The legal status of the initialled EPAs

1 April 2008

By the end of 2007, 20 countries in Africa and the Pacific had initialled interim Economic Partnership Agreements (EPAs) with the EU, covering trade in goods.2 Fifteen Caribbean states initialled a ‘full EPA’, covering areas beyond trade in goods. What is the legal status of these initialled agreements and what are the opportunities for renegotiation, as foreshadowed by European Commission President José Manuel Barroso at the EU-Africa Summit, in Lisbon on December 8-9 2007?

Existing obligations

First, it is important to look at the existing obligations of ACP countries that have initialled either an interim or comprehensive EPA.

Under international treaty law, initialling an agreement demonstrates that the text is authentic and definitive,3 ready for signature or - although unusual - ready for provisional application.4 But an initialled text does not itself impose any obligations on the parties. The parties to an agreement are only under an obligation to implement its terms once it has entered into force, which5 takes place upon ratification or after ratification if this is specified in the treaty (as it is in the interim and full EPAs).6 On signature (but not on initialling), a country enters into an obligation not to defeat its object and purpose prior to its entry into force.7

In addition, the parties to an agreement may decide to apply certain terms on a provisional basis, even though there is no obligation to do so under either general international law or WTO law.8 Provisional application may subsequently be terminated by notifying the other party.9 However, terminating the provisional application of an agreement may indicate an intention not to ratify the agreement, which could result in the EU withdrawing the preferences it had already granted (see below). Therefore, if parties have concerns about the content of the agreements it may be advisable to refrain from provisional application until the disputed clauses are first revised.

Requirements for WTO compatibility

It is also important to look at what is required for the agreements to be WTO compatible. WTO law sets minimum requirements covering free trade in goods.10 It does not require the inclusion of liberalisation ‘multiplier’ clauses, such as MFN or standstill clauses. It also does not require progression to full EPAs or the inclusion of other trade related issues, such as services or investment.

The WTO Transparency Decision11 imposes a procedural requirement to notify the World Trade Organisation of any agreement under which preferences are granted – before the agreement enters into force.12 For this purpose, an initialled text should be sufficient.13 This logic is reflected in the EPA Regulation under which the EU grants tariff preferences to any ACP country that has initialled an interim or full EPA.14 The purpose of this Regulation is to ensure the WTO-legality of tariff preferences granted under an interim or full EPA, and to enable these agreements (once initialled) to be notified to the WTO. Given this treatment, it makes no sense for the European Commission now to claim that these agreements can only be notified to the WTO once they have been signed.

Moreover, the WTO Transparency Decision specifically provides for the possibility of renegotiating an already-notified agreement.15 This has been done on five occasions to date.16 The only requirements are that the renegotiated agreement be re-notified to the WTO and that it remain WTO-legal. This leaves a great deal of scope for renegotiating aspects of the agreements which are not required for WTO-legality (for example, the MFN clause and the standstill clauses could be removed without compromising WTO validity).

Thus, WTO law does not require signature of an interim or full EPA prior to notification, and expressly foresees the possibility of renegotiating and re-notifying an already-notified agreement, so long as the end result remains WTO-legal.

Reasons for duty-free market access to be retracted

The EPA Regulation provides for the withdrawal of market access if (a) an ACP country signals its intention not to ratify it, (b) if ratification does not take place within a reasonable period of time, or (c) the agreement (or its substance) is terminated.17

As mentioned, the withdrawal of provisional application of an agreement may indicate an ACP country’s intent not to ratify the agreement. For this reason, ACP countries should be careful about applying any aspects of an interim or full EPA on a provisional basis. On the other hand, seeking to renegotiate those aspects of an agreement that are not required for WTO-legality should not be taken as signalling an intent to sidestep ratification. The EPA Regulation could be interpreted this way. However, it can be argued that such a view wilfully overlooks the purpose of the EPA Regulation, which is to ensure the WTO compatibility of the resulting agreement, not to protect the EU’s negotiating hand.

It is unclear what a ‘reasonable period of time’ between initialling and signing an agreement would be. In some cases ratification can take place very quickly. For example, the free trade agreement between the EU and South Africa (the TDCA) was signed on October 1 1999 and ratified by South Africa almost immediately in November 1999. On the other hand, for some countries longer ratification periods are also normal. Relevantly, this includes the EU’s own member states. Thus, it took Luxembourg, France, Austria, Italy and Greece until April 27 2004 to ratify the very same TDCA. Arguably, it would be unreasonable to hold an ACP country to a standard higher than that which the EU member states apply in their own treaty practice. Consequently, there is a case that a minimum of four years between signature and ratification would be a ‘reasonable period of time’ for an ACP country to endorse the agreement.

Options for the ACP

ACP countries are not obliged under treaty law or WTO law to sign any interim or full EPA that they have initialled. An initialled text is sufficient for WTO notification purposes.

ACP countries are not precluded by treaty law or WTO law from renegotiating initialled agreements, so long as the resulting agreement is still WTO-legal. They should also be able to do this without prejudicing tariff preferences granted under the EPA Regulation, given that this Regulation is designed to ensure the WTO-legality of the preferences, and not to strengthen the EU’s bargaining position.

However, ACP countries should be very careful about provisional application of an initialled interim or full EPA, as the termination of such provisional application could indicate an intent not to ratify the agreement, and this could prejudice market access under the EPA Regulation.

1 Dr Lorand Bartels is a University Lecturer in International Law and Fellow of Trinity Hall, University of Cambridge. He can be contacted at: lab53@cam.ac.uk

2 Kenya, Tanzania, Uganda, Burundi and Rwanda initialled as the EAC; Botswana, Swaziland, Lesotho, Namibia and Mozambique initialled as SADC (Mozambique has a separate liberalisation schedule); Zimbabwe, the Seychelles, Comoros, Madagascar and Mauritius signed the ESA text but with separate liberalisation schedules; Ghana, Côte d’Ivoire and Cameroon initialled separate texts, as did Papua New Guinea and Fiji.

3 Article 10(b) of the Vienna Convention of the Law of Treaties (VCLT).

4 Provisional application usually takes place at the time of signature, but there is no reason it could not take place earlier. The granting of unilateral preferences by the EU under the EPA Regulation (Council Regulation 1528/2007 of December 20 2007 [2007] OJ L348/1, is a rare example of this situation, as it amounts to a provisional application of the initialled texts on the part of the EU.

5 Article 26 of the VCLT.

6 Ratification is one way in which the parties to a treaty may express their consent to be bound (Article 11 VLCT).

7 Article 18 VCLT.

8 Article 25 VCLT.

9 Article 25(2) VCLT.

10 Article XXIV GATT.

11 WTO General Council, Transparency Mechanism for Regional Trade Agreements. Decision of December 14 2006, WT/L/671.

12 Paragraph 3 of the WTO Transparency Decision states that ‘[the required notification of an RTA by Members that are party to it shall take place as early as possible. As a rule, it will occur no later than directly following the parties’ ratification of the RTA or any party’s decision on application of the relevant parts of an agreement, and before the application of preferential treatment between the parties.]’

13 The Transparency Decision does not refer to initialled agreements. However, it requires the notification of an agreement under which preferences are granted (see example above and footnote 4). If such an agreement is merely initialled, it follows that the initialled agreement must also be notified.

14 See footnote 4.

15 Paragraph 14 of the Transparency Decision.

16 For further examples, see: www.wto.org/english/tratop_e/region_e/notif_changes_e.htm

17 Article 2(3) of the EPA Regulation: see footnote 4.

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