Trade Policy between Europe and the African Continent

Question 1

What are LDC’s?

Answer 1

It’s a United Nations classification of the Least Developed Countries based on three criteria:

• poverty
• economic vulnerability
• human resource weakness

Question 2

What are the policy frameworks of Europe with Africa?

Answer 2

2 main frameworks:

• European Neighbourhood Policy (ENP): North Africa
• ACP countries: sub-saharan Africa

Question 3

What are the objectives of the European Neighbourhood Policy?

Answer 3

Avoid the emergence of new dividing lines between the enlarged EU and its neighbours.

• Stability
• Prosperity
• Security

Question 4

What’s the relation between the EU and the ACP countries?

Answer 4

= Africa Caribbean Pacific

• financial assistance
• technical assistance
• trade: non-reciprocity,

Question 5

What is the Cotonou Agreement?

Answer 5

Cotonou Agreement (2000-2020)

• Trade: asymetrical reciprocity (Special arrangements for LDCs)
• Differentiation à no longer a « one-size fits all policy »
• Regionalization à creation of 7 regional groupings
• Negotiation of Economic Partnership Agreements (EPAs)

Question 6

What are the EPAs?

Answer 6

• Launched in 2002 to replace the Trade chapter of the Cotonou Agreements
• Region-to-Region agreement
• No quotas, more development aid, asymetrical reciprocity

Question 7

What are the major divergences of Africa?

Answer 7

• 54 countries cannot be measured by the same yardstick.
  
  • Significant geographical, cultural, historical, linguistic, political and economic differences
• The record on poverty – constrained by inequality
  
  • “Countries across Africa are becoming richer but whole sections of society are being left behind”, (Africa Progress Report 2012)
  • Variable performance in reducing poverty per country
• Unemployment
  
  • High levels of informal employment + youth surge
• African middle-class still small

Question 8

Explain how Africa is doing well economically.

Answer 8

• Africa been doing well since 2000 (even after financial crisis)
• Rising economic growth till 2008 (5.3%), then down to 3.6% in 2011, estimations to GDP’s growth: 4.8% in 2014 – 5/6% 2015.
• Africa is now one of the world’s fastest-growing regions - Doing better than Asia

Question 9

Explain how Africa is doing well politically.

Answer 9

• Growing interest in African natural resources and energy
• Continuing G8 interest in African affairs
• Increasing number of partners, several new ones (US, China, India)
• International recognition of renewed African institutions (i.e. African Union)

Question 10

What are questions to be asked before doing business?

Answer 10

1. Enter the market?
   
   1. Market Study / Risk Analysis (YES/NO – Alternatives?)
2. When to enter?
   
   1. First mover Advantage vs. Risks of early entry
3. Where to enter?
   
   1. Africa is a big continent. Target groups.
4. How to enter?
   
   1. Ownership options:
      
      1. Direct ownership
      2. Joint Venture
      3. Franchise
5. What to offer?
   
   1. Standardise vs. localise? NB: importance of Cultural differences!
6. Which resources are needed?

Question 11

What is the “Doing Business Report”?

Answer 11

It’s a ranking of economies on their ease of doing business, from 1–189.

A high ease of doing business ranking means the regulatory environment is more conducive to the starting and operation of a local firm.

“Sub-Saharan Africa accounts for 5 of the 10 top improvers in 2013/14. The region also accounts for the largest number of regulatory reforms making it easier to do business in the past year—75 of the 230 worldwide. More than 70% of its economies carried out at least one such reform”

Question 12

What are important points to take home of the presentation about the trade policy between Europe and Africa?

Answer 12

• Africa is a huge continent. Be aware of major differences and avoid generalisations.
• The EU has a strong and long-lasting relationship with the African continent (historical past, culture, development policies).
• The Cotonou Agreement (2000-2020) and the EPAs are the main framework of relations between the EU and the ACP countries.
• Africa is now one of the world’s fastest-growing regions (better than Asia!), but major inequalities still persist.
• Good economic performance has increased the interest into African issues at the international level.
• Africa has new “partners” (BRICS, etc.). The EU is not the only player in town anymore!
• 6 main questions before starting your business abroad