THE EC AND BLACK AFRICA: NEGOTIATING THE FUTURE RELATIONSHIP

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79R00967A001600030018-3
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 28
• Document Creation Date: December 20, 2016
• Document Release Date: September 19, 2006
• Sequence Number: 18
• Publication Date: July 25, 1973
• Content Type: MEMO

Copies. of the attache- LemoThnUzd AL `,. t.i n s ent
to David ;,Newsom, M n r Ra l~ ; try lt.< +~c'L iC 'gyp
F. Randal.1 Smith, George Kcn-uie
John. Ghiardi, Abraham: Katz.
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25 July 1973
MEMORANDUM FOR: Mr,__ Rams y" '^ rbus'h
SUBJECT: Suggested additional customers for. Memorandum,
"The EC and Black Africa: Negotiating the Fu-
ture Relationship."
State Department
M4r. David D. Newsom
3 Assistant Secretary for African Affairs
Room 6234 A
Ms. Nancy V. Rawls
Director, Policy Planning Staff
Bureau of African Affairs
Room 623)
:M9r. Ray S. Cline
Director, Bureau of Intelligence and Research
Room 6351
Mr. Godfrey H. Summ
3 7 Director, INR Office for American Republics and Africa
Room 7L; q 3
Air, William J . Casey
3 t' Under Secretary for Economic Affairs
2 5
ix- F. Randall Smith,
Special Asst to the Under Secretary for Economic Affairs
/ loom 7250
Tr. George R. Kenney
Econcmio Policy Staff Director, Bureau of African Affairs
Room 521+4 A
Mr. John C. Renner
Deputy Assistant Secretary for international Trade Policy
Room 3331
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Mr. C. Thomas Thorne
Deputy Director for Africa (INRZ/RAA)
Room 7533
Y3
Hr. John F. Ghiardi
Director, Office of Economic Research and Analysis
Room 8'722
1,1r. Abraham Katz
Y f Director, Office of OECD European Community and Atlantic
Political-Economic Affairs
Room 6517
Mr. John DiSciullo
L/' Deputy Director for Western Europe (INR/DRR/RES)
Room 7802
11r. Samuel C. Adams, Jr.
A;~sistant Administrator for Africa, Agency for International Development
Room 6936
A1r., James A. McGinley
Assistant Director for Africa
U.S. Information Agency
Room 519-1750 'i
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CENTRAL INTELLIGENCE AGENCY
OFFICE OF NATIONAL ESTIMATES i
25 July 1973
THE EC AND BLACK AFRICA: NEGOTIATING THE FUTURE RELATIONSHIP
SUMMARY
In the next couple of months the terms of future economic
association between most of Black Africa and the expanded Euro-
pean Community will be worked out. There has been some US con-
cern over the tendency of African nations after independence to
maintain and even increase their economic ties with the states
of Europe, both bilaterally and through association with the EC.
Some US policy makers have been apprehensive about the creation
of a bloc from which American trade and investment might be ex-
cluded. This paper examines the implications of an enlarged
group of African and European associates for US interests. It
concludes that although certain specific provisions of a new
association agreement will be disadvantageous to the US, an en-
hanced European role in Africa will mitigate the influence of
Communist and radical Arab groups and help to maintain the
stability which the US desires in the area.
This memorandum was produced in the Office of National Estimates and
discussed with appropriate offices of CIA. They are in agreement
with the principal judgments of the paper.
Comments may be addressed to:
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1. Western Europe and Black Africa are in the process of develop-
ing new arrangements governing their trade and aid relationships. When
the Six of Europe became the Nine, Britain brought with it to the Euro-
pean Community (EC) responsibilities towards 20 Commonwealth countries.
In addition, negotiations for replacing the existing Yaounde II agree-
1/
ment linking the 19, mostly French-speaking, Associated African States
and Madagascar (AASM) with the EC were already scheduled to begin this
fall. These two circumstances have engaged the European Commission in
a process of working out new relations with over 40 developing countries.
1/ The Annex of this paper gives a summary of association agreements
between the EC and African states, as well as a description of the
defacto private commercial ties and governmental attitudes which
perpetuate European economic dominance in Africa.
2/ The African states eligible for future association are as follows:
(a) The 19 present associates of AASM: Senegal, Mauritania,
Upper Volta, Ivory Coast, Dahomey, Niger, Chad, Gabon,
Central African Republic, Congo, Madagascar, Togo, Cameroon,
Zaire, Burundi, Rwanda, Somalia, Mauritius, and Mali.
(b) The 12 African Commonwealth nations: Nigeria, Ghana,
Sierra Leone, The Gambia, Kenya, Uganda, Tanzania, Zambia,
Malawi, Lesotho, Botswana, and Swaziland.
(c) The five other African eligibles: Ethiopia, Liberia, Guinea,
Sudan, and Equatorial Guinea.
Also eligible for association are several Caribbean Common-
wealth countries.
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2. Compounding the difficulty of this blending process is
the fact that most of the Francophone African states are already
in the midst of individually reconsidering their bilateral coopera-
tion agreements with France. On their part, the French are reluctant
to lose their dominant commercial and cultural position in the former
colonies. France wants to maintain reverse preferences, and is tell-
ing its African partners that the price of greater autonomy will be
a reduction of support from the metropole. Many African associates
feel that their sovereignty is seriously infringed by the existing
agreements, and are particularly exercised by France's almost total
control of their external economic affairs. Mauritania and the
Malagasy Republic have recently left the franc zone, and other
members of this currency area are demanding greater autonomy in
monetary affairs.
3. By contrast with France's African relations, the Common-
wealth -- in typical British fashion -- has no farmal treaties of
association among its 32 member-states, but the LDCs of this group
enjoy substantial trade and aid benefits without the sovereignty-
infringing financial and commercial controls maintained by France.
Britain itself feels some obligation to safeguard the economic
interests of its Commonwealth partners and is urging them to
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associate. This would protect the British export markets of the LDC
states and would relieve Britain of having to continue bilateral aid
to a non-associated state in addition to its payments into the Euro-
pean Development Fund (EDF). Britain opposes reverse preferences.
4. Formal negotiations between the African states and the
European Commission are scheduled to begin in September, and both
parties are struggling to arrive at common negotiating positions
toward one another by then. Within the European group, the most
divisive issue is that of whether to maintain reverse preferences
as a necessary feature of African association with the EC. The
British, the Dutch, and perhaps the West Germans -- sensitive to
the objections of other major trading nations such as the US and
Japan -- are opposed. France, the longstanding advocate of reverse
preferences, has recently shown signs that it will press strongly
for their continuation. The French may be able to get their way
by winning over the undecided EC members, and it appears they will
make this effort.
5. When the question of expanding the membership of African
states associated with the EC was first raised, it was generally
assumed that each eligible African country would either join in a
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general association agreement containing trade and aid provisions
along the lines of Yaounde II or opt for a simple trade agreement.
In a series of conferences, the African nations have tentatively
agreed to approach the EC from a common front and to press for
improved terms in the association accord which succeeds Yaounde II.
II. THE AFRICANS
6. The negotiations will hardly be a confrontation between
equal parties: the African states possess neither the political
nor economic influence to place major demands upon the EC's members.
The offer of association was and is essentially a way of meeting
the responsibility felt by Britain and France toward their former
colonies, as well as an expression of their interest in maintain-
ing historical and economic ties. The basic decision of whether
or not to associate however, rests with the Africans. But since
few of the associates or associables have any realistic alternative
sources of the same trade and aid they derive from associating with
Europe, they are left with deciding what form of association they
desire and the more difficult matter of whether they can, in fact,
approach the EC from a united position.
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7. The prospects for African unity in confronting Europe on
these matters, however, are no better than they have been on the
various other major issues over which the African states have
divided among themselves. Fragmentation, moreover, has become
institutionalized by a proliferation of regional and functional
associations throughout the continent. Organizations, commissions,
and Conferences have been a major growth industry in Africa during
the past decade; but such groups have done more to consolidate than
to reduce the past division of Africa into competing or incompatible
blocs based largely on the old colonial lines. Incompabilities in
language and currency, the tendency to maintain established trading
patterns, and the suspicion of many associables that the EC will
broaden France's influence in Africa, remain strong factors working
against greater intra-African cooperation.
8. The economic needs of the African states have chronically
been at odds with their desires for political autonomy, and this
ambivalence is reflected in their current approach to the EC.
Africa is dissatisfied with its role as Europe's "backyard" -- the
supplier of raw materials -- and is demanding a chance to develop
secondary industries whose products will not be prejudiced by trade
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barriers in the developed countries. But since the processes of
industrialization involve years of lead time, in the short run
African nations cannot risk losing development assistance by
pressing their European patrons too hard on economic or polit-
ical matters.
9. The attention and money which the major non-European powers
appeared ready to give to Africa in the 1960s have diminished con-
siderably. US economic assistance to Africa has been steadily
scaled down in recent years, and both the Soviet Union and China
have become highly selective in distributing aid south of the Sahara.
The Arab states -- notably Libya -- have become diplomatically active in
Black Africa, but have not made any economic commitments which would
challenge Europe's dominance there. Thus, the present Yaounde Conven-
tion, which contains economic aid as well as trade support is likely
to be considered the best formula available to the AASM and associable
states in their future ties with the EC.
The Francophone Associates
10. The decade-long experience of the AASM group as associates
has been mixed, and certainly has not brought about the trade benefits
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they envisioned. Apart from the former French colonies (considered
as a group) whose exports are largely agricultural, the only important
AASM exporting country is Zaire, whose exports are mostly metals --
which enter the EC duty-free regardless of their origin. The major
tariff preferences for Africa are on raw agricultural products, but
they are granted in a way that discourages these countries from de-
veloping much-wanted secondary industries and thereby exporting even
semi-processed materials.
11. To state the trade situation graphically: an index of EC
tariff levels faced by the 10 products which constitute 75 percent
of total AASM exports computed before and after these states associated
shows that the level of preference was unchanged by the association
arrangement, and the tariff preference of some major export products
of certain associated states was even lowered.*
12. Association has failed to satisfy the original aspirations
of the AASM states for growth in trade and diversification into
finished products. This disappointment is further aggravated by the
EC's more recent adoption of a generalized system of preferences for
IMF study: "Trade Effects of the Association of African Countries
with the EEC", November 1972, DM/72/91, page 31.
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all LDCs which serves to whittle away the degree of preference
for the associates. In spite of increased trade by African
associates with EC states other than France, the Yaounde agree-
ments have not to any great extent altered the relative importance
of France as the main export market for agricultural products
of the former French colonies. The tariff reductions in EC coun-
tries other than France also do not appear to have affected the
composition of commodities exported by AASM members.
13. In view of this disappointing failure to create meaning-
ful preferences what is the positive benefit of continued association
for the 19 of the Yaounde Convention? The heart of the matter, for
the Africans, is financial aid which is tied to association. The
EC has provided the African associates with substantial economic
assistance under the terms of various association agreements since
the Treaty of Rome in 1958. Under the five-year period of the second
Yaounde Convention, $918 million has been allocated for the original
18 -- about 25 percent more than Yaounde I provided from 1964 to 1969.
Of this total, $748 million is in the form of European Development
Fund (EDF) grants, $80 million as soft loans, and $90 million as
European Investment Bank loans on harder terms.*
Compared with the more than $730 million just in EC aid obtained by
the AASM alone under Yaounde I, all of Black Africa in that same
1964-1969 period received about y1T 3 billion from the US, $400
million from the IBRD, and $130 million from the USSR and Eastern
Europe.
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14. The present group of Yaounde II. associates (AASM) will
undoubtedly opt for continued association along the lines of the
existing Yaounde formula. These states have no realistic alterna-
tives to association and will stand a better chance of resolving
their differences with the Europeans by haggling over details once
the general terms of a new agreement are drawn. This group finds
it much more natural to act in unison than the associables: be-
sides their linguistic compatibility, most of them share a past
experience of regional cooperation, closely related currencies,
and personal ties between their leaders. Two of the most influen-
tial leaders, Senghor of Senegal and Houphouet-Boigny of the
Ivory Coast, are strong advocates of continued close ties with
Europe.
15. One unifying motive for many of these leaders is Francophone
fear of Niger;_an influence. While they advocate greater economic
integration in West Africa, the "old men" of French Africa suspect
that too strong a union with their more prosperous Commonwealth
neighbors would threaten what they consider as their unique identity
and their special relationship with Europe. Nigeria has already
had moderate success in suggesting to Niger, Togo, and Dahomey that
their economic interests lie in closer cooperation with Lagos.
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16. As an inducement to continued association, the European
Community has assured the AASM Africans that expansion of associa-
tion membership will not mean more LDCs slicing up the same aid "pie",-
but rather a larger pie with the addition of British and Danish
contributions. EDF assistance is multilateral and long term, makes
development planning easier and more rational than annually fluctuating
bilateral aid, and reduces the economic subordination of any given
African LDC to a single European patron-state. It is, therefore,
a form of aid which is psychologically satisfying to proud and sen-
sitive African leaders, who are anxious to avoid being accused of
neo-colonialist ties but too poor to pass up an offer of assistance.
17. The 13 African Commonwealth associables are economically
stronger, far more populous and in general developing more rapidly
than the AASM; as a group they also have considerably fewer shared
interests than the associated states. Although most of them will
choose to associate with the EC, the Anglophones will attempt to
make numerous demands upon Europe to reflect what they consider as
their specialized needs. The importance of making a choice on the
matter of association varies with the significance of British trade
for the particular Commonwealth country.
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18. Britain's entry into the Community means that in 1975
she will be imposing a Common External Tariff (CXT) on imports
from unassociated Commonwealth African countries; in most cases
this will mean an increase in British duties. In the absence of
an association agreement, Britain will have to apply the cocoa
tariff against Ghana but not against the Ivory Coast, the peanut
oil tariff against The Gambia and Nigeria but not against Senegal.
With the exception of Nigeria, on whose oil the EC duty is zero,
the Commonwealth African countries cannot afford to ignore the
offer of association with the EC; their problem is to decide which
is the most advantageous type of association for them.
19. Among West African Commonwealth countries Ghana stands
to gain the most from association, since it would otherwise lose
much of its UK cocoa market to its Francophone neighbors when the
UK begins applying the CXT. Ghana depends on cocoa for about half
of its export receipts, and half of its cocoa and most of its
timber will go to the enlarged EC. Sierra Leone and Zambia have
little present need for EC preferences since their exports are
predominantly diamonds and minerals, which already enter the EC
duty-free. Association could, however, help them to diversify
into agricultural exports.
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20. Kenyga, Uganda, and Tanzania have been unhappy with the
existing Arusha agreement* because of its tariff quotas and lack
of access to EDF funds. The option to associate on Yaounde-type
terms, but without reverse preferences, is attractive to them be-
cause it will raise tariff quotas on their crucial coffee and
canned fruit exports and will allow their participation in EDF.
Botswana, Lesotho, and Swaziland want very much'to associate,
but they are tied to the Southern African customs union and the
rand currency area. Therefore they will be able to go no further
towards association than South Africa is willing to let them go.
21. For Nigeria, the impact of Britain's accession to the
EC is mixed. While Britain has remained her largest single
trading partner, trade with the original Six and other countries
outside Western Europe has grown over the years because of the
emergence of petroleum as the predominant export. Relying on the
strength of its oil exports, Nigeria is the only Commonwealth
country thus far to have openly rejected the option of association.
Some of its objection to EC association is political: Nigeria has
leadership ambitions in West Africa and feels that these designs are
threatened by European (especially French) meddling in Africa.
See Section B of Annex.
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Almost 20 percent of the money value of Nigeria's exports, however,
is still in traditional primary products, and Lagos is amenable to a
specialized trade agreement which would protect its European market for
primary commodities -- particularly its western regional cocoa and
its northern peanuts.
22. The potential extension of EC preferential trade agreements
to a wider group of African associates has prompted expressions of
concern from some US officials. These concerns focus on future threats
to our exports, and especially on our desire to avoid the precedent
of continuing these trade agreements which we believe are a violation
of the General Agreement on Tariffs and Trade (GATT) principles.
Evidence to date suggests that the effects of the Yaounde and Arusha
Conventions have been small for US exports as a whole and would remain
so under an association agreement containing tariff levels of Yaounde II.
First, reverse preferences are insigificant for some US exports because
the trade restrictions and/or the preference margins are minor. Second,
a substantial portion of US sales to EC associates (often 50 percent
or more) has consisted of aid-financed goods and government purchases
to which trade and tariff restrictions, and hence preferences, do not
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apply. Third, even with full tariff exemption by the EC, the
relatively unindustrialized partner countries will not soon
become competitive with the US in manufactured exports.
23. Regardless of the impact these particular trade preferences
might have on our exports, however, there*is'far more concern'that
proliferation of preferential agreements threatens to block progress
towards freer, expanding trade under GATT and to divide the world
into large, relatively isolated trading zones. The principal US
criticism of the EC's association agreements is that they depart
from the unconditional most-favored-nation principle of the General
Agreement without meeting the conditions required in GATT for
Customs Unions.
24. The AASM states have already seen their preferences diluted
by Europe's adoption of a generalized system of preferences (GSP),
and fail to see why the US views these watered-down association
benefits as an obstacle to its own accommodation with the EC. In
fact, Africa is unlikely to consider generalized preferences as an
alternative to association with the EC unless the other developed
nations come up with more attractive schemes.* The Africans would
The proposed US generalized preference system would, depending
on competitive needs, encompass only an estimated $78 million
of presently dutiable US imports from Africa, out of a total
of $1,243.0 million in 1972 (OECD figures, FOB).
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undoubtedly demand the liberalization or abolition of quotas in
the existing European and Japanese generalized preferences, as
well as in the proposed American system. In addition, generalized
preferences would have to be extended to a broader range of
agricultural products than at present. If, however, such a liberalized
system of generalized preferences were available as an alternative to
EC association (an unlikely eventuality), it could serve to erode the
ties of tradition which lead these former French and British colonies
to maintain established trade links.
25. The Europeans already understand our position on trade
preferences, and many African associates will increasingly resent
what they view as American meddling with their interests over
abstract matters of principle. The African states are more conscious
than ever of their own national interests when making economic deci-
sions, and the US is not dominant among those interests. The African
declaration against reverse preferences, for example, was made quite
independently of our urgings in that direction.
26. There will, certainly, be a new agreement under which most
of Black Africa's nations will formally associate with the European
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Community. Although expanded association will have little immediate
effect upon established trading patterns, this agreement will very
likely contain trade preferences which the US finds objectionable --
including some provision for reverse preferences, if France chooses to
press the Francophone countries on this issue. In the absence of
an attractive alternative for the African states, America presently
possesses little leverage for pressing its opposition to such trade
arrangements. However, there is no reason to believe that the
successor to the present Yaounde Convention will represent the
last word in European-African economic relations; the new associa-
tion accord will probably be reexamined within a few years, especially
as the Francophone states press for better terms in their bilateral
relations with France.
27. In most respects the closer association of Black Africa
with Western Europe will encourage a pattern of relationships which
is favorable to overall US interests in the sub-Saharan area. An
expanded European role there will insure a continued strong Western
presence in competition with Communist or militant Arab influence in
Africa. Given the continued bleak prospects for African unity, this
gathering of disparate African associates within a single cooperative
framework could help maintain the political stability which the US
desires in Africa.
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