Bridges Weekly Trade News Digest • Volume 8 • Number 37 • 3rd November 2004

ACP And EU Trade Ministers Take Stock Of EPA Negotiations

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Trade ministers from the African, Caribbean and Pacific states (ACP) and the EU met in Brussels from 25-27 October to discuss issues related to their ongoing Economic Partnership Agreement (EPA) negotiations (see BRIDGES Weekly, 22 April 2004). ACP trade ministers and officials also met separately in a ministerial trade meeting and a technical follow-up meeting on EPA negotiations. These meetings were followed by joint ACP and EU ministerial trade talks, the fifth of their kind, and the first joint ACP and EU technical monitoring meeting on EPA negotiations.

The joint ACP and EU ministerial trade meeting provided both parties with an opportunity to take stock of EPA negotiations and ongoing WTO talks. The impact of the EU’s new reform proposals on sugar, bananas and textiles were discussed against the backdrop of heightened ACP concerns regarding the implications of preference erosion on their economies and the imminent phase-out of the WTO Agreement on Textiles and Clothing (ATC) quotas on textiles (see BRIDGES Weekly, 27 October 2004). According to sources, the leaders of each camp — out-going EU Trade Commissioner Pascal Lamy and the Chair of the ACP ministerial trade committee, Ishmael Ashitey — expressed the sentiment that "the meeting allowed fears to be calmed".

Taking stock of EPAs

In press conferences following the series of meetings, Lamy highlighted the intensified level of EPA negotiations. He noted that negotiations with all six ACP regions have now been launched (Eastern and Southern Africa, the Caribbean, Central Africa, Western Africa, the Pacific Region and seven members of the Southern African Development Community). He reiterated the point that the EPAs would come into force in 2008 and transition periods for ACP countries would range between ten to fifteen years. When asked to be more precise on the transition periods, he explained that the structure of these talks did not allow for a precise prediction. A vital prerequisite for the EPAs, he elaborated, were the negotiations between the ACP countries themselves for establishing areas of economic and commercial integration as a means of enlarging their markets "which, alone, can attract investors," Lamy said.

Regarding an ACP request for financial support to improve economic infrastructures and for the interconnection of road and energy networks, Lamy said this was a matter on which the EU could show "a little flexibility but not more". Incidentally, the EU announced an EUR250 million proposal to improve modern energy services in the ACP on 28 October. Jean-Robert Goulongana, Secretary General of the ACP Group, added that the request for additional resources also covered support for negotiations and adjustment costs for loss of customs revenue due to trade liberalisation. In response, Lamy reportedly found it premature to request additional resources for anticipated losses, mainly because he was not certain that the EPAs would translate into immediate trade liberalisation.

Discussions on WTO talks

Discussion between both parties also focused on the impact of multilateral negotiations at the WTO on EPA negotiations. Lamy specified that EPAs would be "WTO plus" — that is, they would go beyond WTO obligations and commitments — to ensure the strengthening of ACP and EU cooperation. Referring to the recently concluded ‘July Package’ of modalities to guide ongoing WTO negotiations (http://www.wto.org/english/tratop_e/dda_e/dda_package_july04_e.htm), he noted that "We have crossed a first stage: that of developing a framework for modalities. Now we must develop the modalities".

Sugar, bananas, textiles and the generalised system of preferences

On the EU’s sugar reform, Lamy noted that it would be finalised after discussions in 2005 (see BRIDGES Weekly, 21 July 2004). He stressed that "whatever the results, the EU will be able to help countries benefiting from the sugar protocol when faced with the adjustment process at reduced prices and the fall in income that some may offset by a rise in export volumes". On textiles, both parties expressed concern about the phase-out of textile quotas at the end of 2004, a major problem for Mauritius and Madagascar in particular, which together account for 85 percent of total ACP textile exports. Lamy noted that the EU was working with affected countries on this "difficult transition".

Commenting on the EU’s new proposal on tariff quotas for bananas (see related story, this issue), Lamy assured the ACP delegates that the EU wanted to protect its own producers as well as ACP producers. He announced the EU’s proposal to set banana tariffs at a level of EUR230 per tonne, adding that "banana negotiations must be ended - including in the arbitration chapter - in good time for the new tariff to take effect on 1 January 2006. My figure is a contribution to this negotiation. Some ACP counties will consider it too low, and some Latin American countries too high. That’s what I’m expecting". Lamy briefly presented the EU’s recent proposal for a revised Generalised System of Preferences (GSP). Technical discussions on this issue are foreseen in coming weeks (see BRIDGES Weekly, 27 October 2004).

ACP endorse candidacy of Mauritian trade minister for WTO DG Position

In a related development, ACP ambassadors meeting in Brussels on 29 October formally endorsed the candidacy of Mauritian Foreign Affairs and Trade Minister Jayakrishna Cuttaree for the position of Director-General of the WTO (see BRIDGES Weekly, 13 October 2004). The ambassadors agreed to secure support for him in their respective regions and also praised Cuttaree for his efforts in championing the interests of developing countries as spokesperson for the African Union and the G-90 group of developing countries at the 2003 WTO Ministerial Conference in Cancun, Mexico. Trade observers noted the significance of this endorsement, given that the 57 ACP countries make up more than a third of the WTO’s membership. Some however pointed out that Cuttaree’s victory will hinge on support from major economic powers such as the US and the EU.

The agendas for the ACP meetings are available Online.

The ACP secretariat in Brussels (http://www.acpsec.org/) have prepared a "Joint report of the state of play of regional EPA negotiations," ACP-EC/JMTC/NP/60, electronic versions were not yet available online as at time of going to press.

ICTSD Reporting; "ACP Countries Announce Support For Mauritian Candidate as WTO Chief," WTO Reporter, 1 November 2004; "Commission proposes € 250 million to improve access to modern energy services in Africa, the Caribbean and the Pacific" EU press release, 28 October 2004.