Bridges Weekly Trade News Digest • Volume 11 • Number 44 • 19th December 2007

Caribbean Group, Cameroon, Ghana Sign EPAs With EU

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Fourteen Caribbean nations, Cameroon, and Ghana have joined the list of countries that have agreed to reciprocal trade deals with the EU just ahead of a crucial end-year deadline, thus saving their exports to Europe from major disruption in 2008.

The accords are the most recent in a flurry of Economic Partnership Agreements (EPA) between the EU and members of the African, Caribbean, and Pacific (ACP) group of countries, replacing longstanding unilateral trade preferences.

The Caribbean group, which includes Jamaica, Guyana, the Dominican Republic, and the Bahamas, initialled the first comprehensive EPA on 16 December, covering trade in goods and services, as well as rules governing foreign investment. In return for removing barriers to 82.7 percent of imports from the EU over the next 15 years, the Caribbean bloc immediately secured duty- and quota-free access for all of its exports in the opposite direction, except rice and sugar.

Cameroon (13 December) and Ghana (17 December), like other ACP countries, initialled ‘interim’ EPAs covering goods trade alone, with issues such as services and investment to be addressed later.

For many ACP countries, the prospect of being slapped with substantially increased tariffs in the EU market has been a major motivating factor behind the recent spate of EPAs.

EU ministers last week formally agreed to subject the 31 relatively richer members of the ACP group to a less generous trade preference scheme available to all developing countries if they did not sign reciprocal EPAs covering goods trade before the deadline. They also agreed that countries that initial EPAs by 20 December (allowing details to be finalised later) would not see market access interrupted in January.

Least-developed countries (LDCs) remain eligible for duty- and quota-free access to the EU without an EPA, but signing an agreement to open their own markets could give them relaxed rules of origin, and thus expanded export possibilities.

Brussels had long warned that it would be compelled to introduce tariffs on non-LDCs by the end-2007 expiry of a WTO waiver allowing the EU to maintain its unilateral preference scheme for ACP states, even after it had been ruled to violate multilateral trade rules by discriminating among developing countries.

As the deadline loomed, the six regional ACP blocs that had been negotiating with the EU splintered. A piecemeal patchwork of deals has emerged, as Brussels has reached agreements with sub-regional groups such as the East African Community, looser alliances including Papua New Guinea and Fiji, and individual countries such as Cote d’Ivoire.

Development campaign groups and some academics complain that the EU has successfully used the threat of tariffs to pressure ACP countries into prematurely signing EPAs, suggesting that opening markets to EU exports could lead to trade diversion, cost poor governments customs revenue, and hurt prospects for industrial development. They claim Brussels was exaggerating when it said that detailed goods trade agreements were necessary by the end of the year to prevent the market access enjoyed by the ACP group from being struck down by the WTO dispute settlement system (see BRIDGES Weekly, 28 November 2007, http://www.ictsd.org/weekly/07-11-28/story1.htm).

At time of writing on 19 December, some 35 of the 79 ACP countries have signed EPAs with Brussels. Most of those which have not are LDCs.

Of non-LDCs that have not signed EPAs, several are not threatened by the imposition of tariffs: seven Pacific region countries have virtually no trade with the EU anyway, and South Africa already has a bilateral trade deal with the EU.

With the recent EPAs struck by the Caribbean group, Cameroon, and Ghana, only Nigeria, Gabon, and Congo-Brazzaville face the prospect of new tariffs imposed on their exports to the EU in 2008.

However, oil dominates Nigeria’s exports, and would not face duties anyway. Petroleum products account for a lower share of Gabon and Congo-Brazzaville’s exports. Sources suggest that Gabon may sign an EPA soon. This would leave only Congo-Brazzaville’s lumber, coffee and cocoa exports vulnerable to tariffs in the EU from 1 January.

West African trade ministers on 18 December called for 18 more months to negotiate a region-wide EPA with the EU, reports Voice of America News. “To have a balanced and development-oriented EPA, we will need some time to conclude a full agreement,” said Mohammed Ibn Chambas, president of the Economic Community of West African States. He downplayed fears that the interim agreements signed by Ghana and Cote d’Ivoire could weaken the collective negotiating position of the bloc, which also includes Nigeria. “I think certainly it was a divisive ploy on the part of the European Commission, but it has not worked to weaken the solidarity of the region,” he said, stressing “the determination of all the countries to move within a regional context.” EU officials also said that they still want to negotiate a region-wide deal.

ICTSD reporting; “EU, Caribbean beat deadline to strike new trade deal,” REUTERS, 16 December 2007; “How Europe’s trade talks with poor former colonies became mired in mistrust,” FINANCIAL TIMES, 12 December 2007; “West Africa Plays for Time in European Trade Negotiations,” VOICE OF AMERICA NEWS, 18 December 2007; West Africa: Ghana, Cote d’Ivoire Would Be Hardest Hit Under EPAs,” PUBLIC AGENDA (Accra), 17 December 2007.