2. Structure of presentation
1. Setting the scene: key milestones
1. Some facts about the configuration
1. Where are we now? Brief state of play
1. Critical challenges ahead in the negotiations
1. Risks ahead?
6. Which way forward in the negotiations?
7. The major challenge for a win-win outcome
8. What then for development policy?
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3. 1. Setting the scene: Key milestones
•
Prior to 2008 (Lome to Cotonou): unilateral, non-reciprocal
preferential market access BUT not compatible with WTO
•
Difficult, uncertain and costly WTO waivers between 2000-07
•
Art 36 Cotonou Agreement: parties committed to start EPA
negotiation to address WTO compatibility
•
Since 2008 – Trade outside of Cotonou agreement. EPAs are
stand-alone agreements;
•
However: many unfinished negotiations – to avoid trade
disruption, EC Reg. 1528/2007 – provisional application of EPAs
for countries that had at least initialed an EPA (although interim)
•
Deadline to finalise all unfinished business: 1st October 2014
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4. 2. Key facts
•
•
Stage II 10/2003 – 2007: Regional negotiations
West Africa: 15 countries (ECOWAS + Mauritania)
Central Africa: 8 countries
East and Southern Africa: 11 countries (COMESA minus)
East African Community: 5 countries (full region)
Southern Africa –6 countries + SA joined later (SADC minus)
Caribbean region – 15 countries
Pacific: Pacific Forum
•
•
•
•
•
•
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Stage I 09/2002 – 09/2003: All ACP negotiations
Since then:
Only 1 full EPA (CARIFORUM) signed in 2008;
1 African region ESA (4 countries) signed in 2009 – all countries ratified.
The remaining 17 countries (have agreements that are legally challenging
Africa: CA (Cameroun signed in 2009, not ratified)
West Africa: Ivory Coast and Ghana
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7. 3.c Who will be affected and by how much?
Biggest losers:
Fiji
(97.4%
exports)
•
Swaziland (96.3%)
Both sugar exporters
(€339/tonne)
•
•
Kenya and Namibia
also likely to suffer
Source: Bartels L & Goodison P (2011): EU Proposal to end preferences for 18
African and Pacific States : An Assessment – Trade Hot Topics, Commonwealth
Secretariat – Figures are from 2009
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8. 3. State of Play of current negotiations: not
quite there yet…
1. ECOWAS: 2 main issues
1.
2.
3.
Market access offer (degree and time frame)
Development chapter (PAPED – additional resources)
Other contentious issues: MFN Clause; EU Domestic
subsidies and support to agriculture; Obligations to
negotiate FTAs with countries where EU has CU
(Turkey, San Marino, Andorra)
2. EAC: Mainly contentious issues
1.Export taxes; MFN,
2.RoO;
3.Agriculture;
4.non-execution clause (ICC/Kenya)
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9. 3. SADC:
1. Export taxes, MFN
2. South Africa/SACU market access both on agriculture and
NAMA; RoO cumulation with SA;
3. infant/distress industries;
4. Central Africa:
1. Slow negotiations.
2. Key remaining issues include MA offer; MFN, Export taxes
development
5. Pacific:
Recently agreed to freeze negotiations because of fisheries
6. ESA:
1 outstanding issue: customs cooperation agreement but not an
issue with deadline
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10. 4. Critical challenges ahead in negotiations
•
Deadline 1st Oct. 2014
•
So far, on contention issues, little flexibility on both sides
•
Timeline towards deadline: given pace of negotiations, even
if negotiations are completed there might be problems with
implementation
•
Risk of failure: Some countries might be left without
preferences; likely implications for regional integration (Kenya?
Ivory Coast? Cameroun? Swaziland?)
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11. 5. Risks ahead
• If agreements are concluded:
Timeline is unrealistic
Risk of trade disruption pending ratification: economically
challenging and politically unacceptable
• If trade talk collapse:
some countries may sign for fear of market disruption;
big risk for regional (dis)integration;
multiple trade regimes applicable to exports to EU with
negative impacts on RI
Diplomatic and political challenges : EU-Africa Summit –
risk of derailing strategic discussions;
More broadly: geostrategic implications – partners might
turn elsewhere
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12. 6. Which way forward in negotiations?
•
10 years on, all technical possibilities have been explored; but
technical solutions still possible
•
Outcome most likely to be resolved at political level
•
Becoming evident that EPA has negative impact on the overall
Europe-Africa relationship;
•
Increasingly urgent to promote positive and constructive
atmosphere to maintain the broader strategic relations between
Europe and Africa
•
Needs pragmatic and realistic solutions on both sides
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13. •
Important to weigh the political cost of a possible failure within
the broader EU-Africa relationship;
•
Are we prepared for a failure? What “extra-mile” are we ready to
go? Or can we afford to go? Whose role?
•
Preparing “smooth landing” if/when negotiations fail: agree to
disagree = politics
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14. 7.The main challenge: Expectations v/s reality:
The disconnect!
•
The major challenge is to bridge the gap between the
expectations of the EPA and the realism:
Expectations = EPA meant to be a development tool. From
African side, many expected to see trade act as a leverage for
broader development. Also financial expectations (additional
funds). But has not happened. From European side, it was
assumed the link was automatic. Both expectations were not met!
Realism = it ended up being JUST an FTA. As such, even if
trade is one tool to achieve development, it is not sufficient in
itself. Needs more
(reforms, markets, investments, accompanying measures for fiscal
losses or losers etc). Crafted as it is, it will not deliver!
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15. 8. What then for development?
•
EPA was expected to be mainly a development tool.
•
So far, this is far from the case – disconnect still too
wide, development objectives still too low
•
This is where we need to focus support if we want EPAs to really
work for development
•
Unfortunately – not the mandate of DG Trade and DG Devco is
still too much trapped within existing financing mechanisms
(EDF etc) all of which are available ANYWAY (with or without
EPAs)
•
So EPA countries see no additionality and LDCs do not see the
necessity to open up their markets
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16. •
But “traditional aid” is not sufficient to bridge the gap –
experience has shown that results have been mixed
•
What role for member states? What can be done?
•
Main issue in Africa – structural transformation of economies to
diversify away from commodity based:
•
•
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Role for private sector? Which private sector?
Thinking beyond aid but in terms of productive engagement –
bring know-how, help develop local expertise and productive
capacity;
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18. Deadline 1st October 2014: In a nutshell
•
EC regulation to amending 1528/2007 (remove countries from
Annex 1)
•
Objective: Deadline to the provisional application of EPA
trade preferences for countries that initialed an EPA but had not
signed or taken the necessary steps to ratify it, regardless of
whether contentious issues have been resolved or regional
EPAs completed.
•
Result: Countries that had not initialed or taken steps to ratify
will loose trade preferences under EPA as from 1st October
2014
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19. Who is concerned by the deadline?
•
So far, 36 ACP countries had initialed or signed an (I)EPA.
•
Of those, 19 countries had met the requirement of
ratification
(i.e
15
Caribbean
countries
+
Mauritius, Madagascar; Seychelles and Zimbabwe). Not
concerned by deadline 1st October 2014.
•
The remaining 17 countries will lose EPA market access
by 2014 if they do not ratify the EPA by then.
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20. The 17 countries fall into different categories:
• 9 are LDCs – on a pure market access basis, they will
continue to benefit from DFQF under EBA status
• 7 are lower middle income countries and will
therefore fall under the standard GSP Scheme – with
higher tariffs for some products and stricter RoO
• 2 are upper middle income countries and will lose all
preferences if the new GSP comes into effect in 2014
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21. Products to be affected
Products with very high tariffs:
• Sugar (€339 – 419/tonne) – Swaziland, Fiji, Kenya
• Fresh and chilled bovine (12.8% + €3034/tonne) – Namibia
and Botswana)
• Fresh bananas (€176/tonne) – Ivory Coast, Cameroun, Ghana
Products with high tariffs
• Tuna (20.4%) – Ivory Coast and Ghana
• Other fish (hake (fresh, chilled, frozen) + monkfish (11.5% 15%) – Namibia
• Beans – 15.7% - Kenya
• Pineapples – 14.9 – 15.7% - Kenya, Swaziland
• Citrus – 14.9% - Swaziland
• Orange,
grapefruits,
grapes
..
>10%
Kenya, Namibia, Swaziland
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22. •
Beyond worsening market access conditions for some and trade
disruption for others, there will be practical implications of
falling into different regimes:
•
For exporters: tariffs will increase; RoO will change
•
Cumulation, which was possible among countries which were
benefiting from IEPA within the same region will no longer be
possible – hence implications for regional markets and value
chains
•
For regional integration – some countries would give EU
better market access than to their regional partners; implications
for RI agenda in setting up CUs or for the administration of CUs
in place;
•
Some countries will face same treatment as developed
countries (Eg Botswana and Namibia will export to EU under MFN
= Japan or US)
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23. Contentious issues: what flexibility
1. Degree of liberalisation: In WA and CA, some degree of
flexibility is needed: WA is requesting 75%. No precedent at
WTO that is is NOT compatible. EU can justify this on the
ground that regional agreements include a majority of
LDCs.
2. MFN Clause: a redline for ALL regions. Either EU drops it or it
broadens the scope to include RoO and other non-tariff
matters as well as services (big EU FTAs are yet to come, so
this should be sellable)
3. Export taxes: A redline for ALL regions: problem is with the
language. Countries do not want their measures to be
approved by EU but only consultation. Other option is to leave
it to WTO
4. Additional funding: so far none, but could explore innovative
financing mechanisms such as blending, leveraging loans using
aid money etc.
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24. EPAs: what impact for Regional Integration
and beyond?
Boomerang effect
• Although negotiations continue, it is increasingly felt that
timing and sequencing of trade agreements with third parties
should be based on RI agenda and not the reverse
•
Priority therefore given to regional agenda by many RECs.
For EPA, this is particularly relevant for services and other
trade-related issues.
•
E.g COMESA services negotiations launched in September
2009 as a way of preparing a common stand for EPA services
negotiations; EPA competition clause is based on COMESA
competition policy etc.
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25. But also broader issues:
•
Disillusion between expectations and results.
•
Many countries seeking status quo and little appetite beyond
market access
•
Flaws in EU’s own trade policies: EBA given to all LDCs in 2001
+ improved RoO in 2011; LDCs have no interest to sign EPAs
and some RECs mainly LDCs
•
On December 2011, at WTO improved market access in
services granted to LDCs. Will have an impact on future
services negotiations
•
No political traction on both sides and no political will to find
mutually acceptable agreement on contentious issues
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26. •
Not necessarily a consensus on either side on what a good
development policy is or whether EPAs are good for RI and
development or not.
•
Irrespective of economic merits, arguments from the EC side
had little convincing effects, given differences in interests and
perception of what EPA was and would achieve
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