Making policies work

GREAT insights Magazine

EPA Update, GREAT insights, Volume 2, Issue 4 (May-June 2013)

01-06-2013

Roquefeuil, Q. de. 2013. EPA update. GREAT Insights, Volume 2, Issue 4. May-June 2013. Maastricht: ECDPM

Share Button

Economic Community of West African States (ECOWAS)

West Africa revises its Market Access offer, puts final touches on its common trade policy

Several important trade-related meetings have taken place in the West African region in the past months. As we reported back in February, information coming from the ECOWAS Ministerial Monitoring Committee (MMC) hinted towards a possible upwards revision of the region’s EPA market access offer. The level of market opening on the West African side has been one of the major sticking points in the EPA negotiations with the European Union, with ECOWAS – up until now – refusing to consider a percentage of market access opening above 70%. 

According to sources close to the negotiations, a new draft market access offer was presented by the ECOWAS and UEMOA commissions to the MMC in the Cape Verdean Capital, Pria, back in late March. The level of market access opening in the new draft offer stood at 74.19%, inching closer to the EU’s position, asking for 80% market access opening. However, the Pria MMC meeting did not, at the time, come to an agreement on this new draft offer. Indeed, ECOWAS Member States requested more time to study the implications of the revised market access offer on their economies. 

Shortly thereafter, an expert meeting was convened in Banjul, Gambia, on May 6th in order for Member States to report back on the revised market access offer and voice their concerns. A few hundred tariff lines were reportedly shifted in the liberalization offer’s schedule, but leaving the general level of market opening roughly untouched. The new Market Access offer should by submitted to the ECOWAS Council of Ministers shortly. It can be expected that a negotiating session with the EU will be convened shortly after should the ministers adopt the expert’s work. 

Expert and civil servants in West Africa have also been working on another major point of contention in the negations, namely the development finance component of the agreement. It seems that the region is putting significant work into actualizing the “Programme de l’APE pour le Développement (PAPED)”, last updated in 2010. The PAPED is the main programme for the financing of EPA related needs and challenges. ECOWAS has always held the position that the signing of the EPA is tied to an “appropriate” financing of the PAPED from the EU, given the fiscal, competitive, and other trade related needs that the region will face if an EPA is signed. The fund meant to operationalize the plan “Fond Régional pour l’APE” (FRAPE), is also progressing. 

On a related topic, the region’s Finance Ministers have put the final seal of approval on the region’s Common External Tariff (CET) on March 20th during the aforementioned Pria meeting. The regional CET is the fruit of ten years of negotiations amongst ECOWAS member states. 

Amongst others, notable features of the CET include the so-called “fifth band” and the “Community Integration Levy”. The fifth band regroups “strategic” products deemed essential for economic development, at a rate of 35%. The fifth band was incorporated at the explicit request of Nigeria and various other actors, who feared that without it the region’s most promising sectors would not be granted appropriate protection from outside competition. The band now groups together 130 different tariff lines, out of a total of 5899. 

The two regional “community levies”, financing the activities of the two regional commissions (UEMOA and ECOWAS), will also be merged into a single “Community Integration Levy” of 1.5%. Up until now, two different community levies coexist in the region – one for the UEMOA commission, the other for the ECOWAS commission. This single community levy should harmonize them in a single instrument. 

The region is now working its trade defence instruments, whose implementation and design is meant to allay some fears amongst ECOWAS member states and productive sectors of increased competition from extra-regional imports. The first drafts have been presented in Dakar, on the 19th of April, during the 13th meeting of the joint CET management committee and further discussed during the 52nd session of the ECOWAS technical committee on trade, customs and free movement. The main points of discussions seem to revolve around the institutional setup of the instruments – clear task divisions and process being key to avoid abuse of protective measures.

East African Community

EAC and EU work towards finalizing technical details, political issues remain on the table

EAC and EU technical level officials met for two days in Brussels, Belgium, from May 2nd to May 3rd to discuss rules of origin and institutional provisions of the agreement. As we reported in our last update, this meeting was seen as a chance to iron out last technical details before a higher level political decision could be taken on the remaining “political” bottlenecks, i.e. the MFN clause, and cumultaion with South Africa, amongst others. It should be followed by yet another round of technical level officials and senior officials, after which, it is hoped, a ministerial package can be put together. 

On rules of origin, the fisheries chapter has reportedly been finalized and closed after the EAC reviewed the wording submitted by the EC last round. The question of cumulation with “other ACP states” remains unsettled, with the EC arguing that only ACP states having signed an EPA are eligible for cumulation. This has been forwarded to Senior Officials for discussions. Further, the previous round had seen parties agree to work on a “package” of product specific rules still outstanding. It seems that the EAC proposal was deemed insufficient by the EC, who remarked that very few changes had been made compared to the EAC’s initial position. 

On institutional matter and dispute settlement, developments of interest include the possible establishment of an SPS working group as a specialized committee in the agreement’s institutional structure, an apparent disagreement over the value of including interim measures in the text on dispute settlement, and finally disagreement on compensation resulting from dispute settlement. These have been singled out for further discussion.

Southern African Development Community

Further progress on agricultural market access and rules of origin, but trade related matters remain pending

A negotiating round of the EU-SADC EPA took place in Johannesburg, from March 19th to 22nd at Senior Officials level. As we reported back in December, the focus of negotiations at the moment seems to revolve around issues of Market Access in agricultural products – a sector where both sides have offensive and defensive interests. 

Reportedly, on agriculture, SDAC and the EU agreed on the principles of establishing a specific agricultural safeguard in the text of the agreement. This should be seen in conjunction with SACU’s agreement to revise its market access offer in agricultural goods upwards by the next round. The round also made good progress by all accounts on Rules of Origin – the question of cumulation appearing to have been largely solved, at least regarding to which countries can cumulate on what products. 

Progress on trade-related issues such as services, investment, competition, etc. is slower, but there are indications that the EU wants to put the issues more firmly on the agenda relatively soon. SADC member states’ appetites towards service liberalization vary, but the EU’s position remains that it will be very hard for it to submit an agreement to the parliament that does not cover the issue. 

On another note, recent requests by South Africa to request protections for three types of South African agricultural products names in Europe (Rooibos tea, Honeybush and Karoo Lamb), have sent positive signals to EU officials seeking to formally incorporate GIs in the SADC EPA, an option the region is reflecting upon. 

Quentin de Roquefeuil is Policy Officer in the Economic Governance, Trade and Regional Integration, and Food Security Programmes at ECDPM.

This article was published in Great Insights Volume 2, Issue 4 (May-June 2013)

Economic Transformation and TradeInfrastructurePrivate sectorPublic Private Partnerships (PPPs)AfricaEast AfricaSouth AfricaWest Africa