Making policies work

GREAT insights Magazine

Economic Partnership Agreements and Beyond

Editorial

October 2014

Bilal, S., Ramdoo, I. 2014. Thematic focus: Economic Partnership Agreements and beyond. GREAT insights, Volume 3, Issue 9. October/November 2014.

Share Button

Everyone agrees: trade matters for development. There is also a general public consensus that trade is good, though with some scepticism on its impact of jobs, wages and prices, according to a recent world-wide survey by PEW Research Centre. The challenge however remains to identify the type of trade regimes and arrangements, at the multilateral, regional, bilateral and domestic levels, that best promote longer term sustainable and inclusive development objectives and how best to implement them so that they support those objectives.

As stressed in the newly released UNCTAD Trade and Development Report 2014, and hotly debated at the WTO Public Forum in Geneva earlier this month, there is a need to identify appropriate international and national frameworks of rules and disciplines that would facilitate a better integration into the global economy (e.g. via regional and global value chains) while preserving sufficient domestic policy space to pursue effective policies fostering increased productivity, decent job creation and higher standards of living for all, in a sustainable and equitable manner.

With the over a decade-long lingering Doha Round of WTO multilateral negotiations, whose only harvest in the ‘Bali package’ of December 2013 is now under threat, most efforts have turned to bilateral, regional and mega trade deals. In this context, the conclusion, this summer, of the negotiations on economic partnership agreements (EPAs) between the EU and respectively West Africa and Southern Africa is attracting a lot of attention – and rightly so!

EPAs matter…

After 12 years of negotiations, with many downs and only a few ups, the conclusion of some EPAs at the regional level is no small achievement. While being confronted at times with diverging interests, West, East and Southern African EPA regional groupings have each managed to keep a common position on EPAs, preventing a damaging split in each grouping.In the case of the East African Community (EAC), which initialed an EPA only on 16th October 2014, in ‘overtime’, following the temporary loss of Kenya’s preferences to the EU market, retrograded to simple general system of preferences on 1st October 2014, but now to be re integrated in the next few weeks in the duty-free-quota-free EU trade regime.  

Preserving regional integrity has been a key challenge in this EPA process, with Central African, East & Southern African and Pacific regions still divided between the few countries that have concluded an EPA, and the many more that have not. However, the multiple EU trade regimes for Africa are still to be addressed, in particular for these regions. This may affect their integration processes and constrain the possibility of building regional value chains.

But trade is not an end in itself: it is a means to foster better political relations, boost economic ties and in principle stimulate development. The successful conclusions of some EPAs, following a difficult and often contentious process, does partly help to stabilise the trade relationship between Europe and Africa and prevent a strong political backlash. EPAs have created resentment among some, and will likely continue to do so. However tensions have significantly decreased, opening the way to more appeased relations between Europe and Africa.

The effective impact on development of these EPAs is difficult to predict, and will require close scrutiny.  EPAs are certainly not as bad or as good as their critics and advocates tend to argue. With a few exceptions (most probably in Southern Africa), and thanks to a gradual transition process and significant exclusions, the main impact of trade liberalisation is unlikely to be felt before years to come, and will most likely be concentrated on few products and sectors, in specific countries.

This is no reason for complacency, as tomorrow’s future must be prepared today. To benefit from such agreements, and mitigate negative effects, strong leadership is now required on both sides: to engage in domestic reforms and adjustments (at national and regional levels), to ensure effective implementation of commitments and monitoring of their impact, and to provide appropriate (financial) support. It also requires accompanying economic policies to help the private sector make the most of potential opportunities to build their productive capacities and access markets.

…but should be placed in the broader trade landscape…

It is also important for the EPA partners to not get distracted by the EPA process and not lose sight of the greater and broader trade dynamics taking place beyond EPAs. Indeed, EPAs are, for the most part, rather traditional, if not already old fashioned, partial trade agreements, covering only goods (except for the Caribbean that have included services, investment and other trade-related issues). Started in 2002, EPAs have been slimmed down and seem somewhat frozen in time and out of tune with today’s international context and global trade agenda.

The stalemate at the WTO over the last decade has been accompanied by a proliferation of bilateral and regional trade agreements (RTAs), and more recently mega trade agreements, such as the Trans-pacific partnership (TTP), the Transatlantic Trade and Investment Partnership (TTIP) and Regional Comprehensive Economic Partnership (RCEP). In parallel, emerging economies and South-South relations have boomed over the last decade, with developing countries accounting for more than half of the world income since 2012. Africa’s own integration and transformation dynamics has also made significant leaps forwards.

Efforts to boost intra-Africa trade, both within and across regions, including by fast tracking regional integration and supporting convergence among regional trade regimes through initiatives such as the tripartite free trade agreement in Eastern and Southern Africa, must be pursued vigorously. It must be based on Africa’s own priorities but taking into consideration the rapidly evolving context.

The WTO remains a key multilateral forum where the voices and interests of developing countries can best be articulated and heard. Salvaging the 2013 Bali package and reinvigorating the WTO framework and Doha Round, to effectively address trade and development nexus, should be a priority.

Particular attention should also be paid to new mega trade deals, which will have a significant impact on the intensity and direction of trade flows and investment and the structure of regional and global value chains. Most importantly, by focusing on regulatory convergence, the TPP and TTIP in particular, should have a significant influence on the future regulatory dimension of trade, hereby contributing to redefining the ‘rules of the game’ of world trade. Thus, such mega trade deals will likely lead to an erosion of the margin of preferences that Africa enjoys to big markets, in particular the EU and the US, and may further entrench the position of Africa as rules and standard taker in international trade.

Faced with these challenges, African policy makers need to forge strategic responses by taking steps to foster their own integration process, including by speeding up regulatory and standards upgrading and by addressing non-tariff barriers to trade, still a major hurdle to the cost of doing business in countries and across regions.. They should also seek strategic alliances with some other members in order to take the lead at the WTO to address some of the issues that might affect the global trading system. They should not only secure their trade relations with their traditional trade partners, but also with their emerging partners, to avoid marginalisation. They could also seek an harmonisation of trade preferences towards Africa, in particular from their main trade partners, such as the EU and the US (e.g. GSP and AGOA). Those that have concluded an EPA could use the in-built review process every five 5 years to harness the benefits of regulatory convergence that the EU would have achieved with big players such as the US or Japan, if and when those trade agreements are concluded.

…addressed in this issue of GREAT insights

This special issue of GREAT insights brings together perspectives on EPAs, the broader trade and development agenda, from a range of high-level personalities, stakeholders and experts.

Outgoing European Trade Commissioner Karel De Gucht reflects on his legacy on EPAs and the perspectives they offer. Dr. Rob Davies, Minister of Trade and Industry of South Africa, highlights the key outcomes of the SADC-EU negotiations and how they fit a development strategy.

Mr. Bernd Lange, Chair of the European Parliament Committee on International Trade (INTA), offers some insights into why, and how, EPAs can best contribute to development, a perspective contrasted by Mr. Kalilou Sylla (Executive Secretary), Mr. Mamadou Cissoko (Honorary President) and Ms Marie Louise Cisse from the West African Network of Farmers’ and Agricultural Producers (ROPPA), who denounce EPAs as misleading development instruments, that will on the contrary impoverish Africa.

Mr. Fredrick Njehu, Program Advisor-Trade Justice at the Kenya Human Rights Commission (KHRC), reflecting on the EPA negotiations in EAC (concluded only a couple of days before GREAT’s release), also raises concerns about the EPA process and development potential 

Mr. Etienne Giros (Deputy Chairman) and Mr. Patrick Sevaistre (Board Member) of the French Council of Investors in Africa (CIAN), stress the key role that private sector, so far largely ignored in the EPA process, should play in bringing these EPAs into life, translating new trade opportunities into effective business relations.

Taking a broader perspective, Peter Draper, a leading African trade expert, Director of Tutwa Consulting and Senior Fellow at the South African Institute of International Affairs (SAIIA), looks beyond EPAs to situate them in the sub-Saharan Africa’s evolving trade landscape and the challenges ahead.

Mr. Witney Schneidman, former US Deputy Assistant Secretary of State for African Affairs and currently non-resident Fellow at the Brookings Institution and Senior International Policy Advisor for Africa at Covington & Burling LLP, focuses on the Africa-US trade and investment relations and the outcomes of President Obama’s Africa Leaders Summit this summer, while Mr. Laurent Law, who represented Mauritius and the Eastern and Southern African (ESA) region in EPA negotiations and isnow an official at the trade policy division of the Government of the Province of Nova Scotia, Canada, brings to light the Canada-EU Comprehensive Economic and Trade Agreement (CETA) and possible insights for EPAs.

Finally, Dr. Gabriel Siles-Brügge, Lecturer in Politics at the University of Manchester (UK), reflects on the evolving approach and rhetoric of the EU towards free trade policy. Instead of our traditional EPA Update, we have opted to present some key facts and figures on the EPA process and outcomes, as a potential quick guide to the EPA complex issues.

As always, we hope this issue of GREAT insights will both contribute to better inform you and stimulate your own reflection on these questions. Please do not hesitate to share them with us.

Dr. San Bilal (Editor), Head of  the Economic Transformation Programme, ECDPM.

Isabelle Ramdoo (Guest editor), Deputy Head of the Economic Transformation Programme, ECDPM.

 

This article was published in GREAT insights Volume 3, Issue  9 (October/November 2014).

 

 

Economic Transformation and TradeTrade Policy and Economic Partnership AgreementsEconomic Partnership Agreements (EPAs)