TANZANIA, NIGERIA, AND THE EU makers more about how industrial policies should be implemented— not if they should be implemented at all. To get industrial policy right, Nigeria and Tanzania need to build new institutions with more independent actors empowered to play an enforcement role – as was done successfully in east Asia.
Of course, the world has changed dramatically since the UK, Europe and the US industrialised in the 19th century. But evolving the policies that worked for the 21st century seems more beneficial than phasing them out altogether.
Protecting new industries
The main reason cited by Tanzanian and Nigerian officials for rejecting the EPAs – that they would block industrialisation – are consistent with these historical lessons. Not only do officials worry that the EPA’ s proposed tariff reductions would pose a drain on vital revenues needed for annual budgets, but both countries are concerned that dropping tariffs would destroy local industries – a view supported by research by think tanks such as the Wilson Centre.
“ Our experts have established that the way it has been crafted, the EPA will not benefit local industries in east Africa. Instead it will lead to their destruction as developed countries are likely to dominate the market,” Tanzania’ s foreign affairs permanent secretary Aziz Mlim stated.
Tanzania also points to a rule in the proposed EPA that would outlaw its use of export taxes on raw materials. This would deny them a standard industrial policy that was used by all of the rich countries to keep raw materials at home and available for use by domestic manufacturers. For example, Tanzania banned exports of mineral sands from gold mining on August 1. This is permitted under World Trade Organisation( WTO) rules, but would not be allowed under the EPA.
Rather than exporting the sands – to be processed into tin, copper and silver abroad – Tanzanian president John Magufuli called for processing plants to be built in Tanzania and to further develop markets for copper and silver. Indeed, a number of EU trade policies are quite clear in their intent to use trade deals such as the EPAs to open up access to raw materials for use by European high-tech manufacturers.
There is also the issue of African regional economic integration. While the EU claims the
EPAs would support the region’ s integration, others disagree, including former Tanzanian president Benjamin Mkapa. He fears that locking in old North-South trade flows under the EPAs would undermine recent efforts at building new South-South regional trade ties.
Drawing on data that shows African countries buy more manufactured goods from one another than do others( most of the EAC’ s exports to the EU are primary commodities), Mr Mkapa says that inter-African trade is far more important for the region’ s aspirations to industrialise.“ The EU market plays almost no role in this,” he concludes.
Nigeria’ s concerns are similar. President Muhammadu Buhari recently reiterated his belief that EPA rules work against the national industrialisation strategy during a special session of the European Parliament in February.
Nigeria does not need an EPA“ until it has been adequately industrialised and [ is ] able to trade industrial goods competitively”, Frank Jacobs, president of the Manufacturers Association of Nigeria, emphasised in a recent interview.
For now, it appears that the impasse is set to continue. Tanzania and Nigeria are determined to take a different approach – using trade protection first, then adopting free trade later. Their next moves will be watched closely.- ThisIsAfrica
INDUSTRIAL POLICIES IN AFRICA AND LATIN AMERICA IN THE 1960S AND 1970S TYPICALLY FAILED BECAUSE THEY WERE APPLIED INAPPROPRIATELY, DRIVEN BY CORRUPTION
2016 | Business Times Africa 41