EPA Update
By Melissa Julian, ECDPM
This is the longer, more detailed version of the TNI EPA Update in the September 2007 issue of Trade Negotiations Insights
Summary
*ACP EPA Negotiators Meet to Assess Progress in Regional EPA Negotiations
*ACP Discuss EPA Rules of Origin
*EU Proposes to Eliminate ACP Sugar Protocol When EPAs in Force
*EU Seeks to Avoid New Banana War
*African Ambassadors Retreat on EPAs
*African Ministers in Charge of Integration Meet
*African Union Executive Council and Summit Discuss EPAs
*Central Africa (CEMAC)
*West Africa (ECOWAS)
*Southern Africa Development Community (SADC)
*Eastern and Southern Africa (ESA)
*EAC agree that the EAC explores the possibility of negotiating an EPA with the EU
*Caribbean (CARIFORUM)
*Pacific
ACP EPA Negotiators Meet to Assess Progress in Regional EPA Negotiations
The ACP Technical Follow-up Group on EPA negotiations (comprised of regional EPA negotiators) met on 10–12 July. Delegates noted progress made in all regions in the negotiations, but also that there remain fundamental divergence of views with the EU in several key areas. These include:
- The inclusion of trade-related issues in EPAs – the EC continues to insist on the inclusion of legally binding commitments, arguing these are essential to delivering EPAs' development objectives. Most ACP regions want the focus of discussion to be on capacity building for national and regional policy formulation and implementation. Where regions have the capacity, they are negotiating and will make legal commitments;
- The schedule for tariff liberalisation - The ACP seeks improved WTO rules to allow more flexibility on product coverage and longer transition periods (of up to 25 years). Since this July meeting, the EC seems now to be considering up to 25 years transitions in exceptional cases;
- Rules of origin – While both sides agree these should be simplified, a full revision will not be possible this year. Negotiators are now seeking in the short term to improve Cotonou rules and the EC is proposing an EPA review clause to come back for a further more fundamental review later;
- Signatories to the agreement (the EC seeks regional level commitments while integration processes in most ACP regions are insufficiently advanced allowing only national level commitments to be taken);
- EU EPA accompanying measures and financial commitments to cover adjustment and implementation costs – the ACP seek further clarity and legal reassurances on the details of commitments made in this area.
ACP market access offers to the EU are proving illusive due to the economic diversity and different levels of development of members within regional configurations. Delegates noted that the EC had agreed to the proposal of the Pacific ACP region to allow countries to opt out of Trade in Goods commitments and that this could perhaps be an option for least developed countries within other ACP regions.
With regard to sugar, the meeting recommended that the ACP Secretariat convenes another meeting of all interested parties to agree on a common ACP approach on the EC's offer with regards to market access for sugar. This meeting now is scheduled to be held from 12-14 September.
The World Bank also made a presentation on managing revenue implications in relation to EPAs looking at the depth and sequencing of tariff reforms and methodological and policy considerations.
Delegates noted the need for further exchange on issues common to all regions (dispute settlement for example) and that negotiations need to be accelerated in order to meet the end of year deadline for their conclusion. The meeting requested the ACP Secretariat to prepare a paper on legal and institutional issues such as provisional application, ratification, and entry into force of EPAs.
ACP Discuss EPA Rules of Origin
The Group of Experts on Rules of Origin met from 9-10 July. They agreed that there was insufficient time to conclude comprehensive negotiations on rules of origin and therefore to focus on transitional arrangements that improve upon the Cotonou rules of origin.
They agreed on a draft model protocol as a good basis on which regions can add to serve as a tool for negotiations at regional level.
They agreed to hold a meeting in the autumn to consider the differences among the protocols presented by the regions and an updated template containing the product specific rules of origin from the regions.
EU Proposes to Eliminate ACP Sugar Protocol When EPAs in Force
A letter from the EC Trade and Development Commissioners in the 25 July Guyana Chronicle newspaper informs that the EU has proposed to end the EU-ACP Sugar Protocol because EPAs will provide tariff and quota free access for sugar, and all exports, from the ACP countries. The EC remains committed to safeguarding the benefits the Sugar Protocol offers to the extent possible within each regional EPA ensuring ACP preferential treatment in the EU market through eliminating all tariffs on sugar between now and 2015 and removing all restrictions on sugar imports.
The announcement follows a difficult meeting of ACP and EU sugar negotiators held on 19 July where the ACP maintained that sugar be negotiated at all-ACP level.
The CARICOM ministerial spokesperson on sugar said the ACP is not against renouncing the Sugar Protocol once its benefits (which have been identified in a study) could be safeguarded in the EPA, but feels that the EC's proposal to review the protocol at regional instead of an all-ACP level appears to be an attempt at divide and rule.
Press reports indicate that the EU was forced by ACP negotiators to retreat on a recent threat to withhold an estimated US$104 million aid package (indicated for the five-year period starting in 2008), should EPA accords be frustrated by any of the regions. The EC was to subsequently claim "misinterpretation" on the linkage on aid and trade by the ACP. There, however, continues to be rising tension in negotiations for EPAs between the EU and ACP.
EU Seeks to Avoid New Banana War
Press reports of 30 July indicate that in a bid to halt WTO litigation, the EC has proposed two options for cutting the banana tariff on Latin American banana imports which the latter argues is too high and discriminates against them. ACP producers, whose bananas enter the EU free of duty, inside an annual quota of 775,000 tons, are concerned that a cut in tariff will lead to cheaper Latin American bananas swamping the EU market.
The EC offer is in reaction the 2 July United States legal complaint filed in the WTO citing “the continued existence of a discriminatory tariff rate quota in the EU's current banana regime”. The EC initially said it was confident its changed tariff policy, introduced last year after it lost a WTO case brought by Washington and several Latin American banana producers, would stand up to scrutiny. Latin American banana exporting countries now have until the end of August to consider the EC offers, but are themselves divided on what level of import duty they think is acceptable.
African Ambassadors Retreat on EPAs
As TNI goes to press, the African Union Commission and the Economic Commission for Africa are hosting a retreat on EPAs for the African Ambassadors in Brussels (25-26 August). We will endeavour to report on the meeting in the next issue. The specific objectives of the retreat are to take stock of the EPA negotiations, with particular attention to progress by September in narrowing the differences and to outstanding issues that must be resolved as a condition for concluding EPAs; to examine modalities for further harmonisation of negotiating positions and text among the negotiating groups of Africa , and the adoption of common African positions on specific outstanding issues; and to consider scenarios for conclusion of EPA negotiations, their ratification and entry into force, and post-December regimes.
African Ministers in Charge of Integration Meet
The Second Conference of African Ministers in charge of Integration was held in Kigali , Rwanda , from 26-27 July to consider how to strengthen Regional Economic Communities to harmonise and rationalise policies and programmes with a view to accelerating the economic and political integration of the African continent.
Discussions focused on two studies conducted by the African Union Commission on the Review of the Abuja Treaty and on Adoption of Minimum Integration Programme for each REC. The Conference also exchanged views on key questions surrounding integration, including the challenges facing integration and whether there could be lessons from the European experience; the difficulties and challenges facing the building of common markets in Africa ; and the role of mobility of factors of production in integration.
They agreed to continue to harmonise and coordinate policies and programmes of Regional Economic Communities (RECs) as important strategies for integration and reiterated that the EPA negotiations should continue under the coordination of the AUC taking into consideration the regional and continental integration agenda. They requested the AU Commission to make further consultations with Member States , the RECs, private sector, and civil society on the study on the rationalisation of the RECs with the view to finalising it by the end of October.
African Union Executive Council and Summit Discuss EPAs
Heads of Government at the African Union Summit on 3 July adopted a protocol to be signed by the African Unon and RECs on relations between the African regional economic communities and the African Union with a view to furthering economic integration.
The Summit also included discussions with the EU Council and Commission Presidents on the emerging new EU-Africa partnership. The EC put forward a communication just ahead of the meeting setting out proposed policy initiatives, including in relation to trade and regional integration, which will be put forward by the future Joint EU-Africa Strategy. These joint policy initiatives will be discussed with the African partners and shall be launched during the second EU-Africa Summit in Lisbon on 8-9 December. The Summit could have a major EPA focus if EPA negotiations have not been completed by then and political decisions are required of African and EU leaders to ensure conclusions of EPA negotiations by the end of year deadline.
The 28-29 June AU Executive Council preceding the Summit adopted a decision expressing concern at the slow progress in the EPA Negotiations on the development aspects, such as additional resources for meeting adjustment costs and building and strengthening of the production and supply capacities. It calls on the EC to reflect in their negotiating positions the political commitment of the EU Member States to make EPAs instruments for development. It further urges the EU to consider putting in place transitional measures that will safeguard the continued entry of African exports to the EU market beyond December 2007, given the low likelihood of satisfactorily addressing all outstanding EPA issues as well as the impossibility of completing EPA ratification process by the end of 2007.
A meeting of the EC-CEMAC Ministerial Trade Committee (CEMAC Trade Ministers and EC Trade and Development Commissioners), enlarged to include CEMAC National Authorising Officers and the Regional Authorising Officer, was held on 14-15 July in Sao Tome & Principe. The meeting reconfirmed the will to conclude EPAs by the year end deadline and gave orientations to technical negotiators to conclude negotiations in October.
In September, CEMAC aims to table its first list of products for tariff dismantlement. Indications are that this will cover some 60% of EU imports and include a list of remaining, including sensitive, products. Indications are that the EC will seek closer to 80% import coverage to the CEMAC market. To determine the coverage and duration of tariff liberalisation in the final offer, the Ministerial meeting agreed that they will develop a plan of tariff liberalisation centred on development and which could include for extremely sensitive products a tariff liberalisation transition period of 25 years to allow time to establish the CEMAC institutions necessary for EPA implementation, to level up economies, to reinforce production capacity and to allow the regional integration process to proceed. Discussions on CEMAC's proposal for a 7 year moratorium ahead of the start of trade liberalisation still needs further discussion.
The exact percentages of liberalisation will be determined after a joint examination of each tariff line, with an approach with favours amongst others, Central Africa's development, improving competitivity and diversification of sectors of production, economic growth, poverty eradication, food security, consumer well being and employment. The duration of liberalisation will be determined according to same criteria. The conclusions of this work must be WTO compatible.
With regard to rules of origin, the meeting decided at the entry into force of EPAs, the Cotonou Partnership Agreement's rules of origin will apply with the possibility of mutually acceptable improvements. The Central Africa region proposed to make their proposals for these at September technical meetings. The EPA will also include a date on which rules of origin will be more fundamentally re-negotiated.
On services and the right of establishment, the two sides exchanged views on legal texts which include a clause relative to most favoured nation treatment and that the offer of the EC to CEMAC covers essential sectors. CEMAC will prepare an asymmetric offer to consider at the September joint meeting. CEMAC will also put forward a Mode IV request as soon as possible.
On EPA legal texts, the meeting instructed technical negotiators to accelerate work and finalise as soon as possible the chapters on competition, public procurement, innovation and intellectual property. In these areas, the negotiations will be based on a two phased approach, first to apply the rules framework in the context of regional integration and after that a transition period to be determined jointly to apply the rules at bilateral level.
With regard to entry into force of EPA, parties must take necessary measures to ensure the effective implementation of the trade regime. Formal signature should be on a date and venue that will be agreed at next meeting of Ministerial Committee.
There was detailed discussion on whether EPA accompanying measures should include financing of basic infrastructure and human development, which the EC maintains are not directly linked to EPAs and are already covered by Cotonou instruments, but which CEMAC says needs to be included to increase competitiveness and because additional financing and less-complex-than-EDF procedures are needed to effectively deliver EPA support. The EC calls for priority to be given in the 10 th EDF NIPs and RIP based on commitments contained in the EPA. The EC also put forward the areas of intervention of the Regional EPA Fund (FORAPE) set out in a document on reinforcing capacities and levelling up economies of Central Africa in the EPA framework on which it would like to focus. That document, annexed to conclusions, includes several key areas which most urgently need a programme of reinforcement of capacities and/or levelling up and sets out is some detail the areas where cooperation is needed to support EPA to support quantitative and quality growth of goods and services and exports from CEMAC. The areas are:
Development of regional basic infrastructure (transport, energy, telecommunications);
Regional Agriculture and food security (agricultural production, agro-industry, fisheries, etc);
Competitivity and diversification of economies (levelling up enterprises, industry, technical norms);
Deepening regional integration (development of common market, fiscal issues and customs issues);
Improving business climate (harmonisation of national trade policies)
Establishment of EPA institutions;
Financing of partnership (road map and recommendation of ministerial meetings)
The EC Development Commissioner's speech to the Ministerial meeting outlines in detailed planned EU EPA support. CEMAC stresses that this support should be included in a legally binding EPA.
The needs identified will be transmitted to the Regional Preparatory Task Force or other competent structures with a view to identifying support programmes, their possible (CEMAC officials would like a more firm commitment than “possible”) source of financing and the modalities for implementing EPA accompanying measures. Experts can then if necessary (CEMAC officials would like a more firm commitment than “if necessary”) identify the support programmes, evaluate their feasibility and propose modalities for appropriate implementation. The analysis can be articulated in a development programme, accompanied by a financial evaluation.
The meeting took note of CEMAC's intention to place the EPA Fund with the CEMAC Development bank. Again, there was debate on whether to include infrastructure support in the Fund. The EC reaffirmed its intention to support competitivity of production sectors concerned by EPA and to contribute significantly to the absorption of the net fiscal impact of EPA in full complimentary with the fiscal reforms and to support accompanying measures linked to the implementation of EPA rules. The two sides agreed to determine a common methodology for calculating net fiscal impact resulting from tariff liberalisation, taking account amongst others of fiscal adaptation measures and of the sovereignty of the Member States. CEMAC also wants the fund to cover basic infrastructure and improving competitiveness of enterprises, compensation for loss of customs revenue, improving business environment, reinforcing capacities and levelling up enterprises.
CEMAC is also calling for the mechanism to determine fiscal impact to be included in the EPA and that EU financing contributions to the EPA Fund beclarified.
CEMAC also want to make tariff liberalisation conditional on the delivery of the EU programme to strengthen capacity and to find a way to include legal provisions to link trade liberalisation and development support to increase capacities, competitiveness and RI inside the EPA. Discussions on this will continue.
Ministers instructed technical teams and RPTF to finalise as soon as possible the formulation of accompanying measures, a prerequisite for establishing a definitive financial framework.
They also instructed technical negotiators to accelerate work on the duration of tariff liberalisation, product coverage, trade in services, legal texts, finance for partnership which includes establishment of a programme of reinforcing capacities
EPA negotiators met with the newly created Central Africa NGO EPA platform on 4-5 July. The platform has been recognised by CEMAC negotiators and is in the process of formal recognition by CEMAC. NGOs adopted a declaration after the meeting calling for more time for EPA negotiations and making specific calls on national governments, CEMAC and EPA negotiators to, inter alia, fund capacity building for regional integration processes, focus on the WTO negotiations, Insure the protection of sensitive products and agriculture in particular, Ensure reciprocity in the free movement of persons between the European Union and Central Africa, Abstain from every engagement in the negotiations concerning investments, competition and public contracts given that these issues are still being discussed at the multilateral level. Request substantial additional fund for the financing of capacity building and costs of adjustments related to EPAs.
Nearly 2000 people protested against the EPAs ahead of the Ministerial Trade Committee meeting.
The West Africa-EC Joint Meetings of Technical and Senior Officials scheduled to be held on 24-27 July were postponed to 3-7 September at ECOWAS' request to allow the region to continue work on their market access offer to the EU. EC officials were concerned that this delay means a regional consolidated offer may not be tabled in an already busy September schedule and negotiators risk not having sufficient time to examine this and proposals on the EPA text and accompanying measures ahead of the scheduled meeting of Joint EPA Chief Negotiators on 5th October which must agree the necessary political accords to conclude EPA negotiations in time for the year end deadline. The EC continues to warn that trade disruption will occur for some West African Member States if EPA texts are not agreed in time to conclude the necessary legal arrangements before the end of December. Regional governments, the private sector and civil society are clearly also concerned about the negotiations deadline as evidenced in increasing press articles in national papers on the EPA negotiations.
The West Africa EPA Ministerial Monitoring Committee (Trade and Finance Ministers responsible for the region's internal coordination and where West Africa decides on its negotiation positions and renews the political mandate for the negotiators) met in Accra on 16 July. The meeting was preceded by meetings of experts and workshops on accompanying measures in the agriculture sector and methodologies to determine sensitive agriculture products aimed to help ECOWAS Member States prepare national lists of sensitive products which can be consolidated into a regional market access offer to the EU.
The sensitive products workshop showed that countries are at different stages of preparations with some, such as Liberia , with no reliable national statistics, up to Nigeria and Senegal which have completed studies, to some such as Burkina Faso which still need to start the process. Ministers endorsed the broad methodology and criteria agreed by experts to establishing impact model which will allow prioritisation of lists and which includes rural development, food security, fiscal impact, trade creation or diversion. Work will continue with the aim of consolidating a regional list by October. Ministers also noted progress in work on the ECOWAS Common External Tariff (CET), noting that 4/5 of the tariff lines have been examined and are the subject of consensus. Discussions on exceptions list concerning some 500 products continue. Ministers asked officials to accelerate work on the CET and negotiations on exception lists in order to submit results to the next ECOWAS Council of Ministers meeting.
Ministers also took note of preparations of the regional policy frameworks on competition and investment and recommended these be submitted to ECOWAS for adoption.
They further noted that the implementation of the EPA would entail fiscal reforms and requested that Member States that have not yet done so, to take necessary measures to harmonise Value Added Tax.
With regard to the EPA negotiations, Ministers are still aiming to conclude by years end a joint accompanying measures programme and financing by EU, market access calendars and the EPA text. Ministers noted that progress will be evaluated in light of the precise EU engagements in different EPA accompanying programmes and the resources mobilised for implementing them effectively and also on the modalities of gradually and asymmetrically opening the West African market to take account of the different development levels between the two regions.
Ministers called for transition period of 25-30 years after a partial moratorium of 5-7 years for tariff liberalisation and for negotiators to take account of capacities of economies and conclusions of studies for defining product coverage. They also called for EPAs to include a rendez vous clause to continue services negotiations after end year and to make no commitments outside WTO on services now.
With regard to EPA accompanying measures and financing for them, Ministers said it is necessary to establish a link between the calendar and opening of markets and the level of EU engagements on mobilisation and implementation of resources for financing accompanying measures to upgrading of productive sectors impacted by the EPA, contributions to significantly absorb the net fiscal impact of the EPA in complementarity with the fiscal reforms and support for implementing the trade rules included in the EPA (e.g. trade facilitation, SPS rules, competition, intellectual property, etc).
Ministers also recommended more involvement of civil society, the private sector and parliaments in EPA negotiations and implementation.
Ministers called on negotiators to accelerate EPA preparations and negotiations and to submit to the next Ministerial meeting the results in all areas, a list of tasks left to accomplish and options to avoid eventual legal gap in trade relations.
NGOs assert that the ECOAS and UEMOA Secretariats are not translating the wishes of the member-states into negotiating positions, but instead put forward a different agenda. Similar NGO accusations are also made in the CEMAC region.
Southern Africa Development Community (SADC)
As TNI goes to press there is a meeting of SADC EPA Group's experts and Trade Ministers being held from 18-19 August to monitor progress in the SADC EPA negotiations and review the SADC Group's EPA mandate. We'll endeavour to report on the outcome in the next issue.
There have been two sets of internal SADC meetings to discuss SPS/TBT issues, to analyse the EC proposal and to further elaboraten the SADC EPA proposal, particularly in relation to provisions for rapid resolution of SPS related problems, such as the fast-tracking of dispute settlement procedures for SPS conflicts. SADC Technical Working Groups met on the 20 – 21 August to continue with reviewing their respective sections of the Agreement.
There were also internal SADC meetings to further develop the approach to fisheries.
There were also discussions on trade remedies and special safeguard clauses to include in the SADC EPA proposal.
SADC EPA Members at t he 19 August SADC Ministerial meeting maintained their position that they agree on a differentiated approach to services indicating that all Members are interested in a co-operative approach, but that some Members would also be willing to include provisions in the EPA that would enable them to negotiate trade in services in the future.
It should be recalled that SADC EPA countries had also agreed in June on a common approach in EPA negotiations on new generation issues (trade facilitation, competition policy, public procurement, intellectual property) – that due to lack of common policies and institutional capacities to implement policies, that they would discuss cooperation where the EU could assist in the development of institutional, policy and legislative infrastructures, but make no binding commitments which could be subjected to dispute settlement in the EPA in these areas.
The SADC Secretariat conducted workshops in Member States with a view to establishing both national and regional medium term needs for EPA implementation. The output expected from these workshop is to be a “programme matrix” that will be considered for incorporation into the SADC 10 th EDF Regional Strategy Paper and Regional Indicative Programme (RSP/RIP), as part of the EPA-related focal area. The deadline for the submission of this annex is the end of September 2007. It is tentatively planned that the text and matrix making up the annex are to be discussed at a joint meeting of the SADC-EC Regional Preparatory Task Force (RPTF) in mid September 2007.
Sources indicate that Tanzania has indicated a possible withdrawal from the SADC EPA. No Tanzanian ministers or officials attended the 17–19 August SADC meetings.
Eastern and Southern Africa (ESA)
The ESA Regional Negotiating Forum on EPAs was held at Le Morne, Mauritius from 1-3 August preceded by dedicated ESA sessions on market access and agriculture, services, trade related issues, agriculture, fisheries and development. Decisions taken by the RNF will be put forward to ESA Ministers for final, formal approval ahead of the next EPA negotiating round with the EC in September.
With regard to market access, the RNF said an agreement with the EC on trade in goods by December is critical to ensure WTO compatibility and that there is no disruption of trade in January 2008 since even the GSP+ option doesn't provide a suitable alternative trade regime for the region. The COMESA Secretariat was requested to finalise the COMESA CET and and member states were encouraged to table WTO compatible lists of sensitive products by mid-August which can be transformed to a regional list to serve as the basis of negotiations with the EC. It was also agreed to maintain the ESA LDCs provisions in the offer to the EC.
After extensive discussions on possible options for a regional response to the EU market access offer regarding sugar, the RNF agreed that the next dedicated session on market access consider this issue. A study to assess the impact of the EC offer on the region will be completed ahead of the meeting.
On rules of origin, Member States were requested to submit proposals for raw material content, value addition thresholds and for amending rules of origin on products of export interest by mid-August to facilitate ESA -EC negotiations.
The RNF further agreed to use texts formulated by experts on Trade Defence Instruments and Customs and Trade Facilitation as a guide for negotiations with EC. SPS and TBT texts will be further considered ahead of the next meeting of the RNF.
On Trade Related Issues, the COMESA Secretariat was instructed to submit a text with elements of a regional competition policy which includes capacity building and technical assistance in support for the implementation of competition and consumer policies. Member States were also urged to speed up the introduction of competition authorities at national level and for resources to be mobilised to implement competition policy at regional level. They maintained the ESA draft text on investment focussed on capacity building, especially for ESA private sector
On Intellectual Property Rights, ESA will define the maximum level of commitments that ESA may take with respect to issues raised by the EC where there are areas of convergence with ESA interests before taking a decision on the extent of cooperation in IPRs and other TRI.
With regard to development issues, the main issue of contention with the EC is on how to obtain a binding EU commitment on an EPA development matrix. The RNF considered a draft Development Cooperation Strategy paper prepared by the ESA Secretariat and made additions to strengthen the text on development. It was also agreed that the development cooperation strategy should incorporate the development matrix. Both the development text and the matrix should be integral and binding part of the EPA. The RNF also stressed the need for the countries to further prioritise their respective national development matrices. The RNF rejected any linking of finalisation of the 10 th EDF RIP programming with progress in EPA negotiations. Finally, Member States' comments were requested on the proposals on benchmarks by Kenya and Ethiopia for discussion at the next dedicated session on development.
The RNF decided in view of the workload of outstanding issues, it was unlikely that EPA negotiations could be completed in all areas by the December 2007 deadline when the Cotonou Agreement trading regime and the WTO waiver are due to expire. They, therefore, decided to prioritise the negotiations on trade in goods, development cooperation, general provisions, dispute settlement and institutional and financial provisions to ensure WTO compatibility and that there is no disruption of trade. The RNF also agreed that the region should secure a formal commitment from the EC for the adoption of necessary transitional measures by October 2007 in order to ensure that there will be no disruption to trade come January 2008. Negotiations in all other areas will also continue with a view to concluding them on time, but in case of failure to conclude some areas, ESA will seek to secure a commitment by both sides to continue with negotiations in remaining areas beyond December 2007.
A joint ESA parliamentarians meeting was held in Addis on 6-7 July. The meeting adopted a declaration which inter alia calls to "institutionalise in the EPA the ESA/EC joint parliamentarian forum charged with monitoring and evaluating impact of EPA implementation on development. "
EAC agree that the EAC explores the possibility of negotiating an EPA with the EU
An East African Community (EAC) Summit on 20 August in Arusha, Tanzania, preceded by a meeting of Trade Ministers, agreed that the EAC (Rwanda, Burundi, Uganda and Kenya) should explore the possibility of negotiating an EPA with the EU.
Considering the limited time left for EPA negotiations, observers indicate that it is likely that EAC countries will continue to negotiate EPAs, as a group, within the ESA (except for Tanzania with is a member of the SADC EPA group and will continue negotiations within that grouping), but if ESA or SADC can't sign EPAs on time, then EAC could do so on its own and even allow for other countries to join the EAC group should they wish to.
In August, the Caribbean Regional Negotiating Machinery launched a series of consultative missions to CARIFORUM countries to exchange views with Ministers and Senior Officials on the CRNM-drafted draft CARIFORUM EPA market access offer to the EC. This in preparation for the 5-6 September CARIFORUM Trade Ministerial meeting which will discuss, and perhaps approve, a market access offer to the EC. Despite intensive consultations over the past months, the Caribbean has still not managed to come to an agreement on a WTO compatible list of products to exclude from trade liberalisation (an earlier common list excluded some 50% of imports from the EU) nor, therefore, its market access offer to the EU. This is the major outstanding issue in the negotiations and is giving rise to concerns in both the region and the EC that much more delay will jeopardise the commonly-agreed commitment to conclude negotiations by early October to allow EPAs' entry into force in January and therefore ensure market access to the EU does not worsen. Discussions in the region on this are difficult due to differences amongst CARIFORUM states on how much trade to liberalise, with some nations wanting something close to permanent non-reciprocity for fear of falls in government revenues and fearing economies are too small or fragile to accept eventual reciprocity. According to a prominent regional columnist, this speaks to the unwillingness of some nations to accept that a single market and economy requires the ceding of elements of sovereignty and also highlights the dangers of trying to superimpose external thinking on a regional economic integration process that is far from mature and on nations at dissimilar levels of development. The issue must therefore be resolved at a political level and there may be a need to revisit how to address LDC concerns within the context of the phasing and exclusion of sensitive products in EPAs.
Despite the delays in negotiations caused by this, EC-CARIFORUM technical negotiations continue with the latest rounds being held from 24-27 July on market access, trade related issues; legal and institutional issues; and services and investment. Work progressed well due to moves from both sides towards negotiated solutions in key areas though there are still several fundamental issues still to be resolved.
At the TNG on market access issues, the Caribbean moved towards the EC position by indicating its willingness to consider averaging base rates in order to achieve harmonisation on a case by case basis as the base rate for tariff reduction (in June the Caribbean had indicated a change in position on base rates from the bound to the applied rate of duty). The Caribbean now supports one CARIFORUM exclusion list and a common list of items whose tariffs are to be phased out. The EC continues to call for a “Single Tariff Schedule” which they say would promote regional integration and provide for a common harmonised base rate across CARIFORUM and uniform duty reduction schedules for similar products across the region, apart from a small number of “significantly traded” products. The EC indicated that it foresees liberalisation generally over a period of 15 years, but concedes that longer periods up to 25 years applicable in exceptional circumstances are possible. The EC also indicated that they will consider a moratorium on the start of liberalisation in specific cases.
The Caribbean tabled texts on Trade Defence Measures focussing in particular on notifications and dialogue. Further work is needed in negotiations on this and on WTO and bilateral safeguards.
With regard to development cooperation in relation to market access, there is disagreement on the EC proposal to focus EPA development cooperation primarily on addressing impacts directly attributed to the implementation of an EPA. The development cooperation process is, however, already being operationalised. All technical subject fields in the EPA include a specific reference to support CARIFORUM priorities in order to implement the agreement. This legal process is being operationalised by the commissioning of feasibility studies to identify CARIFORUM needs, design programmes and establish the cost of funding.
Texts on Technical Barriers to Trade and Sanitary and Phytosanitary Measures were also agreed.
At the Trade Related Issues TNG, texts on Competition Policy were agreed.
With regard to Environment and Social Aspects, the EC insists on binding obligations as a precursor to any binding development cooperation. CARIFORUM has indicated it does not want the obligations to be subject to EPA dispute settlement in view of the possibility of application of traditional trade sanctions in the event of breach, but also indicated that it was still consulting internally on this matter.
The two sides also reached near full agreement with regard to Public Procurement. Including strengthening CARIFORUM's capacity to implement an EPA procurement chapter.
A number of issues were resolved in relation to intellectual property also.
A fundamental divergence of views remains in relation to Cooperation and Dialogue on Good Governance. The EC has reportedly indicated that this must be included in an EPA and is an issue on which it will not compromise.
At the TNG on services and investment, the Caribbean put forward a revised offer which the EC would still like to see further improved with a more significant offer in infrastructure and growth sectors. CARIFORUM indicated that a further improved offer would be presented in September.
The Caribbean also tabled an initial investment offer which included commitments from 10 of the 15 CARIFORUM states. The sectoral scope includes no commitments in production of electricity and gas. Other sectoral commitments are covered by horizontal limitations, which the EC considered very broad and restrictive. CARIFORUM indicated their willingness to present an improved, complete offer in September.
On Legal and Institutional Issues, very few brackets remain. A main issue which remains unresolved is that of the scope of development cooperation. At the TNG meeting, CARIFORUM again stressed the importance it attached to the developmental cooperation aspects of the EPA and emphasised that it was, therefore, essential that the EPA text contained commitments by the individual EU Member States with respect to the provision of development financial assistance where possible. The EC noted that it is considering the submission of additional language in this regard.
The two sides also reached an agreement on the issue of the parties to the agreement - the terms “Parties” and “Signatory CARIFORUM States” will be used in the EPA, the former to be used when the states are assuming individual obligations and the latter when collective obligations are being imposed. Each CARIFORUM State will be recognised in international law as a “Party” to the Agreement and CARIFORUM will not be exposed to any possibility of collective sanctions.
CARIFORUM indicated that its internal consultations on the EC's proposed regional preference clause were still ongoing. The EC has indicated that EPA development support cannot be provide without a clause to ensure that the EPA would ensure any favourable treatment to a CARIFORUM Member State would automatically be extended to the EU. CARIFORUM argues that it cannot do this within its current state of regional integration. A political level agreement will be necessary to break the deadlock on this issue.
Earlier, from 1-4 July, Caribbean Heads of Government met and agreed on the approach to tariff liberalisation (acceptance of harmonization and reaffirmation of the commitment to complete negotiations on time). They adopted a Communique which resolved to develop and implement functional co-operation. The meeting approved a plan to create a single regional trading market by 2015 and ease implementation hurdles. They re-emphasized the need for the EPA to provide clear development benefits for Caribbean economies individually and for the Region as a whole, while allowing special flexibilities for the LDCs of the Region, and for it also to benefit and support economic operators in the Region. The Conference reaffirmed its position rejecting inclusion of provisions on good governance with regard to taxation issues in the EPA. The Conference also called on CARIFORUM Sugar and Banana stakeholders to meet urgently in order to assess and determine their positions for the EPA negotiations in light of EU proposals and developments with unfavourable implications for these products from the Caribbean . A prominent regional columnist says that the results of the Summit show there is little motivation in the region to accelerate the pace of integration.
Pacific Islands Forum Secretariat Deputy Secretary, Peter Forau, who on 31 July said in a speech to PACP Trade Ministers that based on the outcome of EPA negotiations to date he was pessimistic that EPAs can be concluded by the deadline. “Little movement in the negotiations has been made in the key areas of interest to the PACPs such as in rules of origin, fisheries, investment, services including the Temporary Movement of Natural Persons and development assistance”, he said. “Given this rather than optimistic outcome of the negotiations thus far, and in spite of the PACP's commitment to conclude the EPA negotiations by the end of 2007, the PACP region or even individual PACPS may find themselves not in a position to agree to concluding an EPA,” Mr Forau said.
Pacific Forum (Pacific Island countries plus Australia and New Zealand) Trade Ministers met in Port Vila, Vanuatu on 2-3 August, preceded by a PACP Trade Ministers meeting (which was also attended by National Authorising Officers and the Regional Authorising Officer) on 31 July, a PACP Trade Officials Meeting and a PACP Trade Officials Technical Meeting on EPA Goods and Services Offers.
EPAs was a main debate at the Pacific Forum Trade officials and Ministers meetings. Australia and New Zealand argued that negotiations should start with the Pacific on the Pacific Agreement on Closer Economic Relations (PACER) since the PACP are negotiating a goods agreement with the EU within the EPAs. The PACP argued that few, if any, Pacific countries will sign on to a good agreement with the EU, so it was not necessary to start PACER negotiations ahead of their 2011 scheduled launch. After lengthy and headed debate, it was agreed not to launch PACER negotiations, but to instead hold an informal meeting of senior trade officials in early 2008 to exchange information on the status of other negotiations.
PACP Trade Ministers and officials considered regulatory, implementation, government revenue and competition implications of EPAs and the support needed to address these based on a National Assessment of EPA Development Needs and Adjustment Costs and the study on Responding to Revenue Consequences of Trade Reforms in Forum Island Countries which indicated there would be a negative impact for the PACP countries.
Ministers adopted market access draft offers to the EC for goods and services which includes the coverage of products for liberalisation, their sequencing and possible fall back positions.
Ministers also discussed operationalisation of the Regional Preparatory Task Force and the EPA Adjustment Facility and programming of the 10 th EDF and links to EPAs. The heated debate on this latter issue is covered in a separate article in this issue of TNI.
There was considerable interest in a legal opinion circulated by Oxfam that states the EU is legally required to offer GSP+ as an alternative to an EPA for non-Least Developed Countries. The Ministers Outcome Statement, "...expressed the need for the region to give serious consideration to alternatives to EPAs and incorporating them in the way forward in the EPA negotiations."
The Outcomes statement also "expressed concern over the changing 'goal posts' or shift in key EC positions e.g. its position on rules of origin from one based on value addition to rules of origin based on Cotonou Plus." There was concern that the EU had not agreed to the key priorities identified by the Pacific (rules of origin, a regional fisheries agreement, a developmentally friendly investment agreement, reform of investment institutions, temporary movement of people and additional funding for adjustment costs).
A Joint PACP-EC Ministerial Meeting ( Samoa and Tonga Trade Ministers as spokespersons for the PACP and the EC Trade and Development Commissioners) was held on 19 July in Brussels to take stock of the EPA negotiations and to decide on the course of action and perspectives for the coming months. Discussions focussed on trade in goods, rules of origin, services, trade related rules and development cooperation. On Trade in Goods, the EC, who has presented its market access offer to the Pacific, reiterated the need to receive a market access proposal from the Pacific region in order to move ahead with the negotiations within the short timeframe. Both parties agreed that the rules of origin are crucial for development of the region and thus the rules of origin proposal should be tailored to the specific Pacific needs. Services belong to the sectors of major interest to the region, which was reflected in the Pacific services request. Both parties explored possible concrete future steps. On trade related rules, the EC confirmed that reforms would be accompanied by development aid. Both sides agreed to push forward the establishment of the Regional Preparatory Task Force as an appropriate forum to translate needs for support identified in the course of EPA negotiations into operational ideas for trade-related and other development assistance. F inally, t he EU and the Pacific confirmed their commitment to meeting the deadline of 31 December 2007 and to maintaining the ambitions for the development dimensions of the EPA.