A new report urges African governments to mobilise alternative sources of revenue through other forms of taxation, as EPAs lead to loss of import duty-derived revenues
Overall, the report suggests that while EPAs provide some opportunities and pose some challenges, their direct impacts, both positive and negative, on many African value chains are likely to be limited and should not be overstated
EPAs are meant to support the development of African value chains, their implementation alone in the absence of support for capacity building
Economic Partnership Agreements between the EU and African regional blocs limit the ability of the blocs to promote domestic production.
A new report urges African governments to mobilise alternative sources of revenue through other forms of taxation, as EPAs lead to loss of import duty-derived revenues. This has a knock-on effect as they affect the provision of public services, such as agricultural extension.
A report, The Impact of EPAs on the Development of African Value Chains published in June by Sean Woolfrey and San Bilal looks at the value chains in Kenya’s dairy and Namibia’s fisheries and horticulture subsectors.
According to the report, EPAs could undermine the development of regional markets and common external tariffs, potentially inhibiting the development of regional value chains.
“This will in turn affect growth, investment and employment patterns in a particular economy, influencing the reallocation of labour and capital between sectors. They could ‘lock in’ and lend credibility to reform programmes,” says the report.
The report states that EPAs will not have a direct impact on market access within the EAC, as tariffs on intra-EAC trade have been eliminated through the establishment of the EAC Customs Union.
While EPAs will preserve duty-free and quota-free access to the EU market for Kenyan dairy producers for example, numerous constraints in the Kenyan dairy value chain mean that it lacks the capacity to take advantage of such market access.
“For the Kenya dairy value chain, the EU-EAC EPA will not lead to greater imports of EU dairy products, as dairy products are excluded from tariff liberalisation by the EAC,” says the report.
EPAs could also have a indirect impact, especially as both agreements include provisions on co-operation and support in areas relevant to the selected value chains.
For example, the EU-EAC Agreement contains provisions related to the management, support and strengthening of (agricultural) value chains.
It identifies livestock as a priority for co-operation, commits the parties to developing a regional strategy to enhance agricultural production, develop market penetration strategies, agroprocessing infrastructure and ensure standards are met.
The report states that although EPAs negotiated between the EU and African regional blocs are meant to promote integration of African economies into global markets and support African businesses participate in regional and global value chains.
These agreements do not significantly alter market access conditions relevant to many African producers and services providers. They are thus unlikely to have major direct impacts.
“EPAs could have beneficial indirect impacts on African producers and services providers by encouraging investment and by facilitating support to initiatives that boost the capacity of African businesses to participate in global trade, but such support will not automatically materialise through the conclusion of EPAs,” says the report.
There is thus a need for development partners and other actors to complement EPA implementation with support for value chain development initiatives and awareness-raising and capacity building to ensure African business can take advantage of EPA related opportunities, and for the establishment and use of effective mechanisms to monitor EPA impacts.
Overall, the report suggests that while EPAs provide some opportunities and pose some challenges, their direct impacts, both positive and negative, on many African value chains are likely to be limited and should not be overstated.
It also suggests that although EPAs are meant to support the development of African value chains, their implementation alone in the absence of support for capacity building.
