EU-Africa Summit Eyes Increased Trade, Investment Ties

10 April 2014

EU and African leaders meeting in Brussels last week pledged to deepen trade and investment ties between their two continents, with both sides calling for a "fundamental shift" in cooperation. The 2-3 April gathering brought together over 60 heads of state, making it the EU's largest ever summit.

"We are convinced that trade and investment and closer economic integration on each of our continents will accelerate growth," they said last week in a joint declaration. To achieve this, they said, would require the development of more productive supply capacity, building up markets, and the implementation of  infrastructure and governance reforms in Africa.

Increasing cooperation in trade, investment, and empowerment, German Chancellor Angela Merkel said after the first day of talks, would be key to ensuring that "African problems can be solved by Africans themselves."

"[It is time for] a shift from development cooperation to a partnership of equals with trade and investment playing a key role," said European Council President Herman Van Rompuy.

Leaders also adopted a roadmap to frame both continents' cooperation over the next three years, though the Joint Africa-EU strategy adopted in 2007 remains the political reference document for their relations.

The roadmap identifies five clusters of priority actions: peace and security; democracy, governance, and human rights; human development; sustainable and inclusive development; and integration and global emerging issues.

Experts have said, however, that while the roadmap provides a clear indication of the necessary approaches for strengthening areas of mutual interest over the coming years, it still needs to be complemented with concrete implementation plans.

Structural transformation

Structural transformation is a key issue for both sides, given that the recent strong economic growth of several African countries has been mainly commodity-driven, while the EU demand for raw materials continues to rise.

"There is an opportunity for a transformation at continental, regional, and national levels to ensure that Africa's potential is realised and its economic integration achieved in a sustainable manner," leaders said in their joint statement.

They agreed that faster industrialisation and modernisation of the private sector is an essential precondition for structural transformation, underlining also the importance of value addition for raw materials as a "catalyst for industrial development."

Some analysts say that such emphasis is an implicit criticism of China's growing engagement in Africa, which is often perceived as holding back the continent's industrialisation by perpetuating its dependence on natural resources. Along these lines, the need to ensure prudent management of these resources - especially from conflict-affected areas - was highlighted in the action plan, echoing the EU's recent initiative on this issue.

The plan also calls for a more business-friendly environment, encouraging both regions to develop better investment climates, increase technology transfer, and foster enterprises' competitiveness. The key role of the EU-Africa business forum - an annual meeting held on the eve of the summit, which gathered more than 500 private sector participants - was mentioned to this end.

Regional integration

Leaders reaffirmed that greater economic integration will be necessary in order to allow for economies of scale, which can stimulate investment and growth.

The EU pledged to contribute to Africa's own integration, including through its support of the establishment of a Continental Free Trade Area (CFTA), which if successful would establish a single market across Africa.

Negotiations for the establishment of a trade deal that would span three major regional economic communities in Africa - known as the Tripartite FTA (TFTA) - are scheduled to conclude by the end of this year, which could pave the way for the completion of a Continental Free Trade Area by 2017.  (See Bridges Africa, 31 March 2014)

Brussels has also offered to work on all outstanding issues of the bilateral Economic Partnership Agreements (EPAs) that it is negotiating with different African regions, a process that is now over a decade old with no clear end on sight.

The slow pace of the negotiations has long been a source of frustration for both sides. For example, while the EU supports binding commitments by WTO members to eliminate or reduce export taxes, some African countries justify their use as a way to spur industrial development.

Similarly, the impact of these EPAs on regional integration has also sparked concern among some African countries. The action plan therefore recalls the need to reach EPAs that are "development oriented and WTO-compatible," while also promoting African integration, economic transformation, and industrialisation.

However, observers were quick to note that the summit gave little political direction over the way forward in the EPA negotiations, especially in light of the autumn deadline that Brussels has set for concluding these agreements.

In an effort to speed up the talks, the European Commission announced in September 2011 that it would be imposing a 1 October 2014 deadline for the withdrawal of a market access regulation which it currently provides to a majority of African countries - a move that many fear could have detrimental impacts on these countries' trade.

The recent compromise reached on the West Africa-EU EPA has been welcomed by leaders as a significant milestone in this process. However, at a recent summit of the Economic Community of West African States (ECOWAS), some West African countries raised concerns over the impact that the agreement could have on certain industrial sectors. (See Bridges Weekly, 13 February 2014 and 3 April 2014)

Post-2015 agenda, climate change cooperation

During their discussions last week, leaders also addressed issues such as climate change and environmental cooperation, along with the ongoing UN process to establish a post-2015 development agenda.

"The EU and Africa are determined to adopt, in Paris in 2015, a fair, equitable, and legally binding agreement under the UN Framework Convention on Climate Change," leaders said. The action plan mentions that leaders from both regions will prepare nationally determined contributions (NDCs) by the first quarter of 2015, in order to facilitate the talks in Paris later that year.

These NDCs would be the building blocks for a new global climate deal, though UN member states are still at odds over whether these should be mandatory. (See Bridges Weekly, 20 March 2014)

Leaders also reaffirmed their commitment to support the definition and implementation of an effective post-2015 development agenda, which would replace the Millennium Development Goals once they expire. UN member states are aiming to have this agenda - which would include a series of Sustainable Development Goals - ready by next year. (See Bridges Weekly, 27 February 2014)

ICTSD reporting; "EU-Africa summit focuses on trade and conflicts, not least in CAR," DEUTSCHE WELLE, 2 April 2014; "EU-Africa Pledge to Deepen Ties After Two-Day Summit," WALL STREET JOURNAL, 3 April 2014; "EU, Africa shift focus to trade," EUROPEAN VOICE, 3 April 2014.

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