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GREAT insights Magazine

EPA Update

27-02-2014

Roquefeuil, Q. de. 2014. EPA update. GREAT Insights, Volume 3, Issue 2. February 2014.

West Africa

EPA deal sealed off in West Africa

As of Friday 24th, the West Africa Economic Partnership Agreements (EPA) negotiating region became the first African block to reach a deal at the level of senior officials on EPAs, more than a decade after negotiations began. A final meeting to officially endorse the deal as it stands is foreseen in Brussels for early February. It will then have to be endorsed by West African Heads of State.

Sources told GREAT that a deal was reached in Dakar, Senegal, at around 7.30pm local time. Karel de Gucht, European Director General for Trade, had made the trip to Senegal in expectation of an important negotiating session, the first since the talks broke down in 2011. He met with Senegalese President Macky Sall, who had been nominated by the region’s leaders to supervise the talks between the two trade blocks.

Present at the negotiating round were the two regional Commissioners for trade matters, Mr. M. Ahmed Hamid for the Economic Community of West African States (ECOWAS) and Mr. Christophe Joseph Marie Dabire for the Union Economique et Monétaire d’Afrique de l’Ouest (UEMOA).

The negotiating session came after ECOWAS had approved its Common External Tariff (CET) and revised its market access offer upwards to 75% from the 70% it had stuck to previously (see our previous GREAT reports on the topic). The new position on market access was crafted by the ECOWAS Commission and approved by West African Heads of States in Dakar late last year. The move was at the time seen as an attempt to meet European negotiators halfway on the controversial topic of market access, which had bogged down negotiations up until last week.

While the technical details have not been revealed, the outlines of the deal are as follows. On market access, the European Union (EU) accepted the West African position of 75% market access opening over a 20 year span. On the development financing component of the EPA, the text pledges to mobilise US€6.5 billion in order to help West Africa cope with the agreement’s implementation costs. From the information available, it seems the region backed down from its demand of having the text spell out that resources provided would be “additional”.

The text of the most favoured nation (MFN) clause is at first glance more elaborate, reflecting its controversial nature. The EU has committed to grant West Africa any additional market access it would provide other parties in subsequent agreements. Since the EU already grants West Africa Duty Free and Quota Free (DFQF) access, and since the clause is limited to tariffs only, it is not immediately clear what the implications are.

West Africa, on its side, commits to do the same on certain conditions: the clause does not cover other African, Caribbean and Pacific (ACP) or African states, nor countries that have a share of world trade below 1.5%. Further, only agreements with countries having a ratio of manufactures to GDP higher than 10% will be covered. If the deal is concluded with “a group of countries”, then the share of world trade considered shall be 2%.

It is unclear at present what countries or group of countries are covered by the clause. The aim of West African negotiators had been to minimise the number of countries under its reach, so as to retain flexibility during future negotiations. The symbolic nature of the clause, which seeks to extend additional concessions to the EU should ECOWAS go ahead and negotiate further Free Trade Agreements in the future, had also greatly contributed to the controversial nature of EPA talks.

Less controversial but still previously unresolved aspects, such as EU domestic support to agriculture and the so-called “Turkey clause” were overcome. The EU has agreed to refrain from using export subsidies on agricultural goods exported to the region, and agreed to provide ECOWAS with information regarding the nature and amount of support it provides to its farmers. On future negotiations with countries part of a Customs Union with the EU, such as Turkey and Andorra, the two parties will issue a declaration inviting West Africa to consider the prospects of future negotiations.

Most issues were solved by senior officials immediately after a first round of talks amongst experts did not manage to overcome the hurdles on which negotiations broke down in 2011. The two points on which the European Commission (EC) made significant concessions, namely the level of market access opening and timeframe for liberalisation, came after ministerial pressures from EU member states on these issues (see above).

The implications of the deal are far reaching. The ECOWAS grouping has in all likelihood succeeded in avoiding the prospect of seeing two of its members, Cote d’Ivoire and Ghana, break regional ranks and conclude an EPA individually in order to safeguard market access on crucial tariff lines. Secondly, the EU has lowered the threshold of 80% liberalisation over 15 years it had stuck to for more than a decade. Other ACP regions might seek to argue for a similar level of ambition, although talks in other regions are already quite advanced. Finally, the agreement comes a few months before the EU-Africa Summit, where EPAs are expected to be an important topic.

All ACP

European Ministers call on the European Commission to show more flexibility in EPA negotiations

In a letter addressed to Catherine Ashton, Andris Piebalgs and Karel de Gucht, trade and development ministers of five EU member states have called on the EC to show more flexibility in EPA negotiations with ACP countries (1).

The letter, dated 5 December 2013, and signed by eight trade and development ministers from Denmark, France, Ireland, The Netherlands and United Kingdom, is a rare high-level plea from European member states for the Commission to soften its stance on a number of issues that have impeded the conclusion of regional EPAs so far. The last such letter dates back to 2008, when Denmark, Ireland and The Netherlands issued a similar message to the Commission in the face of wide-ranging criticisms from ACP quarters and European civil society (2).

Citing the fear that a failure to reach comprehensive agreements by the October 2014 deadline could spill over unto broader EU-Africa relations and undermine the EU’s credibility on policy coherence for development, the ministers outline several areas where the EC could, in their eyes, adopt a more accommodating approach to ACP concerns and demands. These include revising the EU’s interpretation of GATT Article XXIV, adopting a case-by-case approach to the issue of export taxes, and orienting European Development Fund (EDF) 11 programing towards EPA accompanying measures.

Some of the suggestions, such as the lowering of the 80% liberalisation threshold, or the lengthening of the liberalisation period, touch on topics that will be (or have been) front and center of negotiation rounds with West Africa and Southern African Development Community (SADC).

France, which had argued for a longer “deadline” than the one set in 2012 during council negotiations on the EC amendment of MAR 1528, had already publically criticised the EC for its approach to EPA negotiations. The French President, François Hollande, stated in Dakar two years ago that “African countries’ position in EPA negotiations has not been sufficiently taken into account (…) I am in favor of re-launching the process on a new basis, with a timeframe and content that is more favorable to African countries” (3). The final declaration of the high-profile Élysée Summit held in December last year included a paragraph largely along these lines (4). French NGOs had also sent a letter to Hollande before the summit voicing strong concerns on the process (5).

With the deadline for interim EPAs approaching, fears of a fallout from a failure to reach regional agreements appear to be mounting in European capitals. The deal reached last week in West Africa will in probably go some way in assuaging these fears, although talks are still ongoing in other ACP regions (see below).

A failure to reach an EPA in remaining ACP regions would entail seeing countries rolled back from the DFQF access they currently enjoy into the less generous Generalized System of Preferences. Some, such as Namibia, could even face MFN treatment. Alternatively, African countries could break away from their regional groupings in order to safeguard market access on crucial tariff lines, an option Cameroon appears to be contemplating (6). Both scenarios would in all likelihood have repercussions beyond the world of trade negotiators, and spill over to the political domain.

Pacific

De Gucht meets Pacific trade ministers, Fiji lashes out at Pacific Islands Forum Secretariat

EU Trade Commissioner Karel de Gucht met Pacific ACP Fisheries and Trade Ministers in Honiara, Solomon Islands on 12 December 2013 in an attempt to “resuscitate” Pacific EPA negotiations, which had met serious hurdles during the second half of last year. The last meeting in October had seen Papua New Guinea (PNG) walking out of regional talks in an apparent step to finalise its Interim EPA (IEPA) and secure market access for its tuna canning industry.

The meeting drew strong criticisms from Fiji, who refused to attend. The country issued strongly worded criticism describing the talks as “rushed”. Fiji’s Attorney General said in a statement “The Forum Secretariat is not here to act on behalf of the EU and they should not dictate directions to the members but provide technical advice and further our position” (7). It had previously proposed a meeting to be held in Fiji, amongst Pacific ACP (PACPs) states. The Pacific Islands Forum Secretariat, which coordinates negotiations on behalf of PACPs, responded with its own statement qualifying Fiji’s walk out of the ministerial meeting as something that “is simply not done, and was an extraordinary display of unwarranted and un-Pacific behavior.” (8)

In any case, the regional press reports the talks to have been constructive, preparing the ground for renewed engagement (9). The EU, for whom the withdrawal of PNG had “de facto” suspended regional talks, appears to be hopeful that the basis laid in Honiara could sway PNG back into the negotiations. PNG fears that the global sourcing provision it secured for its tuna exports in its IPEA could be watered down in a possible comprehensive, regional EPA (10). The EU is said to have shown a degree of flexibility on the issue during the meeting, but no further details are available at this point.

Quentin de Roquefeuil is Policy Officer at ECDPM.

Footnotes

1. Available at: http://www.parlementairemonitor.nl/9353000/1/j4nvgs5kjg27kof_j9vvij5epmj1ey0/vjg0k5ved1vs/f=/blg274173.pdf
2. http://noepa.blogspot.nl/2008/11/letter-from-ireland-netherlands-and.html
3. http://www.jeuneafrique.com/Article/ARTJAWEB20121012115858/
4. http://www.elysee.fr/declarations/article/elysee-summit-for-peace-and-security-in-africa-final-declaration/
5. http://www.gret.org/wp-content/uploads/Lettre-APE-Sommet-France-Afrique-D%C3%A9c-2013-1.pdf
6. See the November 2013 issue of the EPA update.
7. http://www.pina.com.fj/?p=pacnews&m=read&o=9555273752aa2c8c909bfb7f25d33c
8. http://www.forumsec.org/pages.cfm/newsroom/press-statements/2013/clarifications-on-article-published-by-fiji-times.html
9. http://www.pina.com.fj/?p=pacnews&m=read&o=189000748652afa11be2f1885c8963
10. http://www.atuna.com/index.php/2-uncategorised/244-pacific-nations-left-uneasy-after-png-epa-drop-out#.UtkI7GRdXU0, http://www.islandsbusiness.com/2013/11/trade/epas-off/

 

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Economic Transformation and TradeTrade Policy and Economic Partnership AgreementsACP Group of StatesEconomic Partnership Agreements (EPAs)European Union (EU)