Trade Negotiations Insights • Volume 7 • Number 8 • October 2008
EPA Negotiations Update
by Melissa Julian, ECDPM
If the mouse eats the elephant won’t starve
African, Caribbean and Pacfic (ACP) and commodities expert, Paul Goodison, argued in September that the changes necessary to ensure that the texts of the Economic Partnership Agreements (EPAs) are not harmful to the ACP and would have only a small impact on the EU. However, he said that if the texts remain unchanged, they would constrain the use of the limited range of policy tools available to the ACP and be devastating for agriculture, infant industries and regional integration. “If the mouse eats the elephant won’t starve. Why is this such a big deal for the EU?” Goodison asked at the African, ACP-EU Joint Parliamentary Assembly (JPA) Trade Committee meeting on September 10 2008.
During this meeting, European Socialist Parliamentarians (the PES Party) said they will urge the European Parliament to give the EPAs the green light necessary for them to enter into force, but only after national ACP Parliaments have done so. ACP Members of Parliament stressed that they would follow progress closely on this, although some questioned if the option of non-ratification would be politically possible. Many voiced concerns that they had not been sufficiently informed earlier in the process to get involved and ensure that the outcome of negotiations met the needs of their constituents.
Meanwhile, the European Commission’s Director General for Trade, Peter Thompson, argued that there was a great deal of transparency in the EPA process and that EPA provisions were first and foremost to encourage trade that the ACP could benefit from. He claimed that the positive effects of trade liberalisation would offset any damage from revenue loss or the need to reform economies to meet costs of liberalisation. The European Commission hopes MEPs responsible for trade - and development - will decide to ratify the EPAs before the vote in the European Parliamentary elections, scheduled for June 2009.
ACP negotiators prepare for summit
Negotiators from the ACP met in Brussels on September 4-5 to reflect on the state of play in the EPA negotiations ahead of the 6th ACP summit in Accra at the beginning of October. Sources close to the discussions in the ACP technical follow-up group meeting said officials stressed the need to ensure that the remaining contentious EPA issues were adequately addressed in negotiation towards full EPAs. These issues include the Most Favoured Nation (MFN) clause; provisions in relation to protection of infant industry and the use of export taxes; defi nitions on substantially all trade; additionality of resources; means of financial integration; rules of origin and safeguard measures. Officials noted that significant changes to key provisions have been made in some interim texts. The urgency and necessity of signing interim agreements was also addressed, with many representatives arguing caution and detailed national impact analysis was necessary before signature. Many also stressed the strength in ACP numbers and the need to put into action all-ACP and regional level declarations. Participants also argued that firm commitments should be sought from the European Commission on financing the EPAs.
Africa-EU ministers voice EPA optimism
European Development Commissioner Louis Michel claimed he is optimisitic about the future of the EPAs. “Negotiations are making good progress. The doubts on the usefulness of the EPAs are fading. The European Commission proposal is convincing,” he told journalists at the Africa-EU Ministerial Troika meeting in Brussels on September 16. (1) While he admitted there are points which still remain to be clarified he said he was “confident that we will achieve complete EPAs by 2009.”
African Union chairperson Bernard Membe, agreed with this outlook, claiming that Africa now considers the EPAs a powerful economic instrument. However, Maxwell Mwezalamba, AU Commissioner for Economic Affairs said that it is entirely possiblethat some countries will not sign the full EPA and that in this case a mechanism should be put in place to allow trade flows betweenthese countries - and the EU - to continue. Alain Joyandet, French Secretary of State for Cooperation and current EU Development Council President, said the recipe for success will be a development dimension that is superior to the previous one and some kind of exception for agriculture, given the global food crisis.
Fiscal impacts examined in Central Africa
Central Africa is working to determine the fiscal impact of the EPA, conducting cost assessments in key areas to help build regional capacity and economies. Efforts are also underway to build the capacities of the Development Bank of the Central African States, which is expected to manage the Regional EPA Fund.
Regional concerns remain over European Commission proposals to inlcude provisions in the EPAs that could reduce the policy space needed to ensure national development. Many fear fiscal revenue losses from tariff dismantlement, rapid harmonisation towards a Common External Tariff and European Commission suggestions to raise Value Added Taxes and excise taxes in the region. Some worry about the potentially negative impact the proposals could have on differentiated treatment for mid-income countries and least developed countries (LDCs), as well as on regional integration efforts.
The European Commission reportedly informed EU member states that signature of the Cameroon interim agreement (as well as those of Ghana and Côte d’Ivoire) may be possible with only final versions in English and French, which would allow its signature in 2008.
West Africa faces challenging talks with EU
EPA negotiations scheduled for October are expected to be difficult, as both West Africa and the EU continue to hold significantly different views on sensitive products, market access and development. Key stumbling blocks include ‘substantially all trade’ coverage, sufficient transition periods and the link between trade and development cooperation commitments. Sources indicate that a ministerial meeting will be needed to look for political compromises in winter.
Changes negotiated to the interim EPA will allow Côte d’Ivoire and Ghana to revise customs duties applied to EU imports when establishing the ECOWAS Common External Tariff as long as the resulting effect is not higher than the custom duties as stated in annex 2. Ghana’s market access offer was also modifi ed with different start dates for liberalisation of some products and slight
changes to the exclusion list.
Business leaders scrutinise ESA-EU EPA
The implications of the ESA-EU EPA for business were discussed at an ITC-Commonwealth Secretariat meeting in Addis on September 9-10. Senior trade and industry representatives exchanged views on the challenges, interests and opportunities for the region. Those countries with insignificant EU trade inferred they saw little value in signing an EPA. It was made clear from partipants that further discussions are needed to decide how to build public and private sector capacity to better understand investment, competition policy and services.
Meanwhile, technical and senior official ESA negotiators met on August 21-26 in Antananarivo to discuss a number of outstanding issues on trade in goods. Discussions on services continued based on the existing draft text. ESA fine tuned its position with regard to some trade related issues, while underlining the need for capacity building. Further work on the development chapter and its implementation continues, while the region awaits a reply from the EU on the costed development matrix it submitted.
EAC witness substantial EPA progress
Technical EPA negotiating teams from the EAC and the European Commission have agreed texts on customs and trade facilitation, sanitary and phytosanitary measures and technical barriers to trade during a meeting on September 15-17 in Bujumbura. Both sides also agreed to formulate new articles in the comprehensive EPA for standstill, export duty, tax and Most Favoured Nation (MFN) clauses. It was decided that further negotiation is needed to agree texts on anti-dumping and countervailing measures as well as safeguards for infant industry. The EAC presented its text on economic and development cooperation, while the European Commission made a presentation on its approach to trade in services negotiations. The EAC prefers to consult its member states on services in order to identify common interests before starting discussions with the EU. The region is still considering how to ensure rules of origin that will allow cumulation between SADC and ESA regions. Again, they await a study before opening negotiations.
South African politics likely to impact EPA talks
South African President Thabo Mbeki resigned from offi ce on September 21. Mbeki’s resignation, along with much of his cabinet will undoubtedly impact on progress in SADC EPA negotiations.
EU agriculture Commissioner Mariann Fischer Boel delivered a speech in South Africa on September 8 in which she stated that it is “good news that South Africa is now interested in being involved in the negotiations of the full SADC Economic Partnership Agreement.” (2) Meanwhile, her counterpart EU trade Commissioner Peter Mandelson issued an open letter to Namibian civil society on September 2, stating that the European Commission is ready to discuss contentious matters in the interim EPA, once it has been signed, in the framework of the full EPA negotiations. (3)
Caribbean-EU finally set to sign EPA
Caribbean Heads of Government decided that 13 out of 15 Caribbean countries will sign an EPA on October 15.(4) During the meeting on September 10, Guyana said it will not sign a full EPA but is prepared to sign a ‘goods-only’ agreement to ensure WTO compatibility. Similarly, Haiti did not commit to signing the EPA over concerns on development and after being hit by four tropical storms in just three weeks.
Mandelson subsequently indicated that the European Commission has no mandate to negotiate a separate agreement with Guyana, but is ready to consider adjusting its provisions after it is signed. Mandelson insists that signing and implementing the EPA is the best way to encourage additional EPA financial support from other donors. He maintains that if a Caribbean country is unwilling to sign the current Agreement, the only legal basis on which trade could continue with that country would be the EU’s less favourble generalised system of preferences.
Pacific aims to bridge differences with EU
Pacific ACP countries (PACP) will try to resolve differences on the EPA with the European Commission at a technical level meeting on September 18-26. The main issues for the debate will be the Pacific’s proposals that trade in goods be included in the EPA as an optional protocol, along with the inclusion of infant industry safeguards and the current IEPA MFN clause. (5)
The first ministerial troika between the EU and the Pacific Islands Forum was held in Brussels on September 16. (6) Representatives claimed they remain committed to concluding a comprehensive EPA by the end of 2008, which fully supports the developmental aspirations of the PACPS and fosters regional integration. Both sides aim to finalise the 10 EDF Regional Strategy Paper and the Regional Indicative Programme by the end of 2008.
For more EPA news please visit: www.acp-eu-trade.org/epa
1. Africa-EU Ministerial Troika Meeting Communiqué, September 16 2008; and AU-EU Troika Press conference, EBS, September 15 2008.
3. Open letter to Namibian civil society, European Trade Commissioner Mandelson, September 2 2008.
4. See separate articles in this issue.
5. As outlined in David and Goliath Battle, Maureen Penjueli, The Fiji Times, September 11 2008, www.fijitimes.com
6. Inaugural European Union – Pacific Islands Forum Ministerial Troika Final Communiqué, 16 September 2008.