EU Offers ACP Interim Trade Deals to Meet EPA Deadline

1 November 2007

The European Commission has pulled back from its threat to end long-established trade privileges for African, Caribbean and Pacific countries unless they sign comprehensive Economic Partnership Agreements before the end of the year.

With less than a month remaining before existing preferential trade rules expire, the Commission has offered to sign interim deals limited to goods-only trade in order avoid disrupting trade. Remaining controversial issues – such as services, investment, intellectual property and competition policy – could then be negotiated in a second phase in early 2008.

“Our objective remains to conclude comprehensive, full economic partnership agreements with all interested ACP countries and regions,” EU Trade Commissioner Peter Mandelson told the European Parliament on October 22. However, given that negotiations are more advanced in some regions than others, it was necessary to conclude WTO-compatible interim deals as a ‘stepping-stone’ to a comprehensive EPA, he said.

Until recently, the Commission had insisted there was no Plan B for maintaining ACP market access if the ongoing talks failed to meet the cutoff date.

WTO Compatibility

The pressure to meet the imminent deadline is the result of a waiver under which WTO Members allowed the EU to maintain its unilateral preference scheme for ACP states until the end of 2007, even if it violates multilateral trade rules by discriminating between developing countries. The five-year exemption was supposed to give the EU and the ACP countries time to negotiate reciprocal EPAs, which would be compatible with WTO rules.

However, the negotiations have lagged in each of the six geographical ACP blocs, with most regions struggling to recognise the deadline. Now, the 79 ACP countries have three options: sign a full and comprehensive EPA, sign a goods-only interim accord with firm commitments to negotiate remaining issues in 2008 or fall back to the Commission’s less favourable Generalised System of Preferences (GSP) tariff scheme – applicable to all developing countries.

Pressure Amounts for Concluding Deals

This last option is particularly worrying for exporters in the 31 relatively richer ACP countries that cannot benefit from duty-and-quota free access to Europe under the ‘Everything but Arms’ initiative. Despite claims from development campaigners and civil society that falling back to GSP is nothing more than a bluff, the Commission insists that there is no other legal alternative. Fear of increased tariffs is also causing the once distinct set of negotiating regions to splinter into sub-regions and even individual countries in a bid to sign something concrete.

The state of play at the time of writing is outlined below.

  • The Caribbean, where negotiations are most advanced, seems to be the only region capable and likely to sign a comprehensive EPA by the end-2007 deadline. • Southern African Development Community members Botswana, Lesotho, Swaziland and Mozambique have submitted a WTO-compatible EPA market access schedule and agreed on provisions on development co-operation and other issues. Angola is still negotiating, while South Africa and Namibia look unlikely to conclude an interim agreement.
  • Of the 15-member Eastern and Southern Africa group, Kenya, Uganda, Tanzania, Rwanda and Burundi – members of the East African Community customs union – have signed an interim agreement on goods trade, as have the Seychelles and Zimbabwe. Mauritius concluded an interim deal on 6 December.
  • Papua New Guinea and Fiji – the two main economies and exporters in the 14-member Pacific group – have signed a goods agreement.
  • Arguing that too much work still needed to be finished in terms of negotiating specific trade concessions and related development aid, the seven-nation Central African bloc asked the EU to seek an extension of the WTO waiver. The Commission refused the request, as it done earlier with regard to a two-year extension proposal from the West African ACP group.
  • West Africa is unlikely to sign anything as a group. The Ivory Coast clinched an individual interim deal on 7 December, and Ghana was reported to be on the point of concluding one within days.

The Interim Agreements

Under the interim agreements, the EU will offer duty-free access to almost all goods from the signatory ACPs as of 1 January 2008. Sugar and rice will be fully liberalised after a transition period (Bridges Year 11 No.4 page 15). ACP partners will phase in market access commitments within 15 to 25 years depending on the country or group. They will also be able to exclude certain agricultural and industrial products from liberalisation commitments.

Each regional deal will backed up by a development assistance package, some specifically earmarked for Aid for Trade. Some of the interim agreements already include development co-operation clauses, while for others such provisions will be agreed during the comprehensive EPA negotiations.

Commission Criticised

EPAs have been accused of opening the floodgates to a torrent of cheap European imports, as well as depriving poor governments of vital tariff income. The critics argue that the EU could seek an extension of the WTO waiver or fine-tune its GSP scheme to avoid raising tariffs in the middle of negotiations. The Commission insists that a waiver extension would not be granted, and that the deals are necessary to “move us from a regime that, although wellintentioned, has clearly not succeeded in promoting development in the ACP.”

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