The ECOWAS-EU EPA implementation test: What can be learnt from the Caribbean experience?

1 September 2014

What lessons can the Caribbean experience provide for the implementation of the West African EPA that was approved by the region’s Heads of State in July?

Business relations between West Africa and the European Union reached a turning point on 10 July 2014 in Accra when the Heads of State of ECOWAS gave their final approval to the Economic Partnership Agreement. They instructed the Chief Negotiators to “take all necessary steps to quickly start the process of signing and implementing the Agreement”. This political decision is the logical result of the conclusion of an agreement that has led to much opposition in the West African region and that, after more than a decade of difficult negotiations, is now considered to be “a fair, balanced and mutually beneficial Agreement for both parties.” In light of this, the current challenge is to move from words to actions.

Indeed, once the EPA has been signed and ratified, West Africa and the European Union will be immediately faced with the concrete implementation challenges of their commitments. More than a challenge, this is a true test for West African nations as they set forward on the path of much-needed, extensive economic and institutional reform so they can benefit fully from trade opportunities within the European market. In this respect, the experience of the Caribbean region, which took this path six years earlier in October 2008, when it was the first of seven regional organisations to enter into a full EPA (CARIFORUM-EU EPA), shows how negotiations are simply a step in the larger process of implementation, which is the biggest hurdle to overcome. It is therefore appropriate for West African Chief Negotiators to learn from the state of the implementation of the CARIFORUM-EU EPA (CF-EPA) as it is currently being re-examined, as per the terms of the Agreement, five years after it was signed.

The CARIFORUM-EU EPA – five years later

The CARIFORUM-EU EPA was intended as a trade liberalisation agreement with ambitious goals (1,953 pages in the English version), covering both trade in goods and services and also dealing with “WTO-Plus” issues such as investment, intellectual property, competition policy and public procurement. Furthermore, the development dimension of the EPA is another key part of the Agreement and is effected through a specific number of provisions in various chapters.

 

The conclusion of the CARIFORUM-EPA was intended to mark the beginning of a new era, that of fruitful economic and trade cooperation between the Caribbean and the European Union. However, during the signing process, the Barbados Foreign Minister, Christopher Sinckler, mentioned the technical complexity of the Agreement as well as – and above all – the importance of “the effort needed to implement it [that] will at times be more onerous than that spent negotiating it”.

 

This acute observation was clearly reflected by the conclusions of the first review of the EPA, which was planned five years after it was signed, as per the provisions of the EPA, in order to assess both the level of its implementation and its socio-economic impact for the 2008–2013 period[i].

 

In general, the analysis shows that the implementation process is far from having reached the goals and objectives set by the EPA and that there are still much work to be done in key areas of the Agreement, even though these areas are its raison d’être.

  • An agreement that is partially applied but still has not entered into force

The very first legal act that marks the entry into force of an international agreement and, from there, its implementation, is without a doubt the ratification process. However, in the case of the present Agreement, only half of the Member States in both regions have ratified the EPA (in May 2014, 7 of the 15 Member States of CARIFORUM and 16 of the 27 Member States of the EU). In this respect, the Agreement does not set a deadline for ratification or a minimum threshold for the number of ratifications needed for it to enter into force. Five years after being signed, the CARIFORUM-EPA still has not entered into force as it has not been ratified by all 43 Member States of both regions. Nevertheless, Article 243-3 of the EPA allowed for the Agreement to be provisionally applied no later than 31 October 2008. It is on this basis that the EU has fully implemented its commitments to lower and abolish tariffs. However, the application of the Agreement, even on a provisional basis, remains a problem for some CARIFORUM States when it comes to the tariff liberalisation scheme: only 9 of the 15 CARIFORUM Member States have implemented the provisions relating to tariff liberalisation.

  • The development dimension of the CARIFORUM-EPA is proving difficult to achieve

Many of the areas identified as priorities by CARIFORUM under the theme of development cooperation have only recently been translated into running programmes and projects, that is to say five years after the EPA was signed. The implementation of certain programmes was mainly delayed by the lengthy programming procedures of the European Development Fund (EDF), the EU’s main funding instrument. At the same time, some bilateral donors have not yet honoured their commitments to facilitate trade under the CARIFORUM-EPA, nor have they actively taken part in its implementation.

What are the main elements that hinder the implementation?

One of the main reasons for the weak implementation of the CF-EPA is perhaps due to the consequences of the 2008 global crisis, which started around the time the EPA was signed. Almost all the CARIFORUM countries – particularly those that depend on income from tourism – have experienced a dramatic drop in revenue. These highly unfavourable economic conditions have not encouraged CARIFORUM States to deploy additional human, institutional and financial resources, which are already very limited, to implement the EPA. All this is compounded by the image of the European market as difficult to access, with or without an EPA.

In this context, the impact of the CF-EPA on the aggregate trade in goods, services and investment can barely be seen at the moment. More importantly, it has had little effect on the indicators – such as poverty or GDP per capita – that are at the heart of the Agreement’s “development dimension”.

Nevertheless, the situation is not as gloomy for all the CARIFORUM States. The Dominican Republic has felt the impact of the CF-EPA on its exports. This was confirmed by the Dominican banana, sugar and industrial goods exporters who have all noticed that the CF-EPA has either opened new markets (e.g. sugar) or sent a strong message to national exporters about new opportunities in Europe.

What lessons can be drawn for future signatory States?

In many ways, the dynamics of the implementation process reflect those of the negotiations – for better or worse. As for the Caribbean region, the EPA negotiations in West Africa have not been spared by the opposition movement or by tensions between the Member States, the degree of involvement of which depends on their interest in exporting to the European market. The heterogeneity of the West African countries brings with it the risk of an asymmetrical implementation process, in a region that is particularly dominated by LDCs. This could test the rhetoric of regional integration and solidarity. The implementation of the WA-EPA is a difficult path that calls for coordinated action between the Member States and ECOWAS at the national and regional levels to maintain regional cohesion.

The difficulties CARIFORUM is facing regarding the implementation of the system of protection of geographical indications (GI) by 2014, as negotiated in the CF-EPA, also show that the implementation can highlight – or aggravate – weaknesses connected with the regional integration process. Indeed, the areas covered by the EPA may not yet have become the real state of affairs for regional policies. This divergence between the EPA’s implementation programme and the legal gap on the regional level calls for internal discussions to reach a common position.

Another crucial issue that should be highlighted regarding the EPA’s implementation is its ownership, not just by the Chief Negotiators, but also by the public sector, the private sector and civil society thanks to an inclusive process to raise awareness of the EPA. This requires a larger vision of the Agreement that goes beyond the completion of a tedious technical exercise comprising of a list of legal obligations and that is seen more as a strong message for investors and companies in the European party. Another key challenge for the region consists in turning the implementation of the EPA into a real opportunity to stimulate trade and investment. The CARIFORUM region, has not yet heard enough of the "EPA signal", with the notable exception of the Dominican Republic.

Finally, when it comes to development cooperation – the main pillar of the EPA which is, to some degree, the raison d’être of its implementation process – the CF-EPA has shown that the region and the West African Member States must engage with their many development partners as soon as possible, once it has been signed, to ensure sustainable financial support. This support has been highly delayed within the framework of CARIFORUM, which has fuelled much criticism of the Agreement and overshadowed the potential economic advantages of heightened access to the EU market.

Conclusion

When the CF-EPA was signed, Chris Sinckler, the Barbados Foreign Minister, stated that “no negotiated agreement is perfect, none can produce perfect results.” The West African Chief Negotiators should keep this quote in mind when the EPA is signed by both parties, but above all when it is implemented. Indeed, the region is taking a new step in the EPA implementation process, which will need to be supported by a common, united commitment from all the Member States as well as the EU. The CF-EPA experience has shown that the main challenge is to make sure that the Agreement becomes an economic reality and not just a legal fiction.

Author:  Françoise Guei is legal expert specialized in international trade law and trade policy at WTI Advisors. 

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