Provide a 4 pages analysis while answering the following question: Trade agreements. Prepare this assignment according to the guidelines found in the APA Style Guide. An abstract is required. It is also seen that in the context of EU, the aspects of consistency are important. The relationships of EU with its trading partners, Africa needs to be seen in the larger context of consistency. This is because the EU cannot afford to have one set of rules at one point of time and a different set at another. There are around 79 countries in the ACP membership list (African Caribbean Pacific list) and have been the beneficiaries of favored treatment for special access to European markets. (The EU in the world the foreign policy of the European Union 2007).
The main problem is that African Nation is having a fear that it brings back that EU colonial system in the country. They are thinking that it will limit their development and would compromise their sovereignty. European Union is of the view that it will promote development in science and technology results in mutual benefit. Relation between both nations will help to facilitate Africa into world economy by promoting growth and investment. It provides provision for social and cultural cooperation and financial assistance.
However, this is all with a return bargain that the EU goods shall be allowed to enter the ACP countries at lowered tariffs, and shall enjoy being the destination point for the goods of EU in these countries. This lowering of tariff of imported goods hurts the local economy since now imported goods would vie with local goods which, apparently would be highly priced in the local markets. The consumers would opt for cheaper imported goods and thus local industry would have no option but to stagnate, without government protection and subsidies.
However, the main advantages of trade agreements is that the economy would become more competitive and , in the current globalised setting , it would be constrained to improve on all aspects- quality, quantity, pricing , servicing and customer retention.
“The most important element of the bilateral agreement remains the establishment of a FTA between the EU and South Africa.” (Drew 2000).
The aspects of government subsidies and grants to local products could be seen in the larger context of protectionist measures intended to alleviate the onslaught of competitive products, and to create revenue generations for the Government. In the long run, agricultural subsidies and grants to farmers, especially in the ACP countries, do more harm than good, and could have long term deleterious effects on the governmental proceedings. In the African context, it is seen that their problem is not in terms of having market access to European markets but in having a volume of goods and services to be exported, in terms of bulk, and at reasonable prices caused by achieving economies of large-scale operations. When volume content is not available, the ACP would not be able to make competitive inroads into other export markets and this forms the nucleas of the problem over time. “The EPAs are thus meant to change the relationship between Europe and Africa, from one built on preferential tariffs – an eroding lifeline – to one that builds lasting and more efficient markets for Africa.” (Neroth 2007).
The main disadvantages of the Trade Agreements could be seen in terms of the fact that the World Trade Organizations has ruled that all countries in a bloc need to be equally treated in trade and no preferential treatment could be accorded.