Tearfund: Government Must Halt Damaging Trade Agreements

Tearfund has called on the Government to prevent EU trade negotiators from forcing poor countries to sign up to trade deals that will harm poverty reduction and development.

A new report from Christian relief and development agency Tearfund - Much to Lose, Little to Gain - criticises the EU for pressuring Africa and other countries to agree new trade deals by the end of the year. These agreements will require Malawi and other poor countries to liberalise their trade markets far beyond what has been under discussion at the World Trade Organisation (WTO). The EU is also pushing for commitments in areas such as investment that developing countries have for years rejected at the WTO.

The report declares that negotiations for Economic Partnership Agreements (EPAs) have been grossly unbalanced and unfairly tied to future aid.

"Trade is vitally important to the development of poor countries," says Mari Griffith, Trade Advisor at Tearfund, "but the kind of trade liberalisation and commitments in areas such as investment that the EU is foisting upon countries from Africa, the Caribbean and Pacific, could well set back their efforts to reduce poverty and ensure ongoing development.

The report looks in detail at Malawi, whose GDP is less than half the annual profits of supermarket Tesco, concluding that EPAs as currently proposed would increase Malawi's dependence on exporting only low-value raw commodities and undermine the country's weak manufacturing sector and Malawi's future industrialisation.

Under the proposed EPAs the EU would gain increased access for its goods to Malawi's markets and to other markets in the region, which could spell collapse for Malawian producers not adequately prepared for competition.

Regional integration between Malawi and its neighbours is also threatened by forcing African countries to open up markets to EU goods and services before they've built up their own regional markets.

An EPA could also lead to a significant loss of revenue and induce other major adjustment costs, reducing the Government's ability to provide basic services such as water and sanitation and increasing Malawi's dependence on aid.