Brexit and the Future of Namibia and Botswana’s Trade with the EU
Last week much to the chagrin of neighboring Kenya, Tanzania decided it was not going ahead with the Free trade agreement called the Economic Partnership Agreement with the European Union which was supposed to be signed by the entire East African Community on 18th July. This was in large measure because of what Tanzania’s officials reportedly called the ‘turmoil’ existing in the EU following the UK’s Brexit vote on 23rd June.
The global trade regimes as well as the global economy have been thrown into turmoil by the surprise decision of the British electorate to reject its 40 year relationship with the EU. For the officials and ministers in Tanzania the costs of not signing are very small. Tanzania is classified by the UN as a least developed country and therefore will continue to get duty free access to the EU even if does not sign the EPA. The reason is that under the EU’s so-called ‘Everything but arms initiative’ all least developed countries in the world get duty free access to the EU. However Kenya, like Botswana and Namibia, is classified as a developing country and therefore must sign the EPA in order to continue to have duty free access for its massive cut flower exports to the EU. For Tanzania the cost of walking out of the EPA is minimal and the price of signing is agreeing to a treaty that is widely seen in governing circles throughout Africa as being profoundly anti-development.
For Kenya, Tanzania’s decision undermines the solidarity of the East African community and its Customs Union but most importantly weakens Kenya’s position in the EU export markets as it is widely seen as the ‘leader’ in the EAC. Kenya’s exports of cut flowers which are multi-million dollar trade preference dependent export to the Netherlands. In 2015 Kenya was exported some 63 Billion shillings of cut flowers, mostly to the Netherlands. It has by far the biggest share of the EU flower market, some 25% beating out both the Columbians and the Israelis. 27% of Kenya’s exports go to the EU with the UK being a relatively minor market. Tanzania has no such dependence on the EU and hence the cost of walking out of the EPA looks completely different in Dar Es Salam than it does in Nairobi. Last week when the East African community called a video conference of its Trade ministers to discuss the EPA, Tanzania simply did not appear, claiming it was unaware of the video-conference. Nairobi really wants the entire EAC to sign the EPA and it is widely seen that it may be willing to pay for EAC solidarity by offering Tanzania trade and economic concessions in other areas.
The position of Kenya, as a developing country is similar to that of Botswana and Namibia, While Botswana’s beef and cattle industries remain highly dependent on EU markets Namibia does not have the sort of dependence on any one export product to the EU. Namibia’s export of weaners to SA is by far the dominant part of the cattle industry. Moreover, the Ministry of Trade as well as Agriculture in Windhoek seems far more willing to develop new markets and decrease dependence on Europe. The most notable recent success for Namibia has been the first country in Africa to overcome the US paranoia about foot and mouth disease and obtaining permission to export deboned beef to the US market. It is highly likely that others such as Botswana will try to emulate the success of the Namibians in the beef export sector. Other sectors such as grape exports and fish are dependent on the EU and so the pressure does exist to sign. But like Tanzania the pressure to ratify the EPA comes from the neighbors, South Africa which is the country that gained the most from the SADC Economic Partnership Agreement with Europe and really wants everyone to ratify. All the six SADC countries signed in early June before the Brexit vote. As ever it was SA increased exports of wine and sugar that have been the greatest benefit of the EPA in Southern Africa.
For a decade Brexit will create trade and policy chaos in Europe and possibly a few small trade opportunities in Africa. One of the cornerstones of those advocating Brexit in the UK was that, after exiting the EU, the UK would be in a position to negotiate better trade deals with Commonwealth countries, a relationship that has waned in significance since the UK joined the EU in 1975. Australia’s PM has already indicated that his country wants to sign an FTA with the UK and Theresa May, the new British PM has welcomed the move.
It is certainly time for African Commonwealth countries to approach the Commonwealth Secretariat in London and the UK government for some indications as to what sort of trade treaty would be possible post-Brexit. However, those ‘old commonwealth’ sentimentalists who believe that a trade treaty with the UK would be any better for Africa than the EPA will soon be disillusioned because, based on past experience, it was the UK officials and commissioners in Brussels who were amongst the most hawkish and demanding of the negotiators inside the EU during the EPA negotiators. There seems little reason to think they will change in any way when London, rather Brussels, calls the shots on trade and Namibia will certainly be not significantly better off. Indeed the possible fragmentation of the UK ,with 62% of Scots voting to stay in the EU and 52% of the Northern Irish, may mean a UK market of much more fragmented and less significant to all African exporters.
For over 50 years the EU has helped maintain peace and stability on a violent, dark and brutal continent where tens of millions of European, Asian and African lives were lost in two world wars. The weakening of the EU as a result of Brexit is a loss for Europe and a loss for Africa and whereas we may extract some minor trade benefits from a fragmented government in London the resultant risk that Europeans will revert to their previous barbaric behavior is a far greater loss to Africa than any gains in exports of a few tonnes of beef and grape.
These are the views of Professor Roman Grynberg and not necessarily UNAM where he is employed.