EPA Update
By Melissa Julian, ECDPM
This is the longer, more detailed version of the TNI EPA Update in the March - April 2007 issue of Trade Negotiations Insights
Summary
*ACP-EU Joint Ministerial Trade Committee Meeting
*First Ever Informal ACP-EU Development Ministers Meeting
*Central Africa (CEMAC)
*West Africa (ECOWAS)
*Southern Africa Development Community (SADC)
*Eastern and Southern Africa (ESA)
*Caribbean (CARIFORUM)
*Pacific
ACP-EU Joint Ministerial Trade Committee Meeting
The ACP-EU Joint Ministerial Trade Committee (JMTC) met on 1 March to assess progress and prospects in regional EPA negotiations. Joint EPA reviews were not agreed for all regions in time for consideration at the meeting (these are to be completed and endorsed at the Joint May Council of Ministers), but conclusions from ACP reviews, indicating the areas where work remains in order to conclude EPAs that can serve as effective development tools, were the basis of ACP positions taken at the JMTC (See last issue of TNI long version for details on the conclusions of ACP reviews ).
ACP officials who attended preparatory meetings for the JMTC report that ACP Ministers reaffirmed that EPAs must support development and include provisions to build the competitiveness and capacity of ACP countries to implement and benefit from EPAs. They noted EU development finance commitments and agreement to include development chapters in EPAs, but called for modalities to be put in place for rapid disbursement of support and for EPAs to include legally binding provisions on EU financing for development. Ministers also called for provisions for the continuation of development cooperation with the EU beyond the 2020 expiry of the Cotonou Partnership Agreement to be inserted into the EPAs.
ACP discussions also revealed that while it is difficult to ascertain now if the ACP can sign EPAs because so much information is still lacking, and despite continuing concern of the development impact of EPAs, it appears that there are no alternatives for non-LDC (Least Developed Countries) ACP countries since Most Favoured Nation, EU GSP (Generalised System of Preferences) status and even Everything but Arms (EBA) for LDCs without improved rules of origin would offer less EU market access than current preferences. There was also quite some discussion on the possibility of concluding phased-in EPAs, covering only trade in goods, but which could include provisions for future discussions in other areas. This is to be determined by each region.
The ACP hope for EU understanding on the work remaining to conclude the negotiations on time which will require consultations at the national and regional levels and it may take time build consensus. Ministers agreed that all efforts should be pursued with a view to concluding EPA negotiations, but that all outstanding issues related to development must be effectively addressed to do this. In the event that negotiations are not competed before the 31 December 2007 expiry of the WTO waiver for current ACP trade preferences, ACP Ministers called for the WTO to be notified of the delay so that the negotiating process could continue so as to avoid ACP-EU trade disruption from 1 January 2008.
ACP and EU Member State sources indicate that ACP Ministers made these points at the JMTC. EC Trade and Development Commissioners Mandelson and Michel reportedly stressed EPAs’ holistic approach to achieving development in ACP countries through trade liberalisation, trade-related rules for economic reforms to attract investment and accompanying measures and support to improve competitiveness and assist in EPA implementation. They warned that if EPAs are not agreed before the 31 December expiry of the WTO waiver ACP LDCs will be granted EBA market access to the EU and non-LDC ACPs will get the EU’s GSP.
Commissioner Michel asserted that adequate EU development support for EPAs was available via the 10th European Development Fund (EDF), which he maintained significantly increased EPA support above the 9th EDF, and the EU’s Aid for Trade initiative to provide a significant part of the 2 billion euro a year by 2010 commitment to the ACP for EPAs. He said that budget support and EPA regional funds could be used to effectively disburse this and any additional assistance that may be provided. This assistance, however, depends on the commitments the ACP make in trade liberalisation and trade-related rules in the EPA, he said. Once EPA commitments are clear, the ACP can put forward concrete programme proposals to obtain funding.
Commissioner Mandelson informed the ACP that the EC would table its market access offer soon (indications are sometime in March) and it is aiming for duty free, quota free market access for LDCs and some transitional arrangements, perhaps even exclusion from liberalisation commitments, for a few sensitive non-LDC products (sugar and rice) to prevent market instability for EC and ACP producers. There will also be special treatment given for South Africa. He also informed that the EC’s proposals for revised rules of origin will not be ready this year and, therefore, perhaps Cotonou rules of origin could be improved and a revision clause inserted in the EPA on this. Commissioner Mandelson also raised the possibility of discussing EU domestic support in relation to products that will be liberalised under the EPA.
He also elaborated the EC’s view that EPA commitments, both those in relation to asymmetric tariff liberalisation (with long transition periods) and also in relation to trade-related rules, can be phased-in. The latter could be included in the EPA, but with the focus first on building regional capacity in this area before opening up to the EC.
Finally Commissioner Mandelson reportedly said the EC was also ready to make an ambitious proposal for access on Mode 4 to the ACP.
ACP and EU Member State officials who attended the meeting indicate their concern at the generally high level of frustration leading to bad feelings between the EC and the ACP sides at this late and crucial stage of the negotiations due largely to the perceived insufficient moves by both sides from their positions towards negotiated mutually acceptable texts for EPAs. Commissioner Michel’s “passionate” intervention on development cooperation, which is his known style even sometimes in discussions with EU Member States and European Parliamentarians, but which reportedly included some frank statements such as to the effect that he was “getting tired of hearing this cry that resources are not enough” and that the EU is not “Santa Claus”, was ill received by many ACP delegates who viewed it as disrespectful, condescending and paternalistic. An African Minister’s angry reaction to Michel’s intervention demanding an apology, soured the tone of the meeting. Others also noted that the fact that the Commissioners sat at the head table on a podium “above” the ACP delegates did not add to the feeling of partnership.
The JMTC did not adopt conclusions, but the EC press release states that they agreed the importance of reaching agreement on the text of new agreements ready for the beginning of 2008 when the WTO waiver protecting existing arrangements will expire. The ACP have clarified subsequently that agreement is conditional on the exact content of the development dimension of EPAs.
First Ever Informal ACP-EU Development Ministers Meeting
At their initiative, the German EU Presidency hosted the first ever informal EU Development Council meeting with ACP Development Ministers representing all the EPA negotiating regions. Present also at the 2 ½ hour dialogue were the EC Trade and Development Commissioners. The focus of discussions was the progress and prospects for EPA negotiations. It provided a rare opportunity for the ACP to collectively present their assessment of negotiations to EU Member States who are normally briefed on negotiations by the EC whom they have mandated to conduct the EPA negotiations and who are therefore also the ACP’s principal interlocutor.
The meeting was part of a process. Many EU Member States, in reaction to concerns expressed by ACP governments and NGOs about potential negative impacts of EPAs, started monitoring the EPA negotiations process much more closely in early 2005 and increased pressure on the EC to ensure the development objectives of EPAs can be realised. Specifically, they have called for the establishment of an effective monitoring mechanism from the start of the implementation of EPAs and outlined the types of EU support which should be provided to assist the ACP to effectively negotiate and implement EPAs which will deliver development objectives. They also explicitly recognised that the ACP’s political choices on what to include in the EPA must be respected. Several EU Member States re-stated these points at the informal Council meeting.
ACP and EU Member States officials who attended the meeting said it was very positive, which was welcomed by all after the tensions at the JMTC earlier in the month. The only terse exchange was between the Nigerian Minister and EC Commissioners with the former questioning the realism in expectations that negotiations will be concluded this year with so much work left to do to prepare and negotiate EPAs. Interventions indicated that Nigeria may not be prepared to sign an EPA this year. The EC is concerned by the impact Nigeria’s position may have on the ECOWAS EPA. The ACP provided the EU Member States with a clear insight into the current state and challenges to completing the EPA negotiations in stating where progress and blockages were in the negotiations, particularly including at the technical level where there has been little progress in some regions. Many noted that while flexibility sometimes emerges in Ministerial level encounters with Commissioner Mandelson that this often does not materialise at the technical level in a willingness to think creatively and arrive at mutually acceptable solutions that address the unique needs and circumstances of the ACP. The ACP also raised concerns on EU Aid for Trade amounts, modalities and timing and that there will be a gap between entry into force of EPA s and the release of 10th EDF resources so there is a need for timely release of Aid for Trade commitments to plug this gap in funding. Several ACP representatives stressed the need to insert a for rendez-vous clause in the EPAs to ensure development cooperation assistance continues after the 2020 expiry of the Cotonou Agreement. They stressed that the EPA should be a trade and development compact where the ACP give binding commitments on market access and, if agreed, trade-related rules in exchange for binding commitments from the EU for development support. EU officials recognise the importance of discussing commitments for development support, but do not want this to be interpreted as the EU wanting to buy ACP market access. The ACP expressed cautious optimism that a satisfactory EPA could be concluded this year and that they are prepared to move forward on that basis.
Officials also indicate that Commissioners Mandelson and Michel re-stated the trade and development aspects of EPAs presented at the JMTC with Michel further stressing that the EU have made international commitments to significantly increase their overall aid packages in the coming years. Commissioner Mandelson reportedly clearly stated that sugar and rice would be treated as sensitive products in the EU’s market access offer. He also set out that there could be bands of liberalisation in the EPA - one band for immediate liberalisation, one for liberalisation with a transition period up to 10 years, one with transition periods up to 15 years and one with sensitive items for liberalisation transition periods up to 25 years.
The German Presidency’s press release of the meeting states that appropriate development provisions must be incorporated in the text of the EPAs and work must continue to develop concrete mechanisms for effective implementation of the development component of the EPAs. They agreed also that the development impact of EPAs should be monitored in the course of the implementation of the agreements. In this regard, monitoring instruments will be further developed. EU diplomats reportedly said such a clause might make it easier for the ACP states to sign up to the accords before the official deadline expires at the end of the year
Initial consultations with EU and ACP representatives indicate that the key question for EPA negotiators is how to include a mechanism in EPAs to monitor the implementation of the agreement’s provisions and its impact in ACP countries, to ensure these are effectively delivering on their stated development objectives. The key will be in jointly agreeing the constraints and capacity requirements for market access and to address theses as part of the EPA. And to agree precisely on the necessary approach and detailed steps required to get from EPAs to development (are actions having desired impact) and finding a way to ensure that the results of monitoring can effectively influence subsequent policies to ensure the necessary pre-conditions are being met (how to change actions if not delivering desired impact) before tariff liberalisation. If this is agreed beforehand in the agreement, it will make gathering data on agreed indicators easier and assessing and drawing conclusions on it less political. So it is good to have this discussion now and not later. If there is agreement on this, it could help unblock the EPA negotiations. Many are watching how the current EPA Review will be acted upon as an indication of what’s needed for a future monitoring mechanism.
Mention was made at the informal Council that there could be a similar meeting with development ministers in the margins of the May ACP-EU Council of Ministers and perhaps under the Portuguese EU Presidency in the second half of this year. One criticism of the informal Council meeting was that there was not enough time for everyone to fully set out their views. Perhaps follow-up could also include meetings of smaller groups to allow more detailed discussion. Several regions have initiated tours of European capitols to discuss issues with EU Member States. Informal dialogue could also usefully continue at technical levels.
EU Member States cold play a key role in ensuring that political commitments and understanding filter down sufficiently to the negotiators level to allow progress so that EPA negotiations are successfully completed within the end of 2007 deadline.
The informal development ministers meeting helpfully decreased animosity after the JMTC. But it seems that where increased understanding is needed in that by calling for binding development finance provisions in the EPA, the ACP question not the EU’s good will, but its current capacity, to effectively deliver its development commitments, including those meant to ensure policy coherence for development. Institutional constraints within the EC and between the EC and EU Member States makes implementing political commitments complex as the decision making process moves down the delivery chain. Its not and indictment, but a fact of the process. The ACP feel the EU should acknowledge this fact in negotiations and ensure the political will to put in place mechanisms in the EPA that will ensure commitments are delivered. EPAs could be the first place where the EU implements its policy coherence for development commitments.
Including binding commitments is in fact essential to having the ACP sign an EPA they feel they own by the year end deadline. This ownership is of course key to the EPAs success. It would require necessary instructions to negotiators. To extend negotiations beyond deadlines with no change in the EC mandate would not offer much prospect. Will the EU Member States have the political will to do this?
Central Africa (CEMAC)
A series of EPA meetings culminating in a meeting of Central African Trade Ministers and National Authorising Officers with the EC Commissioners for Development and Trade on 6 February effectively re-launched regional EPA negotiations. These had been blocked since July 2006 due to differences between the two parties on approaches to dealing with the definition, content and modalities for facilitating the levelling up of Central African production capacities, increasing competitiveness of economies and enterprises to benefit from EPAs and on support for implementation of EPAs.
The joint communique of the Ministerial meeting states that the two sides decided to move to next phase of negotiations of drafting legal EPA texts and negotiating market access offers while in parallel assuring work advances on reinforcing capacity of negotiating structures and on identifying and putting in place EPA accompanying measures and effective instruments and mechanisms for strengthening and levelling up productive capacities. They will also continue work on the EPA framework where divergence of views continues on CEMAC’s call to include the reinforcement of capacities that will translate in the improvement of basic infrastructure and levelling up of economies in the EPA text.
Both Parties agreed on the usefulness of seeking to create a specific regional facility to support EPAs through the use of budget support and the effective implementation of RPTF recommendations into project and programmes of support.
The EC also reportedly made its market access intentions known (those noted above in the section on the JMTC).
The conclusions note that both sides consider competition, investment and public procurement key subjects for development as they attract investment and accelerate growth and that EU support should be provided to help define regional rules. The EU wants to include trade-related rules in the EPA text, albeit it with phased-in commitments to this, something which CEMAC does not yet want at this stage
CEMAC officials indicated that they were in disagreement with the EC about how to reconcile their two views in the EPA Review. A joint report, however, has been subsequently agreed.
Both sides reaffirmed their willingness to conclude EPA negotiations by year’s end. CEMAC clarified subsequently that this willingness to conclude is made on the condition that development issues are dealt with to its satisfaction. CEMAC would like consideration given to what can be done to avoid disruption in trade in case negotiations cannot be concluded by years’ end.
Much work remains to be done to prepare for and negotiate detailed agreements which will flesh out specific, binding commitments. Sources indicate that the EC for example confirmed it is ready to support competitiveness of productive sectors concerned by the EPA, but CEMAC wants all productive sectors concerned covered. The EC says it is ready to significantly contribute to absorb the net fiscal impact resulting from EPA, but CEMAC calls for gross impact to be covered. The EC is also ready to support accompanying measures linked to the implementation of the rules included in the EPA, but CEMAC wants support provided beyond trade rules implementation. The EC maintains it will not include binding commitments in relation to development support in EPAs as this is covered in the Cotonou Agreement, but this is precisely what CEMAC is calling for as a pre-condition to making commitments in trade and trade related areas.
A joint ministerial meeting in July will assess if sufficient progress has been made in both areas. How these two parallel tracks may eventually be brought together, perhaps within the EPA text, remains to be negotiated.
West Africa (ECOWAS)
A meeting of West African Ministers with EC Trade and Development Commissioners on 5 February to assess progress in EPA negotiations and provide guidance for the next steps carried on into the night to agree key points on the basic structure and content of the EPA and, given the tight deadlines, discuss West African concerns over the possibility of letting EPA negotiations run beyond the year end deadline. The EC maintained that any delay was not a viable, nor good option for the region (see arguments set out above in JMTC section). Officials attending the meeting indicated that while the EC agreed that there are practical and political challenges, they maintained that with the right political will these can be overcome and negotiations concluded on time.
The two parties finally agreed a joint declaration which is basically the same as that agreed with CEMAC the following day in that it reaffirms their willingness to conclude EPA negotiations by year’s end, but with the addition that as a prior condition to this, the two sides would in parallel :
- draft the text of the agreement;
- formulate the market access schedules for the two sides; and
- define jointly the EPA accompanying programs and their funding by the EC.
In the all-ACP meetings with the EU in March, Nigeria’s interventions questioned the realism in expectations that negotiations will be concluded this year with so much work left to do to prepare and negotiate EPAs. The country may not be prepared to sign an EPA this year. The EC is concerned by the impact Nigeria’s position may have on the ECOWAS EPA.
Ministers agreed accordingly to begin the next phase of negotiations addressing these issues and declared that the preparatory phase of EPA negotiations is completed, adopting all outstanding technical reports on services, intellectual property rights, the EPA Reference Framework and the Group 5 report on restructuring and building the capacity of productive sectors in the region.
The report on the EPA Reference Framework focuses on the objectives to be achieved by the EPA as well as the overall structure (format and content) of the EPA. It analyses the status and the prospects of the priority areas of regional integration identified in the EPA road map and which should be covered by the EPA. For each of these priorities, the report identifies the relevant measures to be implemented by both parties in order to achieve the objectives assigned to the EPA and guarantee its viability.
The joint Ministerial declaration also noted that there will be flexible and phased introduction of all aspects in the implementation of EPA with a view to serving the interest of the peoples of West Africa. The EC also agreed that it would be willing to contribute to a regional development fund to support EPA implementation if the region is to establish such a mechanism.
Chief negotiators will meet again in July to take stock of progress.
There was not time at the meeting to agree a joint regional text of the Article 37.4 EPA review but this was finalised shortly afterwards and will be adopted at Ministerial level.
Southern Africa Development Community (SADC)
The first formal meeting between the SADC-EPA group, including South Africa, and EC senior negotiators held on 7-8 March effectively re-started the EPA negotiations. The meetings were followed by an information session with non-state actors as well as by the announcement of the formal launch of the Business Trade Forum EU-Southern Africa (BTFES). Negotiations had been suspended since March 2006 as SADC awaited the EU reply to its EPA proposals. The EC presented this reply to the meeting. In it, the EU considers that the incorporation of South Africa into the SADC EPA negotiation creates a more consistent framework for the economic integration of the region. However, this is subject to certain conditions regarding Mozambique, Angola and Tanzania, the scope of the future agreement and the definition of tariff offers.
The EC rejects SADC’s request to grant a non-reciprocal duty free quota free access to the EU market to Mozambique, Angola and Tanzania in a contractual form on the grounds that it is not WTO compatible (though observers note that it is possible for the EU to bind EBA preferences for all LDCs in the WTO). The EU wishes, however, to keep these countries on board in the EPA negotiation and is willing to explore all possible options compatible with WTO rules and taking into consideration the legitimate concerns of these countries.
Contrary to the SADC proposal, the EU considers that the EPA should not limit itself to market provisions for goods only, but should also include binding provisions on trade in services, government procurement and investment and commitments in relation to trade facilitation, intellectual property rights, competition, labour and environment rules. The EC maintains that these issues are important for the sustainable development dimension of the EPA and would contribute strongly to deeper regional integration.
The EC proposes that the EPA should aim at achieving full market access to the EU to the greatest extent possible, while recognizing the need to address the import regime for a few sensitive products (notably sugar). Due to South Africa's level of development and degree of competitiveness, it is, however, inevitable to grant a different treatment for the access of South African products to the EU market, the EC maintains. Such a differentiated approach should also apply to new generation issues, for which a broader upfront commitment is expected from South Africa, whilst regional integration in these areas will deepen over time.
Officials who attended the March negotiating meetings indicate that the two sides agreed to re-launch EPA negotiations with a view to their conclusion by the end of the year to avoid any disruption of the exports of non-LDC SADC countries (Botswana, Namibia and Swaziland) to the EU from 1 January 2008. To do this, they further agreed that the SADC EPA road map needs to be revised so that the negotiations focus on a realistic and achievable agenda for negotiations in the coming ten months. Sources indicate this could for example focus negotiations on reaching agreement on trade in goods and development issues (mainly services and investment) by years’ end. Provisions on trade related areas and trade in services would be included, but with the emphasis on establishing common regional policy, regulatory and institutional frameworks, as the foundations for subsequent inter-regional agreements in areas of obvious mutual advantage. The revised road map will be agreed at Ministerial level in April.
SADC also reportedly expressed concern in the meetings on the EC’s proposal to use the South Africa Trade and Development Cooperation Agreement as a basis for market access for Angola, Mozambique and Tanzania as this would not respond to their special interests as LDCs. It also pointed out that differentiating between South Africa and the BLNS countries would undermine SACU as a customs union. Securing fully duty free quota fee access, in line with the treatment accorded other SADC configuration countries, thus remains a long term objective of South Africa, but this will not be pursued in ways which undermine the short term delivery of duty free-quota free access for Botswana, Namibia and Swaziland.
SADC also reportedly maintained that the focus on trade-related issues should be on capacity building, not on entering into new commitments with the EU at this time.
SADC also called for inclusion of a development chapter in the EPA which would provide a legally binding commitment for the provision of EU development assistance to support SADC implementing legally binding commitments on market access and assistance in aid for trade programmes to help SADC economies adjust to challenges and opportunities arising under EPAs. The EC reportedly said that the level of support would be determined by the level of commitments taken in the EPA.
Eastern and Southern Africa (ESA)
A series of technical negotiations culminating in a meeting of ESA Ministers with the EU Commissioners for Trade and Development held at the end of February put EPA negotiations back on track with a view to meet the end of year deadline to conclude negotiations. As with other regions, it is recognised that this is a major challenge, but still possible as the political will to do so exists. Both sides agreed that the negotiations were behind schedule as compared to the joint roadmap.
Officials who attended indicate that in the negotiations, ESA emphasised the need to comprehensively address development in the EPAs, including the provision of additional resources and appropriate funding mechanisms. The EC stressed that EPA related accompanying measures and additional funding from EU Member States and other donors, including a specific regionally owned fund, into which resources will be channelled and for speedy access, in order, to effectively finance these measures via budget support will be linked to a comprehensive EPA which includes trade in goods, services, and trade related issues. Sources said the EC stressed that there can be no funding to help with economic reforms and implementation unless commitments are made to reform and implement EPAs and strategies and fundable programmes defined. But ESA reiterated the need for additional resources necessary to build capacity to take advantage of market facilities if the regional integration agenda are to effectively address EPA-related adjustment costs.
In this respect, ESA officials indicate that the EC and ESA have agreed that the EPA related accompanying measures would be defined through a jointly agreed development matrix, which would clearly prioritise programmes and projects, which will strengthen regional integration and build capacity to evolve in the new environment to be created by the EPAs and also address the need for reform. The joint matrix will be a binding commitment. There is still divergence on the status of the development matrix and its scope.
Both sides reportedly indicated that a joint regional development matrix based on a proposal by ESA, and its legal status, could be negotiated. ESA wants this annexed to the agreement as a binding commitment to be monitored with benchmarks ESA also wants a comprehensive development clause included in the EPA to ensure that development financing will be channelled on predictable basis outside the constraints of EDF procedures. The EC is reportedly willing to review development
financing at regular intervals. The details must still be negotiated to make the link between the development matrix, additional resources and the delivery mechanism.
Ministers adopted joint conclusions reconfirming the EPA objectives of development via regional integration and trade policies to attract investment and agreed to work urgently to ensure that all necessary measures are taken to avoid disruption to ESA-EU trade and to increase production and supply capacity and foster the structural transformation and competitiveness of ESA economies.
The EC also reportedly indicated its aims on market access, including in rules of origin and in relation to treatment of EU subsidised agricultural products to be liberalised in EPAs and on services (Mode IV) as outlined in the JMTC section above. There have also been indications that the EC may be willing to discuss the idea of a moratorium on liberalisation in the first years of the EPA and ahead of long liberalisation periods, with the length moratorium period still left for agreement.
Ministers also agreed to support capacity building trade related issues that can help secure higher investment and growth levels and therefore development. The EU committed itself to supporting ESA to build capacity in these areas for an effectively functioning regional market and insisted on transparency in these rules as a starting point.
The conclusions state that the two parties are committed to concluding EPA negotiations by the end of the year on the pre-condition that that they succeed to define jointly EPA accompanying measures and the agreed necessary resources for the financing of EPA related adjustment costs as well as effective implementation of the EPA. They agreed to begin substantial negotiations on a development cooperation chapter and on market access by the end of April. They have put these two chapters together to ensure that EPA delivers on development and is not only a trade liberalisation instrument.
Ministers also considered the EPA review and instructed their negotiators to finalise a joint report.
The Ministers agreed to meet again before October 2007 to assess progress.
Caribbean (CARIFORUM)
In February, Caribbean Member States held a series of meetings including a Heads of Government meeting on 12-14 February designed to renew political will on strategic trade issues, including the completion of the CARICOM Single Market Economy (CSME), relations with the Dominican Republic and the WTO and EPA negotiations. The meeting of Heads ensured a common understanding of the important linkages between the region’s integration process and a holistic approach to concluding an ambitious EPA which covers market access in goods and services and commitments on trade related and development cooperation as a means to serve the development needs of the region. This understanding is key to ensure a strong negotiating position to secure an EPA which delivers these development objectives and as it will be the Member States who finally sign the EPA and so must have true ownership of it.
The Heads of Government Conference adopted a paper entitled “Towards a Single Economy and a Single Development Vision” as the framework for the further elaboration of a comprehensive development plan to be adopted in July.
CARICOM Heads of Government agreed that every effort should be made to complete EPA negotiations by the year end deadline as long as the region’s interests were fully addressed. The Conference reaffirmed that inclusion of appropriate development components in the EPA was critical to a successful conclusion of the negotiations with the EU. Caribbean officials make clear that as part of this holistic approach where it is making commitments in market access and trade related issues, that they will insist that EPAs also include a legally binding non-execution clause which will be triggered if promised EU development cooperation support isn’t delivered and which would lead to suspension of CARIFORUM concessions in other areas.
A Caribbean-EU Joint Regional Preparatory Task Force (RPTF) meeting with EPA negotiators was held on 12-13 February which agreed to look at development aspects in specific sectors including services, investment, agriculture and market access. The meeting was implementing joint conclusions from the EPA ministerial meeting in November which called for EPA negotiators and the RPTF to identify Caribbean development needs and translate these into programmes to be implemented at the start of the EPA. Studies will be undertaken in each subject-specific discipline to assess needs and then programmes will be designed to address these and financial proposals quantifying costs put forward to the EC, EU Member States and other donors for financing EPA implementation. The aim is by September to have identified the source of funding of a bundle of CARIFORUM trade-capacity building measures aimed at supporting EPA implementation from 1 January 2008.
The Caribbean is the furthest advanced in the ACP in its negotiations with the EC based on its position that its interest is best served by aiming to conclude an ambitious EPA covering market access deals on goods and services, trade related rules and development cooperation and finance provisions to replace CPA preferences which expire at the end of the year.
The EC will make its first EPA market access offer (in both goods and services) to the Caribbean in March. Both sides are also considering legal provisions on how best to link the development and trade aspects of the EPA, including a mechanism which would monitor development impact of the EPA. EC DG Trade Commissioner Mandelson says a deal is expected to be reached with the Caribbean by July.
The Caribbean maintain that its active engagement at all levels is resulting in EC moves towards Caribbean positions on key development aspects of EPAs and that the agreement they may reach could set useful precedents that could be pursued in other ACP regions’ EPA negotiations with the EC.
Pacific
A letter from the Pacific EPA Spokesperson to the EC Trade Commissioner was leaked to the international press in January (in reply to an earlier leaked letter from the EC to the Pacific) stating that there had been little progress in EPA negotiations on substantive issues and that the outlook for progress this year was bleak unless the EC showed a genuine willingness to understand the Pacific’s unique position and to negotiate to insert that in the EPA. The letter set out the Pacific’s EPA proposals on market access, rules of origin, fisheries, services, including Mode IV, investment and development support. With regard to the latter, the Pacific Spokesperson stressed the need for better and more financial and related effective instruments to address business needs and for capacity building and adjustment support to be provided. This must be a legally binding part of the EPA and delivered in an effective and timely fashion, he said, otherwise PACPs might be bound to full obligation under EPA without the necessary resources or ability to do so. Attached to the letter were the formal negotiating documents for draft EPA texts and on rules of origin and Mode IV. EC officials indicate that the EC understands the concerns but does not see the situation so pessimistic and do not fully agree with some of the issues as presented in the letter. Their position will be expressed in a formal reply to the letter.
A Pacific ACP regional workshop on the state of EPA negotiations for parliamentarians and non-state actors was held on 26-27 February in Fiji and agreed a joint outcomes document in which participants supported regional negotiators to negotiate an EPA that benefits Pacific people. Participants called, inter alia, for the conduct of informed and objective national cost-benefit analyses prior to completion of negotiations. The workshop welcomed the commissioning of a social impact assessment study and called on governments to incorporate the assessment outcomes in the negotiations. Participants supported PACP proposals to the EU on trade in goods, the multilateral fisheries agreement and rules of origin. The workshop also supported the PACP negotiators’ call for costs of adjustment to be over and above existing EDF resources. The workshop further called for the development of stronger regulatory frameworks, including competition policy, as part of improved regulations. Any services market access commitments in the EPA should be conditional upon improving these regulatory frameworks they said. EC representatives at the meeting set out the EC’s position on various topics (alternatives, adjustment costs, etc.), but this was not reflected in the stakeholders summary.
Pacific Trade Ministers met with the EC’s Trade and Development Commissioners on 1 March to examine progress and prospects in the EPA negotiations. The meeting restored positivism to the negotiations and the two sides adopted a joint declaration which agreed that the EPA must reflect the unique features of the region. The EC re-stated its market access intentions in the negotiations (as set out in the JMTC section above).
On rules of origin, the Parties have agreed to examine the PACP proposal for a change of tariff sub-heading and the EC value added approach with a view to improving access for PACP to the EC market. Pacific officials stress that it is essential that these are improved and based on a change of tariff heading since few inputs can be sourced locally and at competitive prices.
With regard to Mode IV, the Pacific noted that this access offers one of the greatest potential benefits arising from the EPA.
Officials indicate that the two sides agreed that as a result of obligations and commitments entered into under the EPA, support from the EC will be necessary. They also agreed to cooperate in mobilising the additional resources from EU Member States and other donors which might be needed for the preparation, implementation and success of the EPA. They also agreed to enhance the effective delivery of assistance through a regionally owned adjustment facility to effectively channel resources for financing EPA related costs.
On fisheries, they agreed to explore possible areas of convergence, including in particular a regional fisheries component as an integral part of an EPA.
Both parties also agreed that competition and investment are important issues for development and the EC committed itself to supporting the Pacific’s efforts in this area.
Ministers examined progress made in the joint EPA review and aim to finalise this ahead of the May Joint Council.
The two parties reaffirmed their commitment to take all necessary measures to negotiate key issues of an EPA supportive of sustainable development by the end of 2007 and which could include phased-in commitments.
A ministerial meeting will be held before October to take stock of progress in negotiations.