There are three big concerns on EPAs. First, every developed country has used tariff protection in its history to develop industry, but EPAs restrict that capability and could unleash a surge in European imports that could wipe out fledgling industries such as Kenya\’s dairy sector, as well as undercut prices of agricultural products. Second, governments themselves stand to lose a major chunk of their revenue that comes from tariffs; for instance, Zambia would lose $15.8m – the equivalent of its annual HIV/Aids budget. EU assurances that there would be aid to compensate only underline how this would increase dependency on aid. Third, the most complex and most important issue of all is how EPAs will affect regional trade. If you can get cheap widgets from the EU, why bother importing from your neighbour in Africa or the Pacific? UN studies have indicated that EPAs could lead to contraction in exactly those low and medium technology industries that are the basis for successful industrialisation.
I won\’t waste my energy trying to overturn your near insane belief that tariffs lead to economic development. But please, just try this. Joe Stiglitz (yes, the Nobel Laureate, the fellow Guardian writer, the go to guy on this sort of trade policy for the interventionists) pointed out in one of his papers on the subject that even if infant industry protection, import substitution and so on did in fact work, it would only do so if the rulers, the politicians and the bureaucrats, were wise, omniscient, incorruptibles.
This clearly isn\’t the case in Africa now, is it? So, as his paper then goes on to state, it rather makes all of these plans about developing behind such barriers rather moot, doesn\’t it?
As Dani Rodrik likes to say, we may often have to go with the second best solutions: as Africa is run by theiving hyenas, even if what you say about tariffs is correct, we still don\’t want industry being developed by such politicians, so free trade is still the way to go.