EPAs State of Play - April 2010

 

In 2002 the EU started negotiations for Economic Partnership Agreements (EPAs) with African, Caribbean and Pacific (ACP) Countries. To date only one final EPA, the CARIFORUM EPA (regarding the Caribbean countries) has been ratified. Up to now 20 African countries have initialed or signed interim EPAs. After having largely been stalled last autumn EPA negotiations have started anew at full throttle in the last few weeks since the new Commission took office in early February.

 

The new Commissioner for Trade De Gught stated recently that he had problems understanding why most African countries had continued to resist signing the EPAs. De Gught accused African countries of double standards by denouncing the EPAs when on the other hand, they were accessing European markets on both duty free and quota free mechanisms.

 

Eastern and Southern Africa (ESA)

 

Mauritius, Seychelles, Zimbabwe and Madagascar signed the interim EPA with the EU last September. The other two members of the ESA formation, Zambia and Comoros, decided not to sign. Both countries are classified as Least Developed Countries (LDCs) and benefit from the Everything But Arms (EBA) program of the European Commission, and therefore do not face consequences for not-signing the EPA. EU Commissioner for trade Karel de Gucht plans to meet the trade minister of Zambia soon in order to revive the stalled EPA talks.

 

East Africa (EAC)

 

The negotiations are largely concluded and there was hope from the European side that the agreement could be signed in May. Africans, however cooled down the expectations. Rwanda's trade expert John Bosco Kanyangoga sees December as a more likely date for the completion of the agreement.

 

A few issues still remain to be solved. Stephen Mbithi, Chief Executive of Fresh Produce Exporters Association of Kenya and a member of the negotiating team, said the parties have agreed on an EAC-EPA-Development Matrix, and are discussing whether it should be annexed or made part of the agreement.The EU opposes its being legally binding, arguing that it has other channels through which it funds development in the region.The European Commission (EC) has, however, asked East African states to prepare a list of priority projects and programmes that require funding for possible approval.

Mbithi added that the Most Favoured Nations (MFN) clause too needs to be defined so that the region is not forced to source for products and services from the EU, when it can get the same from other regions, notably China, at cheaper costs.

 

Kenya's EAC Permanent Secretary David Nalo refuted recent media reports that Kenya (which is the only non LDC of the region and therefore risks most) had indicated it would go it alone, saying that the regional market was a bigger priority for Kenya.

 

In the meanwhile the former President of Tanzania Benjamin Mkapa warned east African states to be wary of EPA as it was another Europe form of colonising the continent. He described EPA, which is being championed by the EU, could be another "scramble for Africa", and was likely to weaken the regional bloc economically. His concerns were shared by the Tanzania Civil Society Trade Coalition (TCSTC).

 

West Africa (ECOWAS)

 

Of the 16 ECOWAS countries 13 are LDCs benefiting from EBA. Of the three non-LDCs Côte d'Ivoire is the only country of the region having signed an interim EPA with the EU, while Ghana has initialed an interim EPA but not yet signed it. Oil rich Nigeria never had any interest in signing an EPA and did not took part in the negotiations. Nigeria has therefore already fallen back on the Generalised System of Preferences (GSP)[1]. The long standing disagreements between the EU and ECOWAS remain.

 

At the meeting on 22-26 March in Brussels, ECOWAS tabled a new market access offer that would open about 70 percent of their tariff lines and volume of trade over a 25-year period. EU officials have acknowledged the proposal but they have also indicated that they would like to see the tariffs brought down more quickly.

 

Meanwhile, the EU and ECOWAS remain at loggerheads over a controversial Most Favoured Nation (MFN) provision. The EU has pushed for an MFN provision in the EPA that would grant it the same treatment that ECOWAS countries provide to "major trading partners" in other FTAs. ECOWAS is uneasy with the proposed provision, fearing it will inhibit West African countries from pursuing agreements with major developing countries. Under the EU proposal, for instance, any trade preferences granted between a West African country and China would also have to be passed on the EU. ECOWAS wants to limit the MFN clause to developed countries.

 

ECOWAS is also pushing the EU to remove agricultural subsidies that it believes are having a negative impact on West African farmers. However, the EU says there is little political appetite for further concessions on agricultural subsidies within the WTO negotiations. At the meeting in Brussels, the parties did agree to set up a contact group that would analyse the economic impact of the EU agricultural subsidies on West Africa.

 

Dates for the next negotiations have not been set.

 

Southern Africa (SADC)

 

In June 2009 Botswana, Lesotho, Mozambique and Swaziland signed an interim EPA with the EU.. South Africa, Namibia as well as Angola did not sign. Of the three countries not signing the agreement Namibia is the only really vulnerable one. Angola as an LDC is benefiting from free access to European markets thanks to the EBA program, while South Africa benefits from preferential tariffs under a separate Free Trade Agreement with the EU.

 

The EU is therefore increasing its pressure on Namibia. Namibia however does not seem to be willing to give in. The EC delegate to Namibia, Elizabeth Pape, is 'not confident' that the Namibian government will sign an EPA. She pointed out that the 'continuation of the status quo is not a solution', with something needing to be done before the end of 2010 to resolve outstanding issues. The EC delegate contends that the EC has 'assured Namibia repeatedly of [its] commitment to honour the texts agreed in Swakopmund for the final EPA'. The Namibian government however argues that following negotiations in Swakopmund in March 2009, 'the EU promised to address Namibia's concerns, which include protection of infant industries, food security and export taxes'. To date however 'no written assurance has been received' on how provisions dealing with these issues will be dealt with in the IEPA prior to signing.

 

A new negotiation round is scheduled to be held on 27-29 April in Brussels.

 

Central Africa (CEMAC)

 

Cameroon is the only CEMAC country having initialed and signed an interim EPA. In January 2010, Cameroon was meant to begin implementing the interim EPA, but the government decided to postpone the implementation. In February the Central African governments agreed to offer an opening of 60% of their markets over 20 years. They defined the proposal as realistic considering the differences in development between the region and the EU. It is however unlikely that the proposal will satisfy the European Commission.

 

 

 

 

Thomas Lazzeri

 

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[1] The EU's Generalised System of Preferences is a trade arrangement through which the EU provides preferential access to the EU market to developing countries and territories, in the form of reduced tariffs for their goods when entering the EU market. There is no expectation or requirement that this access be reciprocated. It has however to be noted that this represents an increase of tariffs for ACP countries, which hitherto benefited from duty free access to the EU market thanks to the Lomé Convention.