The EU's Raw Materials Initiative

Last week the European Commission published a new report on its raw materials strategy. The EU and its member states are increasingly worried about securing access to raw materials for European companies. The rise of China, and also of India and Brazil, set the alarm bells off. Therefore the Commission launched its Raw Materials Initiative in 2008. The main focus of the Initiative was to secure European access to raw materials in third countries. The new report looks at the progress made with the implementation of the initiative and on the way forward. Again, the main focus is not on reducing the consumption of raw materials and on looking for alternatives but on securing the European supply through the pursuit of 'raw materials diplomacy'.

 

As the EU has to rely on the import of several critical raw materials from third countries the Commission is especially interested in securing the supply and removing obstacles to it. In particular the Commission wants to improve the EU's security of supply through bilateral and multilateral trade agreements. In the case of Africa, this happens in the context of the Economic Partnership Agreement (EPA) negotiations. EPAs foresee the removal of export tariffs and of quantitative restrictions on exports, de facto impeding African governments from putting limits and restrictions on the amount of raw materials exported from their countries to Europe.

 

If the Commission gets its way EPAs will also contain a chapter on investments which would remove restrictions on European companies that want to open subsidiaries in Africa to exploit raw materials. To make sure that the raw materials keep flowing the Commission will liaise with the European Investment Bank[1] (EIB) and other European development financing institutions to '...facilitate the raw materials supply'. It also wants to explore the possibility of increasing lending to the mining industry.

 

In its report the Commission touts mining as an opportunity for African development ignoring that over the last decades mining in Africa has mostly been a source of conflict and environmental destruction[2]. In his speech in front of the EU-ACP Joint Parliamentary Assembly in Kinshasa even Commissioner for Trade Karel de Gucht recognised that "extractive industries have seldom been a good basis on which to pursue industrial development. Often, they have even stoked up what economists call the resource curse" and "all too often, developing economies' reliance on raw materials has proved to be a stumbling block for their development".

 

An initial draft of the document even went so far as to envisage the total or partial suspension from the Generalised System of Preferences[3] (GSP) for those countries that apply 'unjustified restrictions to raw materials'. In Africa, this would have applied to those non-Least Developed Countries which have refused to sign an EPA like Congo-Brazzaville, Gabon and Nigeria. Fortunately this was removed from the final version of the text.

 

As if all this were not bad enough, European enterprises keep asking for more. BusinessEurope[4] asks the EU to use its development aid to 'favour or provide privileged relations with resource-holding countries'. In other words development aid should go to resource rich countries that grant Europeans access to their raw materials and if you are not fortunate enough to have raw materials that interest European business, you can remain poor. A return to a distinction between Afrique utile and Afrique inutile from the darkest days of the French colonial past!

 

 

Thomas Lazzeri

 

 

 



[1] AEFJN's concerns about the EIB's role in Africa have already been expressed in an article for the Forum for Action of December 2009 available at http://www.aefjn.org/index.php/370/articles/the-eibs-role-in-africa.html 

[2] See for example Let there be light - Areva in Niger at http://www.aefjn.org/index.php/369/articles/let-there-be-light-areva-in-niger.html

[3] The EU's Generalised System of Preferences is a trade arrangement through which the EU provides preferential access to the EU market to developing countries and territories, in the form of reduced tariffs for their goods when entering the EU market.

[4] BusinessEurope is a powerful lobby of the European industries with a privileged access to the European Commission, representing industries from 34 countries.

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