Bridges Weekly Trade News Digest • Volume 11 • Number 5 • 14th February 2007

West, Central African Countries To Try For EPAs With EU By End-2007

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West and Central African countries have agreed to try to conclude their Economic Partnership Agreement (EPA) negotiations with the EU in time for a December 2007 deadline. They appear to have dropped requests to extend talks beyond this date in exchange for more binding promises of aid from Brussels.

Chief trade negotiators from the two regions met separately with their EU counterparts in Brussels during the first week of February to review progress in the talks and provide guidance for the next round of discussions.

The new EPAs are meant to replace the Cotonou Agreement, a nonreciprocal scheme set to expire at the end of 2007under which the EU provides duty free access to most exports from African, Caribbean, and Pacific (ACP) countries.

WTO Members have agreed to a special exception to allow the EU to maintain these nonreciprocal preferences for ACP exporters. However, this waiver will expire at the end of 2007. The EPAs, in contrast, are supposed to phase in two-way free trade between the EU and each of the six blocs of ACP countries, and would thus not require a similar waiver.

The EU has been pushing to wrap up talks on the EPAs by the end of 2007, arguing that since a new waiver would be difficult to obtain, the one-way preferences would become vulnerable to WTO challenges after that point. Nevertheless, prior to the meeting in Brussels, some African countries had been asking to extend the deadline for concluding the EPAs by two to three years beyond December 2007. As recently as 23-26 January, a meeting between EU and West African negotiators in Burkina Faso came to a standstill over Brussels’ insistence on the original deadline.

In Brussels last week, however, both the Western and Central African blocs agreed to the December 2007 deadline. They appeared to do this on the condition that a deal on opening markets would be accompanied by concrete EU commitments to fund assistance programmes aimed at boosting local productive capacity, supporting adjustment to liberalisation, and facilitating the implementation of the new rules. According to the 5 February text of the agreement between the West African group and Brussels "defin[ing] jointly the EPA accompanying programmes and their funding by the European Commission" would be a "prior condition" for signing an agreement.

Civil society sources say that ACP negotiators privately reported that they had come under heavy pressure from the EU to agree to the end-2007 date.

Some observers of the EPA negotiations believe that even if the Cotonou waiver were to lapse before there is an agreement, other WTO Members would be unlikely to bother launching a formal dispute against trade preferences granted to such small economies, if they were reasonably sure that a long-term deal would be reached within a year or two. An exception to this would be the Caribbean countries, whose duty-free access to the EU banana market has already been the subject of challenges from Central American banana producers. Unsurprisingly, the Caribbean is the ACP region that has made the most progress towards finalising an EPA.

In both sets of talks, the two sides reiterated that the objective of the EPAs was development, and pledged to design an agreement to support sustainable development, regional integration, and good economic governance, as well as to facilitate trade, attract private investment, and spur growth. Notably, they reiterated that competition, investment, and public procurement were "key issues for development," and that rules on all three would be part of both EPAs. These issues were dropped from the WTO’s Doha Round negotiations in 2003, after facing heavy opposition from most developing countries.

The chief negotiators from West and Central Africa agreed to meet with EU negotiators again in July to take stock of progress in the talks. In the meantime, they will immediately start work on drafting the legal text of the prospective agreements, and prepare their respective offers of market access for the negotiations.

According to EU Development Commissioner Louis Michel, "this agreement will be a powerful tool for development. It will boost the potential that trade and investment represent for the development of these countries and for regional integration".

ACP countries, however, have raised several concerns over the development implications of trade agreements with reciprocal market access commitments, such as the possibility of EU products flooding their markets and harming domestic industries. They are also worried about the costs of adjustment and implementation, promises of assistance notwithstanding. Some least-developed country officials have expressed concern over the very appropriateness of reciprocity between countries at such widely different levels of development (see BRIDGES Weekly, 5 July 2006).

The EU insists that it will be flexible, and will not seek full reciprocity in market opening or immediate implementation of liberalisation commitments.

Many developing countries, with the vocal support of non-governmental organisations, have said that the EU has been too aggressive in its demands from the ACP countries. A wide range of civil society groups have spoken out emphatically against the EPAs claiming that they would do nothing to elevate poverty. Participants at the World Social Forum in Nairobi last month protested the reciprocal agreements outside the EU office there.

Brussels assured the African delegations of its commitment to comprehensive development packages to accompany the EPAs. The European Commission has promised 2 billion euros a year starting in 2010 in aid-for-trade to ACP countries, to be spent on training and infrastructure to facilitate exports.

Negotiations between the EU and individual ACP countries started in September 2002; regional negotiations commenced in October 2003.

ICTSD reporting; "Deadlock of Economic Partnership Agreements (EPA) in Ouagadougou," THIRD WORLD NETWORK AFRICA, 3 February 2007; "EU and West Africa and Central Africa agree 2007 push for Economic Partnership Agreement," EUROPA, 6 February 2007; "Africa says deadline for EU trade deals in doubt," REUTERS, 14 February 2007; "W. Africa accepts year-end EU trade deal deadline," REUTERS, 7 February 2007.