Monday, 5 May 2008

Economic Partnership Agreements (EPAs)- The Inside Out

Since the new EPAs were signed in the early part of this year most African, Caribbean and Pacific (ACP) countries have not done a detailed analysis of the agreements. However, a study report on The new EPAs: comparative analysis of their content and the challenges for 2008 provides a comprehensive analysis from the authors perspectives the trade regimes for Africa that on 1 January 2008 replaced the Cotonou Partnership Agreement (CPA), the negotiations that remain to be completed and the challenges facing Africa in implementation. The findings from the study is commissioned by the Ministry of Foreign Affairs of Netherlands and undertaken by the Overseas Development Institute (ODI) and the European Centre for Development Policy Management (ECDPM).

According to the report, eighteen African and two Pacific countries initialed interim EPAs whiles Caribbean (CARIFORUM) countries agreed full EPAs. The remaining African, Caribbean and Pacific (ACP) countries in exception of South Africa now export to the European market under the EU Generalised System of Preferences (GSP). South Africa continues to export under its own free trade agreement (FTA) with the EU, the Trade, Development and Cooperation Agreement (TDCA).

Key features of the interim EPAs

In part A of the report, five specific research questions where responded to in analysing the agreements initialed by African countries and, where relevant, makes a comparison with the CARIFORUM and Pacific agreements.

  • National level: what is the impact of the agreed tariff liberalisation schedules, when compared to current applied tariffs?
  • Regional level: how should the individual agreements (if applicable) be interpreted in relation to current and future regional integration initiatives?
  • ACP–EU exports: what does the DFQF market access to the EU mean for ACP countries in terms of (additional) market opening to the EU?
  • What do the agreed interim agreements/stepping stone agreements say about possibilities to opt out and conditions and time schedules to come to a full EPA
  • In how far are the agreed texts for African regions and countries i) similar to each other
    and to the text for the Caribbean region and ii) development friendly?

Levels of national commitment

In answer to the first question, the study points out how the interim EPAs were finalised in a rush to beat the deadline and how all the African EPAs are different in exception of the East African Community (EAC) region. The report point out that no clear pattern was identified that the poorer countries have longer to adjust than the richer ones or of the EPAs being tailored to development needs.

Implications for regionalism

The report points out that there is little coherence between the EPA agenda and the regional integration processes in Africa in answer to the second question.

Some key provisions of the interim agreements

Research questions 1 and 2 issues highlighted above, have been derived from the complex and detailed EPA schedules using the authors’ judgements about the relative importance of different elements of the agreements. Answering research questions 4 and 5 takes attention away from the schedules of tariffs to be liberalised or excluded towards the main texts, the impact of which will become clear only over time in the light of circumstances.

According to the study, the safest guide to what the parties have agreed and that allows a comparison to be made of each main provision in the various EPA texts is the issue-by-issue summary of the main provisions of the EPAs provided in Appendix 3 of the report. Specific border measures are provided in the EPAs which may slightly alter some of the features of the liberalisation regimes. Apart from that, there are big differences in the ‘rendezvous clauses’ in the interim EPAs which establish the areas in which negotiations must continue. These clauses are guidelines to be negotiated. In addition, the dispute avoidance and settlement provisions are more extensive and rigid than in some previous EU Free Trade Agreements (FTAs). All the EPAs except EAC have comprehensive but wholly non-binding provisions for development cooperation, mentioned in each and every chapter as well as in a section on development cooperation.

The way forward

Part B addresses five questions raised in the terms of reference for the study. Which considers the implications of the interim EPAs concluded in Africa, and the way they were concluded, on the continuing EPA negotiation process, and identifies options for the way forward.

  • What are the lessons learned from the EPA negotiation process?
  • Based on the findings from part A, what are the different scenarios for the way forward, including: – moving from interim to comprehensive EPAs, moving from country to
    regional EPAs, and/or moving from interim EPAs to GSP+?
  • What could be the changes and additions to the interim EPAs to make them comprehensive, development friendly and in support of regional integration?
  • What are the opportunities and threats for the ACP for the negotiations on ‘phase 2’?
  • Special attention should be given to the lessons from phase 1, the political dynamics and the interaction between regional integration and EPA negotiation processes.
  • Considering the outcomes of part A, what are the implications for aid modalities for the coming years (where should ACP and donors pay attention to compared to the current
    state of affairs)?

A turbulent negotiating process

The report mentioned the extremely challenging process and substance of the EPA negotiations resulting to tension and frustration on either side of the table. EC and ACP negotiators were unable to reach common understanding and approach on the cornerstones of new trading arrangements, especially development and regionalism. The report attributed this to various reasons but lack of institutional and technical capacity on the ACP side, as well as insufficient political leadership in many regions made the process less smooth. The first challenge is to mend bruised feelings, restore some confidence and trust and build a true partnership.

Options for the way forward

All the parties are officially committed to concluding comprehensive EPAs, and negotiations are continuing to that end in all regions.

It is not for the authors of this study to identify which is the best option, from the range of options, as this is a task for each country and region. These range from concluding full EPAs over adopting the initialed interim agreements as permanent solutions (possibly joined by additional countries), to opting out of EPAs, relying instead on the GSP to access the EU market and liberalising under the intra-regional and multilateral frameworks. The report went on to state that the challenge will be for each grouping to adopt a common approach consistent with their
regional integration processes, while promoting their development objectives as indicated by the analysis in Part A.

The need for ownership

Interests among countries within a region may differ, include varying degrees of commitment on trade in services and trade-related issues. Signing an EPA should be a sovereign decision by each country and not be pressured to join through political pressure or through aid conditionality.

The report stated that instead of moving from interim agreements directly to full EPAs it would be possible to address different areas of negotiations step-by-step through a built-in agenda consisting of rendezvous clauses with different issue-specific deadlines to finalise negotiations. It also talked about the need to increase transparency in the negotiations and their outcomes in order to allow for public scrutiny by policy makers, parliamentarians, private sector and civil society representatives. Apart from that, the asymmetries in negotiating capacity (between the EU and ACP and among the ACP) that have contributed to the incoherence of the interim agreements need to be taken into account in the further negotiations if the problems identified in Part A are not to be made worse.

Aid for Trade and EPA related development support

The total ‘theoretical revenue’ that will be lost during the first tranches of liberalisation is $359 million per year. Such inflows are needed just to maintain the support needed for domestic producers to adjust to increased competition from imports and new opportunities for exports
as a result of duty-free. As the centrepiece of the EU’s commitment to EPAs so far, it would be sensible to ensure that there is also adequate aid provision to help remove blockages to increased supply. Europe has committed itself to provide more Aid for Trade (AfT) to developing countries and should ensure that part of this enhances the use of quota-free access (DFQF) by removing obstacles to production and export, such as poor infrastructure and other physical or institutional deficiencies.

According to the report, the EU decided that EPA-related needs should be addressed through the ‘EU Aid for Trade Strategy’ in favour of all developing countries. The ACP regions and countries should proactively ensure that the EU AfT Strategy is operational and effective by identifying gaps in existing support and improvements needed in AfT delivery instruments. There is urgent need in particular to assess the added value of different mechanisms (regional funds and national-level instruments, etc.).

Related Posts

African nations in EU trade deal

EU/Africa EPAs on rocks

Globalisation challenges

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4 comments:

Moses Sena Kpetigo said...

Africa's trade unions called on their governments to nullify the interim trade agreements they have signed with the European Union, saying they leave African nations "weak" within the global market. Source: http://twurl.nl/xp7a3e

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