order to achieve this increase, an increase in investments in infrastructure for transport, communication, water supply and electricity is needed. Therefore in this case the indicators to observe are the increase in roads built, the expansion of access to electricity, clean water, sanitation and instruments of communication such as the telephone or the internet.
Other important indicators of the development and the well-being of a society are social indicators that reflect the quality of life such as education or health. Increase in government investments in schools and universities as well as an increase of the literacy rates are indicators for the development in the education sector. Life expectancy at birth is an important way of measuring improvements in the health sector. Investment in the social sector as well as in infrastructure depends on the availability of resources from the government's side. EPAs are likely to have a concrete impact on this as they foresee the reduction and elimination of tariffs on imports from the EU. These customs duties represent an important source of income for many African countries. To give concrete examples, customs duties constituted 38% of the total government revenue in Tanzania in 2005, 49% in Lesotho and 69% in Swaziland. It will be important to monitor how governments cope with the loss of a considerable proportion of customs duties.
The aspects reviewed above indicate some of the more easily observable ways in which EPAs can be benchmarked. Clearly the monitoring and benchmarking process is not something that can be done within a couple of weeks. It will take months or in some cases even years before enough data and cases have been collected in order to be able to make a conclusive argument. It is however important to start now to devise the process and to begin collecting the necessary information so that we will then in the future be able to assess EPAs and their impact and to present the conclusions to the relevant institutional bodies.
[1] The Joint Council is made up of the Council of the EU, the European Commission and Ministers of the SADC countries.