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ACP Technical Follow-up Group discusses common challenges in EPA negotiations and implementation
High-level African, Caribbean and Pacific (ACP) Economic Partnership Agreement (EPA) negotiators and representatives from Regional Integration Organisations exchanged information on the state of play in regional EPA negotiations and their implementation at the ACP Technical Follow-up Group meeting held in Brussels on 12-13 October 2009. A common area of divergence with the European Commission (EC) in the negotiations relates to the EC’s demand that African and Pacific (AP) (the Caribbean has signed a full EPA) market-access offers include liberalisation of 80 percent of regional trade within a 15-year transition period (although the EC has shown some flexibility in this regard). AP regions are calling for lower coverage and longer transition periods to accommodate LDC members, especially considering the continued, and in some cases increasing, use of EU subsidies for agricultural products. The possibility of adjusting the pace of trade liberalisation in the face of the current global economic crisis was also considered.
The ACP negotiators also called for improvements in the rules of origin to allow for full cumulation at the all-ACP level and with neighbouring developing countries. Other requests by the AP include binding EPA provisions to ensure EU development-cooperation support to increase competitiveness and meet EPA adjustment and implementation costs, effective Aid for Trade support and ex-ante-calculated compensation for loss of customs revenue.
For its part, the EU is calling for applying net fiscal impact as the basis for calculating compensation for revenue loss due to trade liberalisation. The EU also maintains that development-support commitments are sufficiently provided for in the overall ACP-EU Partnership Agreement, and that additional resources can be provided by EU Member States and other donors outside of this framework. Participants called for amendments to be tabled in the current review of the ACP-EU Partnership Agreement to ensure continued focus on regional cooperation, coherence in EPA monitoring institutions and to exempt trade cooperation from the threat of sanction in the case of non-execution of EPAs.
European Commission stresses its flexibility in EPA negotiations
The EC highlighted the need for tailor-made solutions for AP countries in EPA negotiations in order to secure their duty-free, quota-free access to the EU in a report to the ACP-EU Joint Parliamentary Assembly Committee on Economic Development, Finance and Trade meeting on 1 October in Brussels[1].
The EC stresses that it is up to the AP partners to decide which type of trade-related rules they want to negotiate at this stage, without undue pressure from the EU. The EC reiterated that it is open to re-discuss any provision in interim EPA agreements (IEPAs) in the framework of regional negotiations and with a view to improving these where possible. Finally, the EC said it agrees with the need for broad-based monitoring and review to ensure that the EPAs meet their objectives. It also believes that monitoring and identifying the exact effect of a trade agreement compared to wider political, social and economic factors requires a flexible and participatory approach. This process can then be linked to formal amendments to the EPAs, said the EC.
West Africa tables revised market access offer conditional on EPA development support
West Africa presented a revised market-access offer in goods to the EC at a meeting in Abidjan from 23-24 October. The offer emerged from the West Africa Market Access Offer Thematic Working Group held prior to the joint meeting and follows extensive consultation within the region. Based on a line-by-line economic analysis, a large number of products (including animal, vegetable, mineral, chemical and wood products) were reclassified from the exclusion to liberalisation lists. Some key sectors with substantial production in the region (such as base metals, leathers, textiles and footwear) were maintained in the regional exclusion list.
The communiqué issued after the West Africa-EC high-level regional seminar held in Abuja on 17-18 October states that, based on preliminary calculations undertaken by the EC, the level of necessary EPA support is more than three billion euros over current EU pledges[2]. Participants agreed that the proposed commitments on Aid for Trade from EU donors are encouraging and may reach 8.5 billion euros in the next five years.
West Africa’s market access opening is conditional on the commitment of the EU to support the EPA development programme according to ECOWAS Commissioner for Trade and Industry, Alhaji Mohammed Daramy[3].
Central Africa EPA negotiations set to resume
Central African and EC officials met informally on 2 October in Brussels, in the margin of the signing of the 10th EDF’s Regional Indicative Programme, and agreed to re-commence technical-level EPA negotiations. The negotiations have been suspended since February, largely due to a CEMAC secretariat re-organisation which is now complete. A Central African preparatory meeting to prepare for the negotiations will be held from 9-13 November, probably in Libreville.
The parties lack consensus in a number of areas, including market-access coverage and transition periods, legal commitments for EU EPA development support, the non-execution clause and rules of origin. In addition, further negotiation is required on Central Africa’s request for specific EPA provisions allowing for the temporary movement of people exercising activities under the EPA, the EU’s proposed Most Favoured National clause (MFN) provision requiring the region to accord any concessions made to major trading partners automatically also to the EU, the use of export subsidies, and EPA provisions on Trade Related Issues.
The Cameroon interim EPA was notified to the World Trade Organization (WTO) on 28 September. Tariff dismantlement is set to begin in January 2010, which could cause problems if a regional EPA agreement is not agreed by then, as the region has not yet established a Common External Tariff.
Comprehensive East and Southern Africa EPA unlikely this year
There have been no further meetings between the East and Southern Africa (ESA) region and the EU since the signing of four country-specific interim EPA agreements in August. The ESA representative attending the ACP Technical Follow-Up Group meeting informed colleagues that the outstanding disagreements on safeguard and infant industry clauses, and on export taxes, need to be resolved with the EU in order for the remaining seven of the regions’ countries to sign on to IEPAs The rendezvous clause is also still under negotiation. There has been some modification to tariffs on sensitive items and quantitative restrictions have been allowed in four main areas. The sunset clause has also been removed.
The region remains dissatisfied with rules of origin provisions for cumulation with ACP countries and in particular with those relating to the SADC and EAC regions. While the draft rules of origin for ESA, and for the EAC, allow cumulation with all ACP countries, they also require that the country that is cumulated with must have the same rules of origin as ESA. However, it is unclear if this is per item or if the entire rules of origin must be identical. If the latter, this would prevent cumulation between many countries. The EC has yet to clarify this question. There is also the requirement for an administrative agreement between the country ESA wants to cumulate with and the EU, but so far not all countries have this agreement.
EU officials indicate that the timetable agreed to conclude more comprehensive and inclusive EPA agreements, possibly including some variable geometry, will continue with increased momentum, but are unlikely to be concluded by the end of 2009 due to diversity in the level of development of the countries in the region.
It has been agreed that Mauritius will host the COMESA Infrastructure Fund whose main mission is to consolidate regional integration through infrastructural development, food security and energy.
East African EPA Ministerial Negotiations postponed
The ministerial-level East African Community (EAC)-EC EPA meeting scheduled for mid-October was postponed. Sources indicate the region is seeking to add a declaration to the interim framework EPA before signing it, which would include commitments to further negotiate the MFN clause, export taxes and development finance provisions in the eventual full regional EPA.
The EAC secretariat informed the EC about the positive outcome of the recent EAC ministerial meeting, in which EAC ministers agreed that working toward signing the Framework EPA (FEPA) was a top priority[4]. Technical and senior-level officials from both parties are due to meet in the coming weeks to iron out the last remaining issues and to agree on a signing date. The ministerial-level signing ceremony is likely to also include a joint commitment on an agenda and timetable to conclude the full EPA negotiations between the EAC and the EU (the broad scope of the issues to be negotiated is included in the interim agreement) in the not too distant future. The EC is optimistic that the interim agreement can be signed before the end of the year and negotiations on the full EPA are expected to continue in early 2010.
EAC Common Market Protocol negotiations held at the end of September agreed that, starting in July 2010, there will be free movement of people, labour and services across the region[5]. The heads of delegations of the five partner states signed the final draft protocol bringing to a close 18 months of intense haggling among the states. Legal and judicial teams together with attorney generals of the partner states will convene soon to make the negotiated document legally binding before it goes to the heads of states for formal adoption.
Southern African Development Community EPA negotiations postponed to next year
There have been no Southern African Development Community (SADC) EPA meetings or joint negotiations with the EC in October, partly because of elections in Mozambique, Botswana, and Namibia. The SADC EPA technical and senior officials meeting that was planned for 11-13 November to discuss market access, unresolved negotiation issues, the way forward and approach to be taken in negotiations has been postponed due to an ACP Ministerial meeting planned on that day in preparation for the WTO Ministerial later this year. This means that scheduled negotiations with the EC in November will also have to be postponed. It is anticipated that senior SADC officials will only be able to meet in early 2010 and only after that meeting has taken place will they meet with the EC. Expectations are, therefore, that formal negotiations will resume in the first quarter of 2010.
Slippage in Caribbean implementation commitments
The Caribbean representative reporting to the ACP Technical Follow-up Group meeting indicated that there is some slippage on the EPA implementation obligations and that not all notifications have yet been made. Trade liberalisation was to have started in January 2009 as some applied tariffs are higher than those agreed in the EPA and need to be reduced to meet EPA obligations. These have not yet been reduced.
The region is in the process of setting up national and regional level implementation units. No regional coordinator has yet been appointed. Work is continuing towards setting up joint EPA institutions and procedures ahead of the first CARIFORUM-EU EPA Council meeting due to be convened in November. A regional level meeting will be held prior to this to prepare for the joint meeting.
Pacific hold first EPA negotiating round this year with the EC
Pacific ACP (PACP) and EC technical level EPA negotiators met in Brussels from 23 September - 2 October, the first negotiation round this year[6]. Prior to the meeting, Niue, Samoa, Cook Islands and Micronesia presented market access offers for trade in goods based on liberalising between 70-75% of their trade and with transition periods up to 25 years. At the meeting, the EC argued that the offers are not yet acceptable and would need further negotiation. Nauru and Salomon Islands indicated that they will present market-access offers in the near future.
Positions were narrowed on a number of issues including food security, cooperation in agriculture, infant industry protection, export taxes, sanitary and phytosanitary provisions and technical barriers to trade. Possible alternative wording regarding good governance in the taxation area was also considered.
PACPs maintained their refusal to negotiate EPA services liberalisation commitments before completing negotiations on services liberalisation at a regional level. The group also wants to prevent any negative precedents in relation to free movement provisions in view of the ongoing trade negotiations with Australia and New Zealand. There was some discussion on the PACPs proposal to instead include a rendezvous clause in the EPA on this issue.
With regard to fisheries, the EC apparently backtracked on its earlier commitment to include improved market access for fresh, chilled and frozen fish in the EPA, a red-line issue for several PACPs, and also proposed new fisheries access provisions.
Further negotiation is also required on EC financial and technical assistance.
PACPs maintained their opposition to the inclusion in the EPA of the MFN and non-execution clauses, arguing that the former would reduce their policy space to negotiate other trade agreements, while the latter was already provided for in the Cotonou Agreement.
Author: Melissa Julian is Knowledge Management Officer with ECDPM.
[1]“Economic Partnership Agreements and their impact on ACP States”. Follow-up by the European Commission to the ACP-EU Joint Parliamentary Assembly Resolution. 1 October 2009. http://www.europarl.europa.eu/meetdocs/2009_2014/documents/acp/dv/jpa_resolution/jpa_resolutionen.pdf
[2] “West Africa-Europe reiterate commitment to integration process”. ECOWAS. 19 October 2009 http://news.ecowas.int/presseshow.php?nb=112&lang=en&annee=2009
[3] “ECOWAS Commissioner for Trade and Industry maintains region willing to open markets up to 70 percent in return for EU EPA related support”. Business News (Ghana), 20 October 2009 www.ghanaweb.com/GhanaHomePage/NewsArchive/artikel.php?ID=170537
[4] “EAC-EU EPA negotiations update. EC Delegate interview”. Business Daily (Kenya). 20 October 2009. www.businessdailyafrica.com/-/539552/672808/-/item/0/-/l84qp4/-/index.html
[5] “East Africa Agrees On Common Market”. allAfrica.com. 6 October 2009
http://allafrica.com/stories/200910060058.html
[6] “Pacific-EU EPA negotiations resume”. Solomon Star via bilaterals.org. 28 September 2009.
http://bilaterals.org/article.php3?id_article=15981).
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