4th February 2009

Replace controversy over EPAs with positive debate, says EU Trade Commissioner Ashton

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In early October 2008, just days before the historic signing of a comprehensive Economic Partnership Agreement (EPA) between the EU and the Caribbean, Baroness Catherine Ashton was named the European Trade Commissioner, swiftly replacing her predecessor, Peter Mandelson. For those involved in the EPA negotiations, all eyes immediately turned on Ashton.

Since then, the expectations, controversies, debates, complexities, successes, and failures of the EPA talks, have fallen on her. So, how does this former member of the UK House of Lords view the progress, opportunities, and future of the EPA negotiations? ICTSD’s monthly periodical that focuses on the EPAs and related issues, Trade Negotiations Insights, reached out to Ashton to find out, in her own words.

TNI: What is needed for the successful completion of the EPAs? Do you expect negotiations to be completed within the deadlines set in the interim EPAs?

Ashton: The top priority is to get the substance of each EPA right. There are complex issues of timing and content but I believe the political willingness is there. Both member states and African, Caribbean, and Pacific (ACP) partners have regularly restated their commitment to EPAs and there is an increasing consensus about the way forward. No one is questioning the fundamental idea that we need WTO-compatible agreements and if we can match the political willingness with agreements tailor-made to the aspirations of each region, the EU can effectively support economic development and regional integration with our ACP partners.

We should also remember that the dates specified in the interim EPAs aren’t deadlines – they’re targets. We have a series of ambitious negotiating calendars that have been agreed with each region but these are under continuous review. No one can be pushed into a deal before they are ready.

TNI: You have emphasised that you wish there to be a ‘different character’ to the EPA negotiations, the process of which has been widely criticised by civil society organizations and leaders across the ACP. How will you ensure that the asymmetries in negotiating power between the ACP and the European Commission are overcome?

Ashton: We must reflect on the state of play and make sure that Economic Partnership Agreements work for everyone involved. The EPA process only makes sense if all parties are brought in, so addressing any questions about trust or confidence is a priority for me. Of course there has been some criticism of the process, and negotiations haven’t always been easy, but there are always going to be different views – that is the nature of any trade negotiation. What is important is that we don’t lower our ambitions to the lowest common denominator. That would be bad for development and bad for regional integration. So we need to listen to the concerns of each region and replace controversy over interim agreements with a positive debate on full EPAs. We can take huge inspiration from the full EPA recently agreed with Caribbean countries and I am confident that we can make real progress in 2009.

TNI: What scope is there to renegotiate the ‘contentious issues’ (as identified by the African Union Ministers of Trade and Finance in April 2008 and endorsed by the ACP Council of Ministers) of the interim EPAs in the context of the comprehensive EPA?

Ashton: Getting to full regional EPAs is an ongoing process involving both ACP countries that did not join interim agreements as well as those that did. All issues tabled during negotiations, contentious or otherwise, are open for discussion. That’s why EU and ACP negotiators are regularly re-examining provisions in the interim agreements as well as exploring new areas, such as services, that were not included in the 2007 deals. Obviously, we still need solutions compatible with international trade rules and the Cotonou Agreement. At the same time, working region by region, we are successfully addressing specific regional concerns and edging closer to full agreements.

TNI: How much flexibility is there to deviate away from Commissioner Louis Michel’s previously-held arguments in favour of the Most Favoured Nation provision that the EU is generous in giving duty-free and quota-free access to EPA signatories, but is not naïve enough to allow them to give better access to the EU’s “economic adversaries”?

Ashton: To answer this question we first need to understand the Most Favoured Nation provision. It has two elements. The first element is binding on the EU. It guarantees that all ACP regions have the automatic right to claim any provision agreed with another ACP region either now or in the future. This ensures that no ACP region needs to hold back in negotiations for fear another will agree a “better” provision later. It also ensures equal and open treatment of all ACP regions in the spirit of the overarching Cotonou Agreement. The second element is binding on the ACP and covers special treatment, such as an exemption from liberalization for certain imports justified on the grounds that the sector is sensitive to competition. If an ACP region subsequently agrees to remove these tariffs on imports from another major trading economy, then arguably the original development justification has changed, and this treatment should also be extended to the EU. However, we have to be clear that this provision doesn’t apply either to imports from other ACP countries or, in practice, to the overwhelming majority of South-South trade deals.

TNI: In one of his final speeches as EU Commissioner, Mandelson signalled his desire to have bans on export taxes inserted into all free trade agreements that the European Union concludes. Do you share this view?

Ashton: The commitment to removing trade barriers like export taxes must be a cornerstone of EU trade policy. I am a firm believer in the benefits of open markets and of the opportunities it can deliver to businesses and individuals. One of my tasks as EU Trade Commissioner is to help entrench and extend those opportunities and I agree that we should use all tools – including trade agreements but also other mechanisms such as the EU’s dialogues with strategic partners – to further breakdown barriers to effective trade. Against the backdrop of the financial crisis, we need to enhance openness in the global economy, not undo it.

There are, of course, some exceptions. The world’s poorest countries need to protect infant industries and its only right that both multilateral and EU trade regimes give those industries the space and time to grow. So we will continue to look at the role of export taxes on a case-by-case basis, in order to make sure that, at the same time as promoting openness in the world economy, we are underpinning long-term economic development in the poorest countries.

TNI: The EU has highlighted that regional integration is a major benefit of the EPAs, while interim EPAs seem to have divided ACP regions. How will you ensure that existing ACP regional integration processes are re-established as a guiding principle for EPAs?

Ashton: Supporting regional integration within and between ACP markets has always been a key objective of the EPA process. By simplifying trade rules and replacing the complex maze of bilateral agreements with a handful of region-to-region trade interfaces, we can create bigger regional markets that are more attractive to investment, which developing markets need in order to create jobs and growth.

Nothing in the interim agreements changes this; ACP countries sign interim EPAs when they are ready and that sometimes means at different times. It shows we are moving at the right pace for each partner, not that the process is dividing regions. Of course, how we tackle the issue of regional integration in the full EPAs is going to vary by region. Some regions, like West Africa, have clear integration processes that the EPA can fit around. In other regions the processes may be overlapping or less clear and we need to build in flexibility to reflect this. Again, the Caribbean EPA provides a good example of how we can institute this kind of flexibility. Provided we meet the basic criteria of WTO-compatibility we can set up a framework that allows everyone to move at their own speed while respecting the overall process of integration.

TNI: What is the link between Aid for Trade and EPAs? What do you see as the role of the European Commission in coordinating overall EU Aid for Trade, including accompanying measures for EPAs?

Ashton: This is one of the areas of greatest concern to our ACP partners. But the EU is also in a difficult situation. On one hand, some ACP countries are reluctant to agree to trade commitments without up-front finance while on the other hand, the EU cannot make concrete pledges until the details of those commitments are known. We cannot make access to development funds conditional on signing a trade deal – EU finance mechanisms are set up to deliver development funds through clear programmes, not on the basis of progress in trade talks.

So we need to reassure ACP countries that they are not taking on an unfunded mandate to implement these agreements. This is why my colleague Louis Michel, as EU Development Commissioner, has taken steps to increase the visibility of development funds. And just as in the Caribbean EPA, each regional agreement has a specific development financing element. In fact, EPA-related finance has already been built into the 10th European Development Fund and the forthcoming EU Aid for Trade Strategy, which includes ACP regional “Aid for Trade” packages. The funds are there and we have the right framework in place – it’s now about communication and delivery.

Photo on homepage courtesy of the European Parliament.

This article originally featured in Trade Negotiations Insights, Volume 8, Issue 1, February 2009.