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EPA Update, GREAT Insights, Volume 1, Issue 1 (January-February 2012)

01-01-2012

Dalleau, M. 2012. EPA Update. GREAT Insights, Volume 1, Issue 1. January-February 2012. Maastricht: ECDPM

94th session of the ACP Council of Ministers adopt strong resolution on EPAs

Following two days of discussions by ACP Senior Officials and trade experts,(1) the 94th session of the ACP Council of Ministers, combined with the ACP Trade Ministerial meeting, was convened in Brussels from 7-9 of December 2011. EPAs featured high on the agenda given the recent proposal by the European Commission to amend the EPA Market Access Regulation (MAR) 1528/2007 to exclude from its remit countries that have not taken the necessary steps to ratify and implement their agreement as from 1st January 2014. 

Insisting on their willingness to conclude agreements and their commitments to finalise the negotiations, ACP Ministers however strongly opposed the EC proposal to fix such unilateral deadline, declaring in a strong resolution that “the delay in concluding the negotiations is due to the non-resolution of contentious issues owing to entrenched positions of the EC side as well as additional issues being added to the negotiating agenda in which the EC cannot be absolved from blame”.(2) Calling for the “immediate withdrawal of the proposed measures in view of their detrimental overall effect(3)”, ACP Ministers stressed the risks and negative effects such a proposal could have on the concerned ACP States and for regional integration(4). They also asked for the application of the MAR 1528 to non-LDCs ACP countries currently negotiating an EPA, such as Nigeria, Congo Brazzaville and Gabon(5) .

This Council of Ministers was followed by the annual ACP-EU Joint Ministerial Trade Committee, which was held on 12 December 2011. According to sources close to the negotiations, the discussions were held in positive atmosphere, both parties reiterating however the need for political commitment to progress in the negotiations.

West Africa

EPA negotiating meetings 

To our knowledge, no EPA meeting has been held in the region since the Ministerial Monitoring Committee (MMC) that considered in November of last year the state of play in the negotiations and urged to fast-track EPA negotiations in order to reach a regional agreement rapidly. 

The last round of negotiations between the parties was held in Accra from 15-18 November 2011, prior to the MMC. As reported in the columns of Trade Negotiations Insights last month, the parties exchanged views on the revised market access offer submitted by West Africa (70% liberalisation schedule over a transitory period of 25 years). Discussions focused on the revision by West Africa of the joint statistical basis behind the offer, the new categorization of specific tariff lines (and the analysis that underpinned the categorization), as well as the level of tariff classification that should be considered for this offer (HS6 vs HS10).

Some progress has been made in the text on articles related to the EPA Development Programme (EPA-DP). The parties decided to insert a reference to the EU Council Conclusions of 10 May 2010 (which presents the EU response to the programme). However, the question of the “additional” nature of development funding continues to oppose the two parties, as the region insists on additional commitments to be made by the EU for the EPA-DP, beyond those already granted in the context of the EDF (NIP / RIP). This question has now been deferred to the political level. 

Unresolved issues in the negotiations also include, inter alia, the definition of ‘third countries’ concerned by the MFN clause, the non execution clause, the community levy, subsidies and domestic support, as well as Art. 106 addressing Customs Unions between the EU and third countries.

The next round of negotiations is foreseen at technical and Senior Officials level in Brussels from 13-17 February. These meetings should be preceded by a meeting on rules of origins that should take place from 6-10 February, as well as by a meeting of the Regional Preparatory Task Force (for development cooperation issues)

However, no information is available as to whether a special Summit of Heads of States on EPA will soon be organized to give political orientations and help the negotiations move forward, as suggested by the MMC in November 2011 and the subsequent Council of Ministers(6)

West Africa continues to work on defining its programme to support fiscal reforms in the context of the EPA

A regional workshop was organized by the Commissions of the two sub-regional organisations – ECOWAS and UEMOA — in Ouagadougou from 1-3 December 2011. This meeting was an opportunity to present and discuss the outcome of a study that was conducted on the modalities of a specific programme aimed at supporting custom and fiscal reforms that would be made necessary in the context of the EPA. 

It gathered representatives of West African Member states, UEMOA and ECOWAS officials, consultants and experts on the topic, to discuss both the general conclusions of the study itself, as well as the indicative matrixes of fiscal reforms by country suggested in the report. Beyond informing West African member states about the possible fiscal impact that an EPA might have on their economies, the objective of the meeting was to make sure member states also subscribed to the various priority axes for reform suggested in the report, and agree on a roadmap. Participants to this meeting also suggested creating within the UEMOA and ECOWAS Commissions a specific institutional unit to deal with domestic taxation issues. 

Progress on the ECOWAS CET

The adoption of a regional ECOWAS Common External Tariff (CET) is critical for the region to progress further in the negotiations of the EPA. In this respect, it is worth reporting here that, meeting in Cotonou, Benin, from 5 to 9 December 2011, the 11th session of the Joint ECOWAS-UEMOA Committee for the Management of the ECOWAS CET has agreed on a roadmap that should see the final draft CET being submitted to the ECOWAS Council of Ministers for adoption by the end of June 2012.(7)

Central Africa

As reported in the pages of Trade Negotiations Insights last month, the technical level negotiations scheduled on 14-18 November in Brussels were postponed to 20-27 February 2012. To our knowledge, no date has so far been set for the Central Africa-EC EPA Regional Preparatory Task Force. 

Beyond official negotiation sessions, an information seminar targeting Central African and European business actors was organized in December 2011 by the European Commission in Yaoundé, Cameroon, in the context of the PROMOTE business fair.(8) The latter aimed at discussing with stakeholders the potential opportunities that an EPA might hold for the private sector.

SADC 

SADC-EU technical and senior officials meetings to be held in the coming weeks

SADC EPA Technical experts and Senior Officials met their EU counterparts in Johannesburg from 10-16 November 2011 to discuss unresolved issues in the negotiations, notably the questions of market access, services and investment, geographical indications and Rules of Origin (RoO). 

According to sources close to the negotiations, some substantive progress has been achieved at the meeting. It was notably an opportunity for the EU to explain their expectations with regards to trade related issues such as Competition, IPR, Procurement, as well as its conception of what the possible provisions related to GIs may comprise. As far as services and investment are concerned, Bostwana, Lesotho, Mozambique and Swaziland have all expressed their readiness to take the discussions forward (although it is worth noting that the mandate of those countries with regards to investment concerns cooperation only). 

Some major stumbling blocks continue to hamper the pace of the negotiations. Among those, the critical issues of export taxes and the MFN clause remain to be substantially discussed. More work is also required on the draft legal text, such as for instance the definition of parties and the standstill clause. Critically, parties still have to reach an agreement on the questions of market access and rules of origins. Indeed, with regards to the former, the new proposal tabled by SACU countries on both NAMA and agriculture, seem to be judged insufficient by the EU which has therefore suggested to focus efforts and attention only on market access in agriculture for the time being. On RoO, although areas of common understanding seem to emerge on a few issues (such as the importance of agreeing on provisions related to administrative cooperation), the question of the exclusion from cumulation of South African products that still face duties on EU markets continues to oppose the two parties, with the SADC side arguing in favour of full reciprocity. The EU and Namibia also need to agree on the sensitive question of the RoO for fisheries, which has not yet been solved. 

Building on those discussions, SADC and EU technical experts should meet in the region from 30 January to 3 February 2012, aiming to focus on the questions of market access, and rules of origins. This meeting should be followed by a senior officials’ meeting, from 27 February to 2 March 2012, in the Southern African Region.

EAC 

Following the 4th negotiating session of the Permanent Secretaries/Senior Officials that was held in Zanzibar in September 2011 and the round of inter-session meetings that was held between East African Community (EAC) and EU experts from 15-17 November in Kampala, the EU and the EAC EPA group met in Brussels at technical and senior officials level from 12-15 December. The objective of the meeting was to discuss the remaining brackets in the draft consolidated legal text, as well as outstanding and contentious issues in the negotiations.

Progress was achieved on the Economic and development cooperation chapter, where the question of the overlap with the provisions contained in the agriculture chapters was solved. An agreement was also found on the provisions related to Technical Barriers to Trade, Sanitary and Phyto-Sanitary Measures as well as Customs and Trade Facilitation. The place that the EAC Development Matrix should have in the text of the agreement (and whether it should be an Annex to the Agreement or not) remains however to be agreed upon among the parties. 

Some progress has also been achieved on the agriculture chapter, although a few definitional issues, as well as the questions of export subsidies and domestic support continue to oppose the parties. Moreover, the EAC has also been asked to consider a possible cooperation text on Geographical Indications. These remaining issues should be dealt with at the next negotiating meeting. 

Finally, some issues clearly remain unsettled. Among those, the MFN clause and the issue of export taxes stand out. Similarly, rules of origin (including in fisheries) and the Dispute Settlement and institutional provisions, will need to be further discussed.(9) The latter two should be the focus of Inter-session meetings, currently planned for the 3rd /4th week of February in Mombasa.

Finally, it is worth noting that the EU has insisted during this meeting on the introduction of two new issues (Trade, Environment and Sustainable Development provisions, and good governance in the tax area) that will need to be considered by the region. 

The next EAC-EU technical officials negotiations will be held during the 2nd or 3rd week of March. These dates have been set in accordance with a new roadmap adopted by the parties in the Brussels meeting – roadmap which foresees a successful conclusion of the EPA by the summer of 2012.(10)

ESA

ESA and EU stakeholders hold joint technical working group meeting ahead of joint senior officials and ministerial meetings

ESA and EU stakeholders met for a joint technical working group meeting from 28-30 November 2011 in Mauritius to discuss unresolved issues in negotiations. According to sources close to the negotiations, progress has been made on the chapters linked to SPS and TBT issues, as well as on various aspects related to trade in goods, including on provisions related to agriculture (although the question of the special agricultural safeguard will need to be considered at the next technical meeting). 

The market access offer in goods is still under discussion, as a few ESA countries are still expected to submit specific offers, arguing for more flexibility in this area.

Regarding services, the details of the text concerning market access, capital movement, and specific sectoral sections such as tourism or maritime services were settled, among others. Among the remaining stumbling blocks in this area, development support provisions, and the question of the MFN clause remain to be discussed.

Unsettled issues such as export subsidies and refunds, special agricultural safeguards should be considered at the next technical level meeting. Others outstanding issues, such as export taxes, the question of additionality of funds for EPA development support, and a few unsettled trade-related issues, have been deferred to senior official level. 

As far as Rules of Origins are concerned, new proposals have been made by the ESA region with regards to the Protocol. According to a source close to the negotiations, the region is also arguing in favour of asymmetry (and suggests that more flexible rules of origin than the rules currently defined in the IEPA could apply to ESA) 

The next EU – ESA technical and senior officials meetings are to be held in March 2012. (The specific date and venue are still to be confirmed). A joint ESA-EU ministerial meeting should also be held in the coming months to consider outstanding issues in the negotiations.(11)

Pacific

EPA representatives from the EU and the Pacific discuss way forward in Brussels(12) 

On the basis of the draft EPA text and the recently submitted revised market access offers submitted by the region last summer, EU and Pacific representatives met from 22 to 24 November 2011 in Brussels, Belgium to discuss the way forward in the negotiations of a full regional EPA in the region.(13) This meeting addressed unresolved issues in the negotiations, notably trade in goods, development cooperation and the sensitive issue of rules of origins in the fisheries sector (one shall here recall that the Pacific region is still asking for an extension of global sourcing on some fish products, allowing them to import fresh fish and re-export it to the EU in processed form uner preferential EPA rates). 

Trade in services is also an outstanding issue, with the EU arguing in favour of a differentiated approach where it would engage with those PACP countries that are ready to take commitments in this area.(14) From the Pacific side, the message that was communicated during the 94th ACP Council of Ministers held in Brussels in December 2011, was that the region continued its efforts to conclude an EPA in 2012, as mandated by Pacific ACP Leaders in September 2011.(15)

Yet, according to a retired Pacific trade negotiator interviewed and quoted by the Islands Business, the chances for the region to manage to conclude a final regional EPA by the end of the year remain low: “To stick my neck out, it will probably end up with more PACPS opting for the iEPA (with some changes here and there). Fiji may feel obliged to ratify the iEPA. LDCs in the PACPS will opt for EBA and/or some form of enhanced GSP”.(16)

The next round of negotiations is planned in the spring of 2012 at technical level. Among the possible items on the agenda are the remaining key contentious issues in the negotiations, including the MFN clause, the non-execution, infant industry and standstill clauses, the question of export taxes, as well as the Market Access offers that were submitted by the region. 

GREAT has been informed that the second meeting of the EPA Trade Committee should be held on 21 February in Papua New Guinea. Since Fiji (the only other country to have initial an interim agreement in the region) has not yet applied its agreement, it will not participate to the meeting. 

ACP-EU Joint Ministerial Conference and Pacific-EU Business Forum

Gathering high-level officials and business leaders from the Pacific region, a regional conference, entitled “Enhancing Pacific business climate for future prosperity”, was organized on 23-24 January 2012 by the ACP Business Climate Facility Program (Bizclim) in Port Vila, Vanuatu.(17) At this conference, the idea to create a Pacific-EU Business Forum to identify business and investment opportunities between Europe and the Pacific has been suggested. This forum should convene for the first time in June 2012, on the sideline of the ACP-EU Joint Council of Ministers, which will be held in Vanuatu.(18)

Caribbean

Inaugural meeting of EPA customs committee occurred in Santo Domingo

The first meeting of the CARIFORUM-EU Special Committee on Customs Cooperation and Trade Facilitation was held in Santo Domingo, Dominican Republic, on 8 December 2011. This inaugural meeting was an opportunity for officials from both sides not only to discuss legal and institutional issues (such as the rules of procedure for this Special Committee and the identification of Permanent and ad hoc observers) related to the functioning of the Committee, but also to consider issues related to (i) custom cooperation and trade facilitation, (ii) rules of origins, (iii) mutual administrative assistance and (iv) tariff classification issues.(19) Quoted in an ACP Press Release, Branford Isaacs, Head of the EPA implementation Unit of the Caribbean Community secretariat, argued that this meeting marked “yet another milestone on the path of EPA implementation, coming as it does on the heels of the convening this past June of the first meeting of the Trade and Development Committee under the CARIFORUM-EU EPA”.(20) 

Melissa Dalleau, ECDPM Policy Officer Trade & Economic Governance

Footnotes

1. See: ACP Newsdesk. Press Release. ACP senior officials debate free trade deals at pre-WTO sessions. 7th December 2011
2. ACP Secretariat. Decisions and Resolutions of the 94th Session of the Council of Ministers, 7-9 December 2011. Brussels, 9th December 2011
3. ibid.
4. ACP Newsdesk. Press Release. ACP Ministers resist ‘unilateral deadline’ to wrap up EPAs. 10 December 2011.
5. http://www.acp.int/es/node/744
6. See: ECOWAS needs fresh guidelines over EPA pact with EU. OGHOGHO OBAYUWANA, The Guardian. 27 December 2011
7. ECOWAS Press Release. Joint ECOWAS-UEMOA Committee agrees on roadmap for regional Common External Tariff. 11 December 2011. Press Release N 260/2011
See: ECOWAS Press Release. 11Th JOINT ECOWAS-UEMOA COMMITTEE MEETING ON COMMON EXTERNAL TARIFF OPENS IN COTONOU. 5 December 2011. Press release N°: 257/2011 
8. http://trade.ec.europa.eu/doclib/press/index.cfm?id=770http://news.ecowas.int/presseshow.php?nb=257&lang=en&annee=2011
9. EPA Flash News: EU and East African Community (EAC) hold EPA talks in Brussels.17/01/2012
10. Ibid.
11. See EPA Update. Trade Negotiations Insights. Vol 10. No9
12. See: Cover Report: EU wants EPA concluded. But is the Pacific ready? Samisoni Pareti. Island Business
13. European Commission. EPA Flash News – The EU and the Pacific region hold EPA talks in Brussels, 19 January 2012
14. ibid.
15. Pacific ACP committed to concluding comprehensive EPAs with EU in 2012. Suva, Fiji, 17 December 2011/ PIFS Press Release: via ACP Secretariat Website.
16. Cover Report: EU wants EPA concluded. But is the Pacific ready? Samisoni Pareti. Island Business
17.Europe and the Pacific regions will see the launch of a joint Business Forum at the occasion of upcoming meeting of the ACP-EU Council of Ministers, 01 February 2012
18. See also: NEWS: EU-Pacific Business Forum proposed at ACP BizClim high level conference
19. CARIFORUM holds inaugural EPA customs committee. CARICOM Press Release. Georgetown, Guyana, 8 December 2011. (accessed via ACP Secretariat website).
20. Ibid.

This EPA Update was published in GREAT Insights Volume 1, Issue 1 

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Economic Transformation and TradeTrade Policy and Economic Partnership AgreementsEast African Community (EAC)Economic Partnership Agreements (EPAs)Southern African Development Community (SADC)TradeAfricaCaribbeanCentral AfricaPacificWest Africa

External authors

Melissa Dalleau