Malawi is still failing to export finished products to Europe. Ninety nine percent of Malawi’s exports into the European Union (EU) constitute raw agriculture products
The EU is Malawi’s largest trading partner for exports and second largest for imports–138.5 million Euro representing 12.9% of Malawi’s total imports from the Rest of the World in 2010.
Primary products currently dominating Malawi’s exports to the EU are food stuffs like fish, tobacco and animal products.
“Raw materials and tobacco in themselves make up approximately 67 percent of Malawi’s exports to the EU, followed by food and live animal products which constitute close to 32 percent of the exports,” says the EU
The exportation of raw and semi-processed products to the international market has over the years dealt Malawi a heavy blow as it has been generating inadequate foreign exchange cash to finance importation of phamarcueticals, fuel and fertilizer.
This has in-turn worsened Malawi’s trade gap, as reflected in the country’s deteriorating Terms of Trade (Tot)
In 2011, Malawi’s trade gap was estimated at $456 million
Malawi’s participation in EU trade remains extremely limited, ranging from 0.01 percent to 0.02 percent of total EU trade.
Based on the EU (Malawi) trade facts, in 2010 the main portion of Malawi exports to the EU was destined to Germany (36%), the Netherlands (13.5%) and the UK (10.6 %), whereas, the EU’s main exports to Malawi were from the UK (19.8%), Germany (18.9%) and France (12.2%), during the same period.
The EU has offered preferential market access to developing countries for decades mainly under the Cotonou Agreement in partnership with the African, Caribbean and Pacific (ACP) countries; the Generalised System of Preferences (GSP); and a series of bilateral Free Trade Arrangements.
– Under the EU GSP’s “Everything But Arms” scheme, the world’s 50 Least Developed Countries, including Malawi, continue to enjoy duty and quota free market access for all goods (apart from arms) imported to the EU.
– Trade provisions under the Cotonou (Partnership) Agreement, to which Malawi is also signatory, had to be revisited, making them compliant with the requirements of the Word Trade Organisation (WTO) at global level.
Economic Partnership Agreements (EPAs) between the EU and ACP regions have therefore been, and continue to be negotiated, with the main aim of achieving this WTO compatibility.
Malawi continues to negotiate it’s EPA with the EU under the regional grouping of Eastern and Southern African regional grouping. One of the main objectives of the EPAs is to build upon and further enhance the market access conditions which were previously provided under Cotonou.