Can the EPAs save us from the food crisis?

11 December 2010

Very recently, Dr. Mohamed Ibn Chambas, Secretary General of the African, Caribbean and Pacific (ACP) Group, reminded us again that the Economic Partnership Agreements (EPAs) should be a development tool for the ACP countries.

The EPA negotiations have been underway for nearly ten years now. Throughout this time, however, the world has kept on turning – not always in the right direction. Namely, in 2007 and 2008, the ACP countries, and indeed numerous countries the world over, were destabilised by what has been dubbed a “food crisis.”

During the second half of 2007, basic food products such as rice, wheat and milk were hit by price increases ranging from 50 percent to over 100 percent. For people who spend nearly all of their income purchasing food, such an increase is intolerable.

This crisis provides us with an opportunity to explore some critical questions. First, what is the true capacity of the Economic Partnership Agreements to serve as a “development tool”? And second, how could ACP countries have used the EPAs to better respond to the challenges posed by the food crisis?

What food crisis?

For this purpose, it is important to identify the causes of the food crisis and the ensuing policy responses.

Six major causes were suggested at the beginning of the explosion in agricultural prices in 2007-2008:

1. Increased demand for food products;
2. Decrease in food production (due notably to the deterioration of soils and unfavourable climatic conditions in major cereal-producing regions);
3. Abandonment of family farming in developing countries, notably following the dismantling of agricultural policies and public-sector support for agriculture (as a result of the structural adjustment policies enforced by international financial institutions);
4. Liberalisation of global agricultural trade;
5. Speculation on raw materials; and
6. Competition for scarce food products from agro-fuel producers.

To address these causes, countries’ responses can be grouped around five approaches.

1. Increase food supply by developing subsistence agriculture
Leaders in countries like Malawi, Mali and Senegal, among others, decided to promote subsistence agriculture over export agriculture in an effort to meet local food needs.

The EPAs in contrast, tend to promote agriculture exports. While such an aim is a typical goal of trade agreements generally, in the case of the EPAs it clashes with developing countries’ goal of producing agricultural subsistence products, not agricultural export products.

Furthermore, the investment liberalisation promised by the EPAs promotes the cultivation and export of bio-fuels, thereby threatening the availability of arable land for subsistence agriculture. The EU appears to be quite ambitious on this front: by 2020, the bloc aims to substitute 10 percent of fossil fuel consumption with energy from renewable sources. Agro-fuels are expected to play a huge role in that effort; this would be impossible to achieve without a massive boost in imports.

More liberal investment policies could handicap those states wishing to protect their land from foreign predators who are little inclined to focus on fulfilling local food needs.

2. Increase financial investment in agriculture
In 2003 in Maputo, the African States committed to allocate at least 10 percent of their national budgets to agriculture. The EPAs could, however, make states less inclined to actually carry this out.

Indeed, the budgetary restrictions following the opening up of borders under the EPA process led to a drop in the amount of resources available to support agriculture, which was already under-capitalised thanks to the crisis.

It is quite unlikely that this decrease in public-sector resources is to be compensated by increased growth stemming from trade liberalisation as officials had hoped. Indeed, the economic crisis means we can forget any such optimistic scenario; on the contrary, all we will probably witness is weak or inexistent “EPA” financing that is truly supplemental to the support already allocated under the European Development Fund, or EDF.

3. Grant regional political priority to agriculture
On the political front, officials should aim to implement ambitious regional agricultural policies that preference regional production to ensure that food needs are better met.

However, the EPAs and their liberalisation objectives restrict states’ capacity to use measures like trade barriers and community preferences to build domestic agro-economic chains. Furthermore, the “Most Favored Nation” clause, which EU negotiators hope to insert into all of its EPAs in some form, does not permit trade preferences that would promote strengthened trade with non-European countries.

4. Focus on regional integration
Numerous countries have begun focusing on regional policies in their attempts to obtain food security. And yet the very construction of these arenas is threatened by the EPAs.

ACP countries are engaged in international negotiations on a number of fronts (EPA, WTO, agreements with third party countries, etc.), but the number of officials assigned to follow these talks has been cut back. Thus the EU’s insistence on pushing forward in the negotiations on the EPAs in fact penalised the construction of regional trade areas by diverting ACP officials’ attention away from regional initiatives.

The integration envisioned by the EPAs is a forced and counterproductive integration. In addition, the interim EPAs have significantly, and lastingly, endangered budding regional dynamics.

5. Market regulation
The only way to stamp out the kind of market speculation that magnified the volatility of farm prices in 2007 and 2008 is to create and deploy public tools to counter the economic players who see goods as an easy means of scoring a profit. A few examples of such tools: establishing stocks of primary basic agriculture products, guaranteeing “ceiling prices” for foodstuffs, or intervening in import and export markets, which a number of countries did between 2007 and 2009.

These tools are often limited or even prohibited by free trade agreements, in particular for regions that have only a very weak market position, such as ACP regions, which makes them extremely dependent on partners’ goodwill.

European responses to the food crisis

If, as I argue in this article, the EPAs are indeed curbing structural responses to the causes of the food crisis, it is interesting to compare ACP countries’ policy decisions to those that have been taken by the European Union following the food crisis.

Among other things, the Europeans responded by strengthening financial support for farmers by increasing the available budgets. Export subsidies were reintroduced for specific products. Demand increased from all sides for the reimplementation of regulatory tools for European agricultural product supply, in order to maintain agricultural prices at levels that would enable small family businesses to preserve a degree of profitability.

Lastly, there was a major consensus that the EU should maintain a “strong” Common Agricultural Policy. That meant providing for significant budgets, developing offensive trade interests, and offering more protections for this strategic sector. A recent parliamentary report confirms this option for a consistent European Agricultural Policy: “Europe cannot allow itself to place its trust in other parts of the world for the security of its food supply.” Why does the EU allow itself public intervention tools that it refuses to other countries with which it wants to enter into so-called “partnership” trade agreements?

The lessons of a crisis

The 2007-2008 food crisis served as a manifest reminder -- particularly for weakened states and regions -- of the unique characteristics of the agricultural sector. These characteristics mean that governments must implement appropriate public policies to ensure the security of their food sector.

The unpredictable nature of the food crisis highlights the need to maintain maximum public response capabilities. States and regions must be in a position to react quickly to unforeseeable events without having to wait for the approval of trading “partners,” as has been proposed in some trade agreements now under negotiation.

The development of free trade can by no means be seen as a way to fight the causes of the food crisis. This point is driven home by the fact that we are currently seeing a paradigm reversal in Europe with regard to the future of the CAP. Until recently the bulk of the programme was disparaged; today, however, it is being reasserted as a major direction for European policy.

Henceforth, is there still a place for agriculture in Free Trade Agreements?

Agriculture cannot be subject to liberalisation, even 20 or 25 years down the road, as it is unlikely that even then ACP farm exports will be able to compete with those from the EU. The liberalisation of the agricultural sectors in trade negotiations is a direct threat to the realisation of Millennium Development Goals number one: to reduce poverty and hunger by half.

So many ACP States, regions and peasant organisations adhere to an agricultural policy that calls for “food sovereignty.” By viewing agriculture as a sector much the same as any other, the EPAs are out of line with this perspective. The recent events, in all their very painful reality, should prompt us to acknowledge an agricultural exception in the EPA negotiations, for the ACP countries as well as the EU member states.

J.-J. Grodent is Head of the Information Service with SOS Faim Belgium, and Director of Défis Sud. This document has been prepared based on a presentation given at the Seminar “EPA in (times of) Crisis” on 29 April 2010. For further information, a more detailed version of this article is available from the following link :

Evaluation synthétique des études d’impacts de l’APE réalisées pour les pays membres de la CEMAC, Sao Tomé et Principe et de la République démocratique du Congo », Rapport final, 2007, p.6, Philippe Hugon, Olivier Stintzy, Partenaires et stratégies, PrincewaterhouseCoopers France. « Economic Partnership Agrements : making them tools for development”, 2005, p.2, San Bilal, ECDPM. “Etude d’impact des APE sur l’économie du Mali », 2004, p. 14, B. Faivre Dupaigre, M. Coulibaly, A. Diana, IRAM – GREAT.

EPAs: Can better safeguards help?” K. Ulmer, Speaking notes, EPAs in (times of) crisis
Brussels, 29 April 2010.

Notes
[i] Vanuatu Daily Post, 2010 08 06.

See, on this subject, Alan Matthews, Economic Partnership Agreements and Food Security, Shedding Light on the Negotiations, Vol.9, No.5, June 2010,

The Fiscal Impact of the EPA, David Laborde, Shedding Light on the Negotiations, Vol 9, n°6 July 2010.

See, on this subject, the article by El Hadji Diouf, Why the MFN clause should not be included in EPAs, in Trade Negotiations Insights, Vol. 9 No. 8 (October 2010).

Il n’y a pas de plan «B» aux APE, Bernard Petit interview, Défis Sud n°81, March 2008.

Pouvant d’ailleurs se tourner vers les pays ACP !

Consolidated version of the Treaty on the functioning of the European Union, Official Journal of the European Union, 30 March 2010, Arts 39 to 44. See also Appel de Paris, signed by 22 European countries, for a Common Agricultural and Food Policy, December 2009, http://agriculture.gouv.fr/appel-de-paris-pour-une-politique.

Lyon Report PE 24-03-2010)

A recent interview with the African peasant leader Mamadou Cissokho confirms this approach : http://www.youtube.com/watch?v=RvJnP3v-GK4.

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