Trade Negotiations Insights • Volume 8 • Number 2 • March 2009

EPA negotiations with Central Africa

The state of play

by Claude Maerten and Elisabeth Tison

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The global context of the Economic Partnership Agreement (EPA) negotiations between the European Union (EU) and the five regions involved has changed in unforeseen ways over the last few months. Now, the economic crisis threatens to jeopardise world trade, particularly in the temptation to seek refuge in protectionism. As such, ACP countries are facing a number of threats, notably decreased global demand and declining investments.

We need to work together on adequate responses to mitigate these negative effects. We must also prepare to improve supply capacity for the future through balanced growth that benefits the population at large, so as to be posed to capitalise on the eventual upturn. The EPAs are part of this response.

Although progress on the EPAs is necessary, it should not be rushed. There are strategic issues at stake for the ACP and it is important to match the content of the partnerships under negotiation to the specific needs of each region. This takes time, particularly because the regional negotiation format requires substantial co-ordination efforts on the ACP side. But there are still common objectives, whatever the pace of negotiations, which are to: (i) help meet Cotonou Agreement goals, particularly sustainable development and support for regional integration; (ii) strengthen supply capacity and diversification within economies and hence promote greater integration into the global economy; and (iii) ensure WTOcompatibility, particularly in relation to the degree of liberalisation necessary to comply with the definition of “substantially all trade” in GATT article XXIV.

The EU has no wish to exercise pressure at the risk of obtaining agreements that might not meet the specific needs of each region. But its position should be understood in the light of another EPA goal: strengthening regional integration. The complete regional agreement being negotiated with Central Africa is intended to replace the interim agreement signed with Cameroon, which will begin to take effect in 2010. The initial effects will be limited however as the liberalisation envisaged in the case of Cameroon will be very gradual, unlike that of the EU, which opened its markets almost completely as from January 2008.

And so while it is certainly important to understand what EPAs are, it also important to understand what they are not. EPAs are not intended to cover every aspect of our relations with ACP countries. This is not what either we or the ACP countries would want. There is an existing agreement to this effect, namely the Cotonou Agreement, which has political and co-operation aspects. The negotiation of an EPA, it should be recalled, covers only the trade aspect of the Cotonou Agreement. While it also has development goals, the framework of co-operation between the EU and Central Africa, and other regions, is and remains the Cotonou Agreement.

Nevertheless, the European Union is well aware of its partners’ major needs in terms of EPA support measures. Substantial funds are being allocated for these needs within both the pluri-annual programmes between the European Community and countries of the region (which amount to around one and a half billion Euros over the 2009-2013 period for the eight Central African countries) and the regional pluri-annual programme (whose allocated total is 150 million Euros for 2009-2013). A substantial portion of this will be dedicated to EPA support following a joint decision by both parties. Moreover, these figures cover the period up until 2013; the 10th EDF and future programmes will cover the later stages of liberalisation (liberalisation will continue over a much longer period).

Finally, EU Member States aim to offer additional help in the form of aid for trade based on needs identified within the region; this exercise is currently taking place. Hence it is clear that large amounts of funding have been allocated for EPA support that should make it possible for Central African countries to reap the greatest possible benefits from liberalisation and the strengthening of regional integration it brings with it.

The negotiation meetings that took place in Libreville from 3—10 February 2009 saw useful exchanges on the majority of important issues. In particular, the region wished to take stock of the progress made during 2008; there has undoubtedly been advancements. The negotiations have made major strides on the issue of market access in goods possible, for one, although they also revealed the inevitable differences in these kinds of talks. And though discussions on market access in services have not yet been finalised, negotiations have been fruitful and the remaining points of disagreement should be resolved without significant problems.

In terms of the rules of origin contained in the future EPA—a potentially highly significant issue for regional development, particularly industrial development—initial meetings have confirmed the overall convergence of viewpoints between the EU and Central Africa, taking as a basis the EU proposal to retain the advances made in the Cotonou Agreement on this issue, while implementing certain improvements. In relation to support measures, discussions have reached the phase where the region is clarifying priorities—a necessary step for enabling mobilisation of the support promised by EU Member States and other stakeholders. In addition, given that studies carried out thus far have used different methodologies, a jointly-agreed methodology will be established for evaluating the net fiscal impact of the future Agreement on countries in the region.

Again, while the pace of negotiations may seem slow to some observers, this should not mislead them as to the two parties’ intentions: to devote as much time as is necessary to the negotiations in order to reach a complete and balanced agreement that accounts for the specific needs and ambitions of the Central African region.

Authors
Claude Maerten is Head of unit DG Trade - D2 - ‘EPA I’. Elisabeth Tison is Head of unit DG Development - D3 - ‘Central Africa region and Great lakes’. For more information, please see the following European Commission links: ec.europa.eu/trade/issues/bilateral/regions/acp/index_en.htm; and ec.europa.eu/development/geographical/regionscountries_en.cfm.