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Melissa Julian, Nicolas Mombrial, Corinna Braun-Munzinger, ECDPM
ACP-EU Council adopts EPA resolution
The ACP-EU Council of Ministers adopted a joint resolution on Economic Partnership Agreements during its meeting on June 12-13 in Addis Ababa.1 The text echoes the EU External Relations Council conclusions of May 27, by calling for greater flexibility in the move from interim agreements to regional EPAs.2
The ACP reiterated previous calls by African Union trade ministers to review ten articles in the interim agreements, given the haste to complete EPA negotiations at the end of 2007. The European Commission said it would try to accommodate changes in the push towards full agreements, but stressed that it could not guarantee all ACP demands. ACP governments fear presenting imperfect interim deals to parliaments for ratification on the grounds that they may be improved if a full agreement is negotiated. Some members of the European Parliament believe they should not approve EPAs until ACP Parliaments have done so.
Several ACP countries argued that a full EPA covers an entire region, but does not necessarily have a wide thematic scope, i.e. may exclude services and trade related issues. The European Commission claims that the fuller the EPA, the better the development potential. It stresses the importance of ACP ownership of EPAs to ensure that governments carry out the necessary reforms to implement the agreements. Both sides stressed the need to build regional markets and agreed to discuss regional integration and its potential benefits, rather than focussing on compliance with WTO rules. Timelines for signature of interim EPAs have slipped due to EU requirements to translate the texts into 23 languages. Signature of the interim agreements is now only expected in the autumn or even early next year.
The 10th EDF finally enters into force
The 10th European Development Fund (EDF) entered into force on July 1, after six months of delay. EU Development Commissioner Louis Michel told the ACP-EU Council of ministers that all EU member states and the majority of ACP countries had ratified the financing instrument, appealing to those who had not yet signed to do so within 12 months in order for them to access the funds. The European Commission has clarified that the bulk of support (€1.3 billion) is for EPAs and economic and trade integration, while 40% will be general budget support. Discussion continues on regional strategy papers, which should be concluded in October. There is still no firm commitment to development cooperation finance beyond the EDF. However, EPA texts state that both sides have an obligation to give priority to EPA implementation. This is the first time bilateral support has been promised in an EU agreement and is an obligation of intent for member states to provide this support.
African Union calls for unity to tackle food crisis
Africa must unite to reduce the impact of rising food prices that have hit its citizens harder than the rest of the world, African Union (AU) Commission Chairman Jean Ping said during the African Union Summit in Sharm El Sheikh from June 24-July 1.3 “This sharp increase [in basic food prices] has had a particularly negative effort on African countries,” Ping said, claiming it was crucial for African countries to negotiate with the West with one voice on the food crisis, as well as on soaring energy costs. Ministers also adopted a statement on EPAs.4
Optimism reigns ahead of Central African talks
There is optimism in Central Africa ahead of its EPA negotiations with the European Commission in July, despite the original calendar slipping. Leaders instructed CEMAC to pursue negotiations to reach a comprehensive EPA during the CEMAC Summit in Yaoundé on 24-25 June. Member states were also invited to send representatives to CEMAC headquarters in a bid to create national structures to deal with regional integration. The President of the African Development Bank said a regional economic programme will be drafted before December 3 and should be adopted at an extraordinary heads of states summit around the same date.
Central Africa continues to work on its regional goods and services market access offer to the EU, ahead of technical and chief negotiator sessions on July 7-18. Central Africa maintains that there should be 70% trade coverage with 30% exclusions and a 25 year transition period. However, it is willing to negotiate this if effective compensation or accompanying measures are put in place to cover fiscal losses, reinforce capacity and finance adjustment costs. The European Commission is calling for 80% coverage with 20% exclusions and a 15 year transition period, although it has indicated willingness to negotiate once the offers are on the table.
One suggestion from the European Commission was to start work on the basis of the three schedules discussed last year (Cameroon and Gabon’s liberalisation schedules and the one tabled by Central Africa in October 2007) and offered to assist the region in calculations. But Central Africa refused this approach, stating that schedules presented in October 2007 were hypothetical and - along with Cameroon’s interim agreement - failed to take individual country concerns into account.
Central Africa has not yet managed to present a services offer as national lists have not been finalised, but did present an ambitious request for an improvement of the EU’s original proposal. The EU reportedly rebuffed the request, insisting that it expects an offer from Central Africa of at least 50% liberalisation before it will offer more.
Central Africa has noted that it does not want to include the European Commission’s proposal for an MFN clause in the EPA and has flagged concerns about including a safeguard clause.
Development issues were the focus of a Regional Preparatory Task Force meeting in June. Central Africa requested that the joint orientation document on reinforcing capacities be translated into precisely funded programmes. Studies are being conducted to elaborate a matrix that will calculate the net fiscal impact of the EPA with a view to agreeing a common methodology and a matrix for financing cooperation. Following a European Commission audit of the Central African Regional Development Bank, it was decided that an interval of around one year is necessary to sufficiently increase the capacity of the bank to manage the regional EPA Fund.
West Africa advances towards regional EPA
Ministers from West Africa’s monetary union (UEMOA) examined the region’s financial situation and invited member states to accelerate harmonisation of national economies and fiscal regimes during a meeting on June 26. They also held a ministerial seminar to define a strategic framework for relaunching agricultural production. Meanwhile, there was a UEMOA workshop in Dakar to validate a report on the effect of harmonisation of import taxes on society and the impact of EPAs on the fiscal receipts of UEMOA countries.5 The report suggests the introduction of a maximum import tax of around 30% with capacity building to ensure fiscal potential is reached. Experts said more information was necessary to draw conclusions on EPAs.
Earlier in the month, negotiations on an initial joint text took place between European Commission and West African officials in Abuja on June 17-20. The text, which was based on a draft from West Africa, still contained brackets. However, both sides agreed on the objectives of the EPA and on the trade in goods section. Disagreement remains on the elimination of export taxes; the reform of ECOWAS and UEMOA levies to make them WTO compatible; the MFN clause; the elimination of EU agricultural subsidies; the duration of the transition period for establishing free movement of goods in West Africa; transit; and the definition of custom duties.6 West African sources indicate that further outstanding issues relate to the standstill clause and the non-execution clause.
There are reports that the region still needs to agree to the methodology to be used for aggregating national lists into a regional one.
Progress on the market access offer is linked to the finalisation of the ECOWAS common external tariff (CET). A preliminary report commissioned by ECOWAS was published in the second half of June, which addressed the creation of a fifth tariff band as well as the reclassification of certain products. ECOWAS heads of state subsequently stressed that the establishment of a customs union was a prerequisite for a regional EPA with the EU.7
Senegalese authorities and private sector representatives have indicated a possible u-turn from their December 2007 position to not negotiate EPAs. The EU’s Director General of Trade, Peter Thompson, told a civil society meeting in Brussels in June that these two groups would be interested in negotiating an EPA, including on services. He also indicated that there was a change in mood and preparation on EPAs in Nigeria. Translation problems have delayed the Côte d’Ivoire signature of the interim agreement with the EU, which will no longer take place on June 30 as planned.8
SADC-EU prepare for July round of negotiations
SADC and European Commission negotiators hammered out trade in services and investment questions, during a meeting in Gaborone on June 30-July 4. They also discussed the SACU market access offer and the list of concerns presented by Angola, Namibia and South Africa (ANSA) with the interim EPA, which they want addressed in the final EPA. As previously agreed, trade related issues and the ANSA concerns will now be discussed in parallel processes. The region aims to sign the interim EPA by July 1 (delayed for translation reasons) and a full EPA by the end of the year. Peter Thompson confirmed this deadline to civil society in Brussels on July 1. He said that the full EPA would include chapters on services and investment, incorporating the EU services liberalisation offer. SADC countries (minus ANSA) would include one services sector liberalisation commitment per member country, as well as a standstill clause to negotiate the rest of the SADC schedule within three years, he said.
SACU tabled its goods market access offer to the EU on June 27 and awaits an initial reaction.
ESA tackles outstanding EPA problems
Eastern and Southern Africa identified and discussed the key problematic areas in the interim EPA that it wishes to re-open in the move towards a full agreement, during a technical officials meeting in Brussels on June 23-25.9 Constructive discussions took place on agriculture, particularly for sanitary and phytosantiary measures, while provisions for technical barriers to trade were almost finalised.
Discussions on development focused on the need to link ESA’s development strategy with the 10th EDF Regional Strategy Paper. Both sides agreed to hire a consultant to consider how to establish development benchmarks. ESA also agreed to submit a revised, costed, development matrix which identifies the region’s top priorities.
ESA and EU services texts were put on the negotiating table: ESA’s GATS based text was compared to the EU’s Caribbean EPA GATS — plus text (i.e. including investment). ESA called for investment in non-service sectors to be dealt with in the trade related issues negotiating group. The two sides agreed to take a further look at rules and development cooperation in relation to investment.
There was similar debate based on joint texts with regard to intellectual property rights, competition policy and sustainable development. ESA called for negotiations to take place in an asymmetric and progressive way, with flexibility offered to different sectors and interest groups of ESA countries. Good progress was made by outlining objectives on a joint text acknowledging the importance of customs and trade facilitation. ESA and the EU agreed to step-up cooperation to ensure that the relevant legislation, procedures and administrative capacity was in place to promote trade facilitation.
ESA voiced objection to having provisions on good governance in the fiscal chapter of the full EPA. However, the European Commission replied that its inclusion was compulsory.
EAC common market talks deferred
The East Africa Commission region continued to prepare for the next round of EPA negotiations with the European Commission. These had been scheduled for early June, but will now only take place in September. The region plans to finalise its liberalisation schedule in early July.
WTO talks could delay Caribbean signature
The official signature of the Caribbean EPA could be postponed due to the WTO ministerial meeting which has been scheduled simultaneously. Peter Thompson told civil society in Brussels that signature, which was foreseen on July 23, might be postponed due to the ministerial in Brussels on July 21. EPAs will be discussed during a CARICOM Summit in Antigua-Barbuda on July 2-4. Sources indicate that signature will now take place for all countries (possibly not Guyana) in Barbados on July 30 or August 30.
Debate on the EPAs in the region continues, with prominent academics, eminent regional personalities, trade unions and the Guyana government calling for signature to be postponed unless the EU threatens to re-impose tariffs.10 However, no private sector organisation has yet called for a delay. The Director General of the Caribbean Regional Negotiating Machinery maintains the agreement is imperative for the region.11 The Prime Minister’s cabinet of Barbados is set to consider its review of the EPA on July 10. Meanwhile, Jamaica’s Prime Minister, Bruce Golding, has announced that his country will sign the EPA, but added that signing could be called off in the face of wide-scale opposition.12 Trinidad and Tobago’s trade minister, Lenny Saith, has also given the thumbs up to the EPA.13
Sources indicate that the main problem governments are flagging with the EPA relates to the terms of regional preferences the EU sought and secured for the Dominican Republic. It remains to be seen whether those concerned would be willing to put the region’s credibility to the test by trying to re-open what they and the EU have already agreed. Many will have to weigh up the negative impacts of a delay in signature, particularly in terms of uncertainty for bananas and sugar. Haiti and the Bahamas still need to put forward their services liberalisation offers.
Pacific calls for focus on trade in goods
The lead spokesman for the Pacific ACP trade ministers, Hans Joachim Keil, wrote to EU Trade Commissioner Peter Mandelson in July, proposing to conclude EPAs by the end of the year. According to sources in the region, Keil suggested that both sides focus on finalising outstanding issues including trade in goods, dispute settlement, fisheries and development. He also advocated suspending negotiations on trade in services and inserting a rendez-vous clause in the EPA that would commit both parties to revisit services in the future. Problems have arisen after the European Commission was unable to agree to Pacific proposals, particularly with regard to the temporary movement of natural persons (so-called Mode 4). There is also disagreement on trade related rules, where the Pacific does not feel that the agreement proposed by the EU, which is based on the one agreed with the Caribbean, is in line with the developmental issues faced by the region. Any EPA institutions established between now and the end of the year, will take responsibility for a programme designed to deepen the Pacific-EU partnership. The Pacific now awaits a response to its letter from the Commission.
For more EPA news please visit: www.acp-eu-trade.org
1 For further details see EU Council press release: ACP-EC Council of Ministers, Addis Ababa, June 13 2008 http://register.consilium.europa.eu/pdf/en/08/st10/st10822.en08.pdf
2 Council Conclusions on Economic Partnership Agreements (EPAs), 2870th EXTERNAL RELATIONS Council meeting Brussels, May 26-27 2008, www.consilium.europa.eu
3 See: Africa must unite to tackle rising food prices – AU, Daniel Wallis and Cynthia Johnston, Reuters, June 27 2008.
4 For further details on the Summit see: www.africa-union.org
5 See: UEMOA-Harmonisation des taux d’imposition : Des gains de recettes qui se perdent dans les Ape, Le Quotidien, June 26 2008, www.lequotidien.sn
6 See: Update on EU-West Africa EPA negotiations, EPA Flash News, Directorate General for Trade, European Commission, June 25 2008, www.acp-eu-trade.org
7 See: ECOWAS leaders call for development of regional infrastructure, Afriquenligne, June 26 2008, www.afriquenligne.fr and the final communiqué of the Abuja Heads of State meeting on June 23: www.apo-opa.org/080627.pdf
8 See: Côte d’Ivoire: Le gouvernement ivoirien va signer le 30 juin un accord d’étape avec l’Union européenne dans le cadre des négociations sur les nouveaux accords de partenariat économique afin de “préserver ses exportations”, l’Agence France Presse, June 2008, www.izf.net
9 See: EPA newsflash on the EU-ESA EPA technical negotiations, July 1 2008, www.ec.europa.eu/trade
10 See: EPA: Caribbean still divided on treaty, BBC, June 27 2008, www.bbc.co.uk/caribbean 11 See: Region to benefit from EPA agreement, Alphea Saunders, Caribbean net news, July 1 2008, www.caribbeannetnews.com
12 See: Jamaica to sign EPA with Europe, RadioJamaica.com, June 24 2008, www.radiojamaica.com
13 See: Trinidad backs trade deal, BBC, June 5 2008, www.bbc.co.uk/caribbean
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