The CARIFORUM EPA and beyond: recommendations for negotiations on services and trade related issues

4 September 2008

The German Federal Ministry for Economic Cooperation and Development (BMZ) has commissioned a series of studies on the so-called Cotonou Issues (services trade and trade related issues - TRIs) in the Economic Partnership Agreements (EPAs) as they currently stand.2 These studies analyse the comprehensive CARIFORUM EPA text in order to derive conclusions for the ongoing negotiations, specifically for the African regions.3 The analysis focuses on the following areas:

 trade in services

 investment

 competition and public procurement

 innovation and intellectual property

 social and environment issues

 cross-cutting to all above topics: lessons learnt from the negotiation process as experienced by the Caribbean Regional Negotiating Machinery (CRNM).

All studies depart from the analysis of the relevant chapters in the CARIFORUM-EPA, in order to assess potential development related impacts of these texts on the Caribbean economy and society. Building on this, the second part of the analysis discusses opportunities and risks for the development of the African ACP countries in a bid to strengthen knowledge on EPA topics beyond market access in trade in goods, deepening discussions within African ACP countries and thus contributing to ongoing negotiations.

Services and investment

The authors stress that development-friendly implications of services and investment liberalisation depend on the competitiveness and the regulatory environment of these sectors in the regions. For finance, tourism and telecommunication services, the authors depict the situation of the sector at selected national levels in more depth, looking at the corresponding status in terms of regional integration as well as the resulting implications for the EPA negotiations.

All authors emphasise that the right sequencing is of utmost importance to the development impact of liberalisation in services and investment in EPAs. Regional integration (and sectoral regulation) should be implemented first. Regional liberalisation should be introduced afterwards, before finally opening up towards the EU in a third stage.

Several authors spotlight the new hybrid negotiation format for services and investment introduced by the EU Commission. It deviates from the General Agreement on Trade in Services (GATS) format (e.g. differing in modes, positive and negative list approaches). CARIFORUM insisted on using the GATS format for its own services commitments. Still, the newly structured offers are more difficult to compare to existing EU liberalisation schedules. Negotiations thus become less transparent and more intricate.

Many authors mention that in the case of services negotiations, the EU could offer more market opening in favour of the ACP services exporters (mode 4).

Intellectual property and innovation

At times, the intellectual property rights (IPR) and innovation regulation seems to go beyond the multilateral framework of the WTO Trade Related Intellectual Property Agreement (TRIPS). Enforcement obligations, as well as mandatory accession requirements to international treaties in the area of intellectual property rights protection, create significant implementation costs. Moreover, it was found that defensive instruments for protection of intellectual property rights were of more relevance to EU commercial interests than to the ACP's own economic development. Therefore, the authors recommend critically assessing costs and benefits of IPR and innovation regulation in the EPAs - more than for any other trade related issue.

Public procurement and competition

The authors stress the importance of public procurement and competition for the development impact of EPAs on ACP citizens. Anti-competitive practices may lead to excessive prices for goods and services, whilst sound public procurement regulation will increase efficiency of state purchases and reduce corruption. In both areas, there has been a missed opportunity to improve regulation. Governments should be obliged to be fully transparent in their procurement procedures. Competition laws should avoid anti-competitive practices and commit institutions to cooperate in cases of criminal investigation. As with services and investment, regional regulation should precede regional liberalisation and be a prerequisite for any market opening towards the EU.

Ecological and social standards

Provisions for the protection of the environment and labour rights are a valuable novelty in these trade and development agreements. The dedicated chapter in the EPA shows clear endeavours to respect (multilateral) core labour standards without burdening ACP countries with the same reform
pressure as for the provisions on IPR and innovation. Here, the author recommends introducing compulsory indicators for observing social standards as well as the integration of social and environment standards into public procurement regulation in the final EPAs.

Aid for Trade

Aid for Trade was highlighted as imperative during the negotiations as well as for EPA-implementation at national, regional, and international levels. Areas requiring such assistance are manifold, ranging from development of negotiation, regulatory and implementation capacity to strengthening of productive capacity.

BMZ intends to facilitate further dissemination of the studies through print, internet and CD-Rom.4 The studies are meant to enrich and deepen the debate on trade in services and TRIs in the ongoing EPA negotiations. They could thus serve as further technical input at national, regional and international levels in government institutions, civil society and the business community - particularly in the ACP regions. Discussion involving all these players at different levels may contribute to the definition of ACP negotiation positions in the ongoing EPA talks.

 

1 Eckhard Volkmann (Dipl. Ing. International Agricultural Science) works in the German Federal Ministry for Economic Cooperation and Development (BMZ), Division 315 - Globalisation, Trade and Investment; "> Dr. Silke Trumm (Lawyer) works in the Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) as advisor on trade in services and investment to BMZ; "> The views expressed in these studies are those of the authors only and should not be attributed to BMZ.

2 Studies are available at www.gtz.de/en/themen/laendliche-entwicklung/24564.htm 

3 Nine studies, including case studies from EAC and SADC for services and investment.

4 Please contact the authors to request copies of the analysis.

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