Free trade alone is not a solution in Africa

Article has been published in German (www.gegenblende.dgb.de)

On 30 May 2019 it finally happened. The African Continental Free Trade Agreement (ACFTA) came into force. In particular the two biggest national economies of Sub-Saharan Africa, South Africa and Nigeria, had long resisted accession because they were afraid of “cheap products” from abroad that would damage their competitiveness. Now they are to take steps such as the creation of a Customs and Currency Union, a Common Market and an African Economic Community will also possibly follow. The positive aspects of trade are rarely questioned. Certain political conditions must however prevail for its positive welfare effects. The African trade unions, largely outside the discussion to date, could in particular play a central part in cross-border cooperation.

At first sight ACFTA is an impressive and ambitious project. One of the potentially biggest and continually growing economic areas with 1.2 billion people was to be incorporated in the Agreement. Many of the 54 African countries are registering high growth rates. Their growing middle classes are driving demand for consumer goods that are often imported from countries outside Africa. So the African Free Trade project fits in both with the dominant economic activity and lifestyle and with the dominant discourse: trade liberalisation has positive effects on growth and welfare. But many questions remain.

Trade Unions fear that Chinese products in particular will be freely traded

The experience to date with regional free trade agreements and economic areas in Africa1 shows that the liberalisation provisions of the treaties are in practice often circumvented. National governments in the end remain dependent on customs revenues and develop some creativity with regard to border and customs provisions. The result is the well-known truck queues stretching for miles at the borders. The sub-regional economic areas, created to promote intra-regional trade, have not solved this problem. Added to this is the endemic corruption, not only at border crossings, and the poorly developed transport infrastructure which anyway is aimed at trade with the former colonial powers.

ACFTA should overcome these problems and by stronger intra-regional trade promote the continent-wide building of industrial supply chains and hence self-sustaining development. But even if the political will and financial resources to get a grip on the problems could be found, the question remains of what in fact should be traded within Africa. The region at present only generates around 2.5 trillion US Dollars per annum. Compared to this, with less than half the population, Europe generates 17 trillion US Dollars. This explains the concern of countries such as South Africa, Ghana and Nigeria that it will not be African, but mainly Chinese products that will get into the country indirectly tax-free and hence thwart their industrialisation strategy. This is the central criticism of the Nigerian trade union movement. It is essentially the industrialisation success of China that has contributed considerably to the premature de-industrialisation of Africa.

To date the industrialisation strategies of African countries have not been able to absorb sufficient labour in the productive manufacturing industry. On the one hand the demographic pressure is very high, on the other international competition is too great. Many African economies therefore remain focussed on exporting raw materials and on relatively unproductive agriculture and informal services. The hope that trade liberalisation will lead to industrialisation and the development of supply chains on the African continent, seems to be wishful thinking.

There are still no policies for trade that is socially equitable and sustainable

In addition ACFTU does not offer any answers to basic questions. Even if in the emerging economies of Africa de-growthcannot readily be discussed (beyond a reduction in population growth), the growth promised by trade liberalisation sounds hollow in view of the pressing problems of global society, especially since it is the countries of the Global South that are suffering from the consequences of man-made climate change. Trade after all also has environment- and climate-damaging aspects, not least because of the necessary and increasing transport sector. A discussion on the “good life” that will be achieved by higher growth must also include a sustainability dimension even in Africa. In addition the welfare effects of trade arise not least due to structural changes in the economy that produce losers and intensify competition. In this respect the project of continent-wide trade liberalisation comes into conflict with the aim of creating long-term "good labour" in the fight against poverty.

Answers must be found to political questions so that trade is also facilitated in terms of ecological sustainability and a just society. For the African trade unions social interests and the protection of workers’ rights are also of central importance, as is the question of a just transition to a less climate-damaging economy. Trade unions can benefit from the potential of the Free Trade Agreement and the long-term plan for a Customs and Currency Union (or even an Economic Community), to strengthen their power base and represent the cross-border interests of their members.

Beyond national discussions the African trade unions have hardly been actively involved in the discussions on the Free Trade Agreement. As they largely represent those employed in the public sector, this marginalisation is also a consequence of their own weakness. Furthermore, competition considerations in investment and trade questions hamper cross-border solidarity. With unemployment levels of over 30 percent in South Africa, Ghana or Nigeria and over 90 percent in Zimbabwe the creation and maintenance of jobs, often irrespective of their quality, is the main focus for governments and trade unions. Even though the economic areas directly affected by trade competition are mostly small, the interests of the employees even in highly informal economies are greatly affected by liberalisation; in the end, this affects the development opportunities for the whole country. The trade unions have so far failed to develop a cross-border political position that criticises the growth narrative associated with trade liberalisation.

In Namibia the trade unions are making effective use of their political influence for workers

At the same time a few African trade unions are developing transnational organisation, campaign and lobbying capabilities, above all the eight Global Union Federations (GUFs) and their African member unions. An important area will be infrastructure: if intra-African trade is to increase, the demand for infrastructure projects will grow. This will give rise to intervention opportunities for trade unions in the construction sector. The People’s Republic of China (PRC) is by far the most active player from outside Africa in financing and implementing infrastructure projects, with a wide range of (partially) state-owned multinational groups and subcontractors. Even if China is not exactly known as the home of freedom of association, the Building and Wood Workers International (BWI) and its members have for many years succeeded in the trade union organisation of Chinese companies and workers in construction projects and moving road works. It now has over 72,000 members in over 14 countries, whose trade unions have signed more than 55 collective agreements with Chinese companies, with a rising trend! In Namibia the trade unions have been able to convert their strength into political influence. There state projects can only be awarded to investors and foreign firms if the Metal and Allied Workers Union MANWU has previously been involved. As the demand for trade infrastructure increases, the opportunities to influence trade union commitment also increase.

More trade will necessarily lead to more transport and that also results in great potential for targeted union action. If truck drivers, pilots, railway workers or ground staff at airports down tools, the effects on regional, continental and global supply chains are felt almost immediately. If cross-border port workers in Durban, South Africa, and Walvis Bay, Namibia associate with the truck drivers on the transport corridors to Gauteng and Johannesburg, the political power of the trade unions also grows. The International Transport Workers’ Federation ITF is already on the starting blocks here. However the great national fragmentation of the trade union movement often hampers cross-border action.

Trade union influence can also be exerted via its sectoral potential. For many groups active on the continent trade obstacles, non-transparent border policies and arbitrary customs provisions form a great challenge, so they also benefit from the political influence of the trade unions. Africa’s biggest retailer Shoprite/Checkers with branches in over 15 countries honestly admits that “Trade in Africa is many times more difficult and cost-intensive than between South Africa and Europe”. For example trucks of chocolate from Switzerland that was previously flown to Johannesburg sometimes wait for weeks at the border with Nigeria, resulting in immense costs for refrigeration. For this reason Shoprite is using the global framework agreement with the services GUF UNI Global Union to obtain its support for specific trade and customs improvements as part of the annual exchange with trade union representatives. This has nothing to do with a general recognition of social dialogue, but innovative trade unions can use the plea for trade union support very much to their advantage.

The EU should support the trade unions in organising cross-border solidarity

Fear influences discussion of the ACFTA for national trade unions and umbrella associations in Africa. Experience with the liberalisation of markets and services are almost entirely negative; free movement of people and goods is mainly seen as a threat to labour relations. On the other hand many African trade unions see the ACFTA as a paper tiger, a long way from implementation. This may still comfort the trade unions on the continent, but in the medium term serious challenges are associated with the project. At the same time the project can also be implemented to the benefit of workers if trade union action is not only focussed nationally.

If cross-border trade union solidarity and cooperation can be organised effectively, a big step will be taken towards the comprehensive social and ecological regulation of the ACFTA. Instead of pushing economic partnership agreements that disadvantage the African countries unilaterally and of only talking of Good Governance, the EU could recognise that the policy of the voluntary social responsibility of Western groups has failed. To enforce workers’ rights throughout the supply chain, legal measures are needed. Furthermore the EU could support the African trade unions in making the necessary internal reforms and building up transnational networks and institutions. Here lies the key to cushioning economic and structural change by the ACFTA in a socially appropriate way.

1) Among others the East Africa Community, EAC, the Southern African Development Community, SADC, the Common Market for Eastern and Southern Africa, COMESA.