EU enlargement, which should see ten more countries joining the European
Union (EU), increasing its population by 105 million and its landmass by 45% is
not necessarily good news for Africa but the continent would have to live with
it and take advantage of certain new developments.
Enlargement will see huge flows – aid as well as foreign direct investment (FDI)
into those countries. The new members may live in the same continental landmass
as the current EU states but they are a million miles apart in terms of their
standard of living, with only a fraction (11.18%) of the average EU Gross
Domestic Product. Furthermore, the new member states share borders with some of
the richest regions in the current EU, namely, Germany, Austria, northern Italy.
There will therefore be enormous pressure to invest in those countries as
happened in Spain, Portugal and Greece, to improve their infrastructure and to
enable them to comply with EU production, marketing and environmental standards.
The regions they border who are very concerned that citizens of the new member
states will flock to those regions will also want do as much to develop those
countries to stop that happening. Companies in the current EU will also continue
to invest heavily in the new countries to take advantage of the very low wages.
This means there will be less aid and FDI for Africa from the EU as they
concentrate on their new members.
Agriculture is the main budget item in the EU; constituting half of the total
budget and enlargement could have a significant (negative) impact for Africa.
These countries have relatively (to current EU countries) high proportions of
their GDPs and populations involved in agriculture, 7.8% of their GDP and
employing 26.7% of their total labour force. Enlargement could virtually
bankrupt the EU as we should see a huge increase in payments under the CAP.
Although under present arrangements payments levels to farmers in the new member
states under the CAP will be at a much lower rate than that available to current
members, experience suggests that this will be only temporary – the new members
have the vote. We will therefore expect the level of support to farmers in the
new member states to rise to levels in current EU member states. If this happens
then it will, as some observers have noted, sharply increase the total level of
support to farmers. The EU budget will therefore come under severe pressure
resulting in less aid being available to Africa.
The other likely adverse effect relates to market access. Enlargement of the EU
could increase the agricultural production of the EU significantly, particularly
if the scenario of increased rate of subsidies to farmers in the new member
states holds, hence more surplus building up which would have to be disposed of
in Africa or markets that Africa could export to. This is because the
productivity of farmers in the new member states is by EU standards very low and
there is room for significantly improvement. The EU, with only with only 45%
more land produces goods valued at 208.8 Billion ECUs, 14 times the value of
agricultural output of the new member states – although higher CAP payments are
partly the cause they do not make up for all that difference in productivity.
Furthermore, these countries, after the break up of communism liberalised their
agricultural markets significantly – in a report by this author in 1999 it was
revealed that the Producer Subsidy Equivalent (PSE), the total level of
protection accorded to their farmers, was much lower in the new members states
than the level of support found in the EU under the CAP - now, they will be
joining “fortress” Europe, which means less access for products from Africa
within a trading bloc with the highest levels of PSE in the world.
The aid portfolio has never been a highly regarded arm of the European
Commission. The tumultuous policy framework that is being engendered by
enlargement, future enlargement and other policy issues could reduce the status
of the aid Directorate even further. In the current climate with the focus on
the proposed constitution of the EU that Mr Giscard is working on, events in the
Balkans, the tense state of the EU/US relationship following the Iraqi war, aid
and the relationship with Africa come way down the list of priorities. The
worst-case scenario is that one of the smaller new members will be put in charge
of aid and or EU/Africa relationship. That will be a lose-lose scenario for
Africa. Firstly, that country will have little or no clout and experience of how
the EU system works. It may have very little experience of Africa, under
communism, the USSR badgered its client states to be nice to Africa, that all
ended with the break down of communism. Since then those states have had more
than their fair share of problems, with no time to be concerned about Africa.
Lastly given the poverty in those countries it is unlikely that any
representative from that region would want to go out of his or her way to help
Africa, rather the dictum that charity begins at home is likely to hold.
The situation is not however completely hopeless and Africa must try to make the
best of new opportunities which are developing. In the post Iraqi situation the
new “cold war” is the tussle for supremacy between the EU and the US. Africa can
play the game it played during the first cold war. The downside is that the
value of the UN vote has been devalued significantly in the aftermath of the
Iraqi war. Secondly, both the US and the EU are likely to continue to press for
good governance and market liberalisation, although the EU is less likely to be
as strident as the US in the case of the latter. The former is the best thing
that happened for Africa although the latter is not necessarily good for the
continent particularly when both the EU and the US continue to practice one
thing and preach the opposite. Africa needs fair trade whereby market access on
the continent is balanced by market access in rich countries. Another
opportunity since September 11 is the war on terrorism. Governments can
convincingly argue that dysfunctional states and poverty are the ideal breeding
grounds for terrorism. Such states do not have control over their landmass and
airspace and they can be bought over by rich terrorists. Fair trade, investment
and aid are the best antidotes to terrorism.
African governments can also take advantage of the change in the political
paradigm in the current member states. In those countries virtually all social
democratic and even centrist parties have retreated from doctrinaire socialism.
The glue that is increasingly holding the left and centre are environmental
issues, fair trade, debt relief, aid flows and the negative impacts of
globalisation. Africa should make use of this new political climate and engage
policy makers and NGOs to ensure that it gets the best deal available.
The continent should make use of the WTO. The rules of that organisation states
that new trade agreements – enlargement of the EU is effectively within that
category – must not result in a reduction in market access for third parties.
African countries must analyse the effects of enlargement and if there is any
adverse effect relating to market access then they can have a case against the
EU under WTO rules.
Enlargement of the EU should therefore be closely watched by African countries.
It is part of the trend towards larger trading blocs and political entities.
This is the first stage of the enlargement of the EU, more countries will be
brought into the EU project. These new countries have little or no ties, trading
links with Africa and because they are also very poor they will be competing
with Africa for investment and aid from the current (rich) EU member states. The
current EU member states will be far more generous to their kith and kin, partly
for economic reasons, because they will, to start with, be a low wage part of
the EU, making the EU more competitive and in the long term make it into a
bigger and more cohesive market. But also for political reasons, the EU will
become a much bigger player, rivalling the US and China. Globalisation is making
the nation state increasingly obsolete the EU is making sure it becomes a force
to be reckoned with. African countries will need to take advantage of new
developments mentioned above but they must also follow the example set by the EU
in creating an African trading bloc and political entity, pigs can free.