West African Leaders Formally Endorse EU Trade Pact
After over a decade of negotiations, West African leaders formally approved their Economic Partnership Agreement (EPA) with the EU last week during an ECOWAS Heads of States summit in Accra, Ghana. Regional chief negotiators have now been instructed to take immediate action toward launching the signing and implementation processes.
The leaders’ decision came following “consensual results reached by the Chief Negotiators on all the issues (particularly on the market access offer, the EPA Development Programme (EPADP) and the text of the Agreement),” the summit communiqué said.
The planned EPA, once ratified, would establish a free trade area between the EU and West Africa, replacing the non-reciprocal regime currently in place.
“This agreement, with a strong development component at its heart, will pave the way for sustainable economic growth in West Africa, generating jobs and well-being for our citizens,” said European Trade Commissioner Karel De Gucht on Friday, in response to the news.
Despite progress earlier this year by the regional bloc towards finalising the trade pact, the final deal was briefly put into doubt after several African trade ministers openly sided with Nigeria against the EPA during a meeting of African Union trade ministers in April.
The ECOWAS group – known also as the Economic Community of West African States – consists of Benin, Burkina Faso, Cape Verde, Gambia, Ghana, Guinea, Guinea-Bissau, Ivory Coast, Liberia, Mali, Mauritania, Niger, Nigeria, Senegal, Sierra Leone, and Togo.
Nigeria lifts veto
West African leaders had already endorsed the EPA “in principle” during a previous ECOWAS Heads of States Summit in Yamoussoukro, Côte d’Ivoire. However, Nigeria later said it was concerned over the deal’s potentially adverse economic impacts, arguing that the EPA could cause harm to its infant industries and jeopardise its development. (See Bridges Africa, 15 May 2014)
The change in stance, sources say, came following significant domestic opposition to the pact, ranging from civil society to the private sector. Nigeria had therefore insisted on renegotiating some of the agreement’s key provisions, such as by asking that 181 tariff lines be reclassified within the different categories of the offer.
This, Nigeria claimed, was necessary given that the initial structure would have hampered key sectors of its economy.
The country also requested further discussions on a revision clause, which would require that the agreement be adapted every five years, as well as on Brussels’ commitment to offset tax losses and provide additional financial resources for the EPA development programme. In addition, Nigeria had also asked for the development of indicators for measuring the EPA’s impact.
An ad hoc committee comprised of Nigeria, Ghana, Côte d’Ivoire, and Senegal was thus established to assess Nigeria’s concerns, in the hopes of moving the discussions forward. The group provided technical and political responses to Nigeria’s queries during their second meeting in mid-May.
According to sources close to the discussions, countries agreed that the Agreement would be revised every five years and that this revision would be based on the results of an economic impact study.
Furthermore, West Africa will receive a five-year moratorium during which it will not have to cut tariffs. The safeguard measures for ECOWAS’ common external tariff will also be integrated within the EPA, thus giving each country the opportunity to protect domestic production if necessary.
Meanwhile, the implementation of the EPA will be guided by a joint EU-West Africa Ministerial Council.
The ad hoc committee also convinced Nigeria to set aside its demands that the market access component of the pact be revised. Ministers reportedly stressed that such a request could dismantle the hard-won compromise, which was the result of a complex process that required balancing the region’s varying economic configurations and interests.
Another consideration for West African officials, sources say, was the fear that the EU might lose interest in committing to the agreement if the initial 75 percent phased-in market opening over the next 20 years was adjusted downwards.
Preserving regional integration integrity featured high in the discussions, observers say.
EU market access preserved for Côte d’Ivoire, Ghana
Côte d’Ivoire and Ghana are no longer in the list of countries that risk losing their trade preferences to the European market. Key exports from these countries to the EU – such as cocoa, bananas, and tuna – will therefore not be affected. Both countries have openly backed the new deal, having previously initialled interim EPAs with the EU in 2007.
Analysts note that these two countries are the only ones in the region – besides Nigeria – that are not “least developed countries” (LDCs). This therefore put them at risk of being included in the less advantageous EU Generalised System of Preferences should the EPA not be in place. The LDCs in the region, meanwhile, would still benefit from duty-free, quota-free (DFQF) access under the Everything But Arms arrangement.
In an effort to speed up the talks, the European Commission announced in 2011 that countries which have concluded an EU EPA without having taken steps for ratification and implementation by 1 October 2014 will be withdrawn from the Market Access Regulation, which provides DFQF access to 36 African, Caribbean, and Pacific countries.
Should these developing countries not ratify an EPA by this deadline, they would potentially be at risk of losing their free access to the EU market.
Some experts, such as Ben Czapnik, an adviser for the International Trade Centre, have suggested that a failure to reach a deal would not only have undermined Côte d’Ivoire’s exports of primary products to Europe, but could also have reversed the industrialisation process already underway in some sectors. (See Bridges Africa, 30 May 2014)
For instance, Côte d’Ivoire has been using its comparative advantage in cocoa to move up the value chain and export value-added cocoa products. Furthermore, he noted, the fact that Cote d’Ivoire and Ghana are both key economic players was also significant, as the absence of a regional EPA could have made the West African common market unworkable.
SADC, EAC regions next in line?
In the other two African regions where EPA negotiations are still ongoing, significant strides have been made over the past few months. Various sources are particularly optimistic that a deal could soon be reached with the Southern African Development Community (SADC), where discussions have been narrowed down to two outstanding issues: export taxes and agricultural safeguards.
In the East African Community (EAC), while issues such as the Most Favoured Nation (MFN) clause and rules of origin have reportedly been settled, export taxes and EU domestic agricultural support are still unresolved.
However, sources indicate that political issues could also jeopardise the deal in the latter region, given that East African leaders are not keen to sign a trade agreement that includes a non-execution clause – in other words, a clause that permits the deal’s suspension in cases of proven human rights violations.
The upcoming weeks will therefore be critical for the future of trade relations between the EU and Africa, as negotiators continue their efforts to conclude the talks ahead of the October deadline.