The untapped potential of EU-Africa trade

CAPE TOWN – China’s use of trade and investment links to expand its influence in Africa is fueling growing concern in some European capitals. But, instead of complaining about China’s activities, the European Union should be deepening its own engagement with the continent.

In recent years, the EU has been actively seeking to secure new trade and investment opportunities around the world. As of July 2018, the EU was engaged in negotiations for 21 free-trade agreements. This includes talks initiated in the last seven years with six ASEAN countries – Indonesia, Philippines, Malaysia, Singapore, Thailand, and Vietnam – which could pave the way for a future deal with the entire region.

The EU has also initiated talks with New Zealand and Australia. And it recently concluded comprehensive free-trade agreements with Armenia, Canada, Japan, and Vietnam, as well as a standalone investment agreement with China.

But what about Africa? The continent’s trade with the EU is already massive: together, African countries represent the EU’s third-largest trading partner, after the United States and China, accounting for nearly 7% of total extra-EU trade in goods, including 7% of imports and 8% of exports. And though the EU ran a persistent trade deficit with Africa in 2000-2014, it ran a €22 billion ($25.5 billion) surplus in 2015 and a €22.7 billion surplus in 2016.

Africa’s trade with the EU is triple that of, say, Canada, which amounted to €94.7 billion in 2016. With the Comprehensive Economic and Trade Agreement, annual EU-Canada trade is expected to increase by at least 8%, or some €12 billion. But that is still the equivalent of just half the EU’s trade volume with Egypt alone.

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First published by Bilaterals