West Africa, EU Reach Trade Deal
The EU and West Africa have reached a compromise on an Economic Partnership Agreement (EPA), following over a decade of negotiations. The trade pact is meant to provide 16 West African countries with long-term access to the European market, without being subjected to tariffs or quotas.
The two sides reached a deal at the senior official level on 24 January, and at the chief negotiators' level last Thursday. Sources say that while a political endorsement is needed, this is merely a formality. Along with being initialled and signed, both sides will then have to ratify the deal in their respective legislatures.
In the days preceding the agreement, EU Trade Commissioner Karel De Gucht had met with Senegalese President Macky Sall and Commission of the Economic Community of West African States (ECOWAS) President Kadré Désiré Ouedraogo, as well as other high-level politicians, in an effort to clear up outstanding issues.
The sixteen African countries included in the deal are Benin, Burkina Faso, Cape Verde, Ivory Coast, Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone, Togo, and Mauritania.
According to the European Commission, West African countries account for 40 percent of all trade between the EU and African, Caribbean and Pacific (ACP) countries.
The goal of Economic Partnership Agreements is to provide for trade reciprocity, promote sustainable development, and advance regional integration by encouraging ACP countries to enter negotiations with the EU in regional groupings, rather than individually.
Negotiations for these agreements began over a decade ago; however, only the Caribbean and four African countries - Mauritius, Madagascar, Seychelles, and Zimbabwe - have finalised their EPAs so far.
The slow pace of the negotiations has long been a source of tension between the EU and African countries. In an effort to speed up the talks, the European Commission announced in September 2011 that it would be imposing 1 October 2014 as a deadline for the withdrawal of market access regulation "MAR 1528" - which currently provides duty-free, quota-free market access to ACP countries. (See Bridges Weekly, 5 October 2011)
The aim of this deadline, Brussels explained, was to give these countries added incentive to conclude regional EPAs, as well as to start implementing their existing ones. Should the developing countries not ratify an EPA by this new deadline, they could potentially lose their free access to the European market.
With the October deadline fast approaching, trade and development ministers from five EU member states - Denmark, France, Ireland, the Netherlands, and the United Kingdom - recently asked the European Commission to show more flexibility in its EPA negotiations.
The 5 December letter, addressed to the EU High Representative for Foreign Affairs Catherine Ashton, EU Commissioner for Development Andris Piebalgs and EU Trade Commissioner Karel de Gucht, raises concerns regarding "the current situation" involving the interim EPA ratification deadline, given that "regional EPA negotiations continue to face significant difficulties."
The news that negotiators had finalised the EU-ECOWAS EPA was unexpected, many experts commented to Bridges, given the various challenges that had emerged over the years.
For instance, one of the major difficulties in the EPA process came from the lack of integration within West Africa itself, and the two different economic structures in place in the region- the Economic Community of West African States (ECOWAS) and the West African Economic and Monetary Union (UEMOA/ WAEMU).
In addition, most ECOWAS members are least developed countries (LDC), which experts had warned gave them less incentive to conclude an EPA, since their LDC status would still have made them eligible for duty-free, quota-free market access under the EU's "Everything but Arms" scheme even if no deal was signed.
However the stakes were different for non-LDCs in the region, such as Ivory Coast and Ghana, which had agreed on an EPA with the EU in 2007 in order to maintain preferential access to the EU market. Nigeria - the region's largest economy - and Cape Verde, meanwhile, have no EPA with Brussels, but do currently benefit from the EU's Generalised System of Preferences (GSP).
Market access, development assistance
Last October, ministers had pushed for the EPA negotiations to resume, after a prolonged stall in the talks. Resolving differences over market access offers and the EPA Development Programme (EPADP, known as PAPED in French) - a scheme meant to address the West African development needs with regards to the EPA - were flagged as being particularly important.
In the case of market access, West Africa had originally offered to open 70 percent of its market over 25 years. However, that proposal was reportedly deemed insufficient by the EU, which had pushed for an 80 percent market opening within 15 years.
Sources confirm that the two sides have agreed that West African countries will liberalise 75 percent of trade over a 20-year transition period.
This final level was backed by the decision of ECOWAS ministers to implement a regional Common External Tariff (CET) by 1 January 2015. However, some experts stress that the parallel developments of the new market access offer and the regional CET has not allowed trade officials the chance to determine how to best align the two.
With regard to development assistance, both parties agreed that the EPADP will need a set of accompanying measures and development assistance in order to help to build capacity, implement the EPA, and support domestic reforms.
The agreed assistance amount is €6.5 billion for the 2015-2019 period, lower than the €15 billion that West African countries had requested. However, some commentators have said that €6.5 billion could be enough to cover the costs of the programme's activities over that time.
"Now we have to define the conditions for disbursement to benefit from this funding... in order to allow our sub-region to be competitive and enhance its integration," said ECOWAS Commission President Kadré Désiré Ouedraogo, according to the Agence de Press Sénégalaise.
Another topic that had proven particularly difficult in the negotiations was the Most Favoured Nation clause.
Brussels had originally requested that, should West Africa later grant preferential access to any other countries, it also provide the EU with the same treatment. However, West Africa had insisted that it wanted to retain the possibility of advancing its cooperation with southern countries.
Negotiators have reportedly agreed that West Africa will grant the EU any new favourable tariff treatment provided to another commercial partner, as long as the latter has a share of international trade higher than 1.5 percent and whose degree of industrialisation is above 10 percent in the year prior to the agreement's entry into force.
Experts say that these criteria could include preferences granted to partners such as India, China, and Brazil. Preferences granted to other African and ACP countries will be exempt from this requirement, however.
The issue of agricultural subsidies has long been divisive, since the EU did not wish to include it within the EPA's scope. The two sides eventually agreed to ensure the transparency of their respective policies and domestic support measures.
To this end, Brussels will regularly report to West Africa its actual measures, including their legal basis, their nature, and the related amounts. Under the terms of the deal, the EU has also agreed to refrain from using export subsidies for farm goods exported to West African markets.
Compromises on non-execution, rules of origin
The non-execution clause, which allows parties to suspend commitments in cases of human rights or democracy violations, had been another point of contention between the two sides.
West Africa had been against including in the EPA a clause that it termed as political, while the EU wanted to include the possibility of trade sanctions in the agreement. Sources say that the draft deal ultimately dropped this clause.
With regards to rules of origin, the EU has reportedly accepted West Africa's request in this area, including with regards to cumulation and the need for asymmetry, given the inequalities in economic development between the two sides.
ICTSD reporting; "L'UEMOA, la CEDEAO et l'UE trouvent un accord à minima sur les APE." Agence de Press Sénégalaise, 8 February 2014.