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EPA Update, GREAT insights, Volume 2, Issue 2 (February-March 2013)

February 2013

Roquefeuil, Q. de, 2013. EPA Update. GREAT Insights, Volume 2, Issue 2. February-March 2013. Maastricht: ECDPM

EAC-EU EPA round held in Mombasa: towards a ministerial package? 

Seniors officials and permanent secretaries from the European Commission (EC) and the East African Community (EAC) met in Mombasa, Kenya from 5th to 7th of February to discuss outstanding issues in the negotiations, building on the previous technical round held in November of last year in Kampala. 

According to sources close to the negotiation, the Economic and Development Cooperation chapter of the agreement, which outlines the support measures accompanying the EPA, is now agreed upon and finalized at Senior Officials (SO) level, after a few adjustments inserted in the text. Technical level negotiations had already prepared the ground and cleared most hurdles in the Chapter in May and July of last year (1). The Economic and Development Cooperation chapter is one of the major points of interest for the EAC in the negotiations. 

Another development in the negotiations concerns the link made by the EAC between the finalization of the agriculture chapter of the Agreement to the article on export taxes. The agricultural chapter is almost finalized following the “package” deal struck earlier last year. While the details of the agricultural package remain murky, the broad contours seem the revolve around the idea that the EAC drooped its demand to address domestic subsidies in the negotiations, and agreed to remove the term “trade distorting” from the body of the text in exchange for a commitment from the European Union (EU) to increase transparency of domestic agricultural support and to refrain from subsidizing goods liberalized in the agreement (2). It seems that the region is now linking the finalization of the text in the question to the agreements’ article on export taxes, where it has sought flexible language. The EAC considers export taxes as an important tool for its industrialization and policy space. 

On Rules of Origin (RoOs), the question of full cumulation with South Africa and ACP countries has been deferred to discussions at the ministerial level, as part of a possible “ministerial package” that would include other traditionally contentious issues such as the MFN clause. Technical work remains to be done on product specific rules. Fisheries and the principle of time-bound asymmetry in RoOs were also discussed, with the EAC reportedly agreeing to the latter in principle. Other issues requiring more technical work concern the Dispute Settlement Chapter’s scope and institutional provisions.

Finally, the Trade and Sustainable Development chapter has been relegated to the rendez-vous clause – meaning that it will be negotiated at a later stage, after the signing of the agreement. Good governance in Tax matters and the “Turkey clause” concerning EU customs unions with third parties are still not recognized as issues for discussion by the EAC. 

With negotiations having made significant progress in the past months, sources appear confident that a “ministerial package” could be put together after another round of technical and SO negotiations, possibly within the first half of 2013. Officials cite MAR 1528’s “expiry date”, still to be agreed upon in Brussels (see below), as a possible reason for the renewed dynamic. This package would bundle all the issues having been identified as political-level decisions by technical and senior officials. The next SO meeting is foreseen for mid May, preceded by a technical round. 

As CET design speeds up, ECOWAS wants to revive EPA negotiations in 2013 

As reported in these columns last month, the ECOWAS Common External Tariff (CET) made headway towards full implementation from the 1st of January 2014 onwards after the 12th meeting of the Joint ECOWAS-UEMOA Committee for the Management of the ECOWAS Common External Tariff (3). Final details are expected to be polished in the first half of 2013, are as the community’s texts on trade defence measures, namely the Decreasing Protection Tax (DPT), the ECOWAS Countervailing Duties (ECVD), and the Import Safeguard Tax (IST). This would leave sufficient time for information and sensitizations missions to take place in ECOWAS Member States from July to December. 

Further progress on ECOWAS-EU EPA negotiations is contingent on the establishment of the region’s common tariff regime, because the CET is the basis of West Africa’s market access offer to the European Union (EU).

It is in this context that the experts from the ECOWAS Ministerial Monitoring Committee (MMC), the body in charge of overseeing EPA negotiations on the West African side, met on the 20th of February for a three-day meeting. While the conclusions of the meeting are unknown, market access issues – one of the biggest hurdles in the negotiations – were firmly on the agenda, with discussions apparently focusing on a new “draft offer”. The expert’s discussions are expected to feed in a ministerial level meeting of the MMC in Cape Verde in March. 

It should be remembered that no round has taken place between the EU and its West African counterpart since April 2012, when negotiations got stuck on market access issues – notably the level and timing of market opening on the West African side and the level of detail of the statistical basis used to conduct negotiations. ECOWAS negotiators insist on a maximum opening of 70% of their own market, while the EU argues for an 80% opening. Further, the because the ECOWAS CET is fragmented on some tariff lines at H6 level, the level of detail commonly used for trade negotiations, ECOWAS negotiators have insisted that negotiations take place at a greater level of detail in order to keep the EPA Market Access offer consistent with the CET’s structure. The EU has not been forthcoming on this request. 

The European Commission, in its last communication on the negotiations stated that it was confident that “a compromise can be found with a decision at political level on reciprocal market access.” (4) In a press release prior to the MMC, the region seemed to agree that all the technical options had been exhausted during earlier market access talks, hence the need for Ministerial guidance (5). 

While the conclusion of the MMC’s experts on market access are not known at the moment, an ECOWAS press release stated that a new draft offer, discussed during the meeting “would be forwarded to Member States for their comments as part of the process of generating a consensus” – possibly implying that ECOWAS could budge on its previous position of 70% market opening, but that consensus amongst its Member States had not yet been reached regarding the details of the new draft offer (6). 

Apart from market access issues, the MMC also reportedly discussed all outstanding issues in the negotiations, including, inter alia, divergences in the main body of the text (the MFN clause, the non-execution clause, agricultural subsidies and the clause relating to countries in a Customs Union agreement with the EU) and the protocols (notably the programme APE pour le développement (PAPED) and Rules of Origin). 

The amount and “additionally of the funding going into the PAPED, is also a particularly sticky point of contention between the two parties, with West Africa calling for 9.5 billion Euros of additional “fresh” funds while the EU projects that the PAPED will be financed under current EDF funds, totaling 6.25 billion euros together with other forms of aid and grants going to the region (7).

The MMC meeting did not go unnoticed amongst West Africa’s civil society organizations, which released a communiqué reminding their “outright opposition” to any concession beyond the 70% market-opening threshold ECOWAS negotiators have stuck to so far. The communiqué was released on the 18th of February by the Plateforme des organisations de la société civile d’Afrique de l’Ouest sur l’Accord de Cotonou (POSCAO) (8). 

MAR 1528 trialogue started on 17 of January 2013

Talks between the European Parliament (EP), the Council, and the European Commission (EC), dubbed “trialogues” in European Union (EU) jargon, have started on January 17th in Brussels on the amendment of Market Access Regulation (MAR) 1528. 

The amendment, proposed by the EC last year, would exclude countries that have taken “insufficient steps to ratify and implement Interim EPAs (IEPAs)” from the remit of the temporary MAR put in place for IEPA countries years ago when the World Trade Organization (WTO) waiver covering the Lomé preference expired. The EC had proposed 2014 as a “deadline” for implementation of IEPAs, while the EP argues for a two-year extension to 2016. The Council, representing the Member States, had backed the EC’s 2014 date. 

The conciliation procedure, or “trialogue”, between the EC, EP and Council are relatively common after the introduction of the Lisbon Treaty, which gives more voice to the EP in EU decision making. The aim is to find a consensual compromise solution, so that the regulation can pass the second legislative round between the EP and Council successfully. A decision is expected by mid-April. 

The move to put a “deadline” for IPEA implementation on the MAR had been criticized in ACP quarters, while the EC holds that the MAR has always been temporary in nature. Officials also cite WTO conformity worries. 

European Parliament gives consent to Interim EPA with four ESA countries, progress on intuitional dimensions

The four Interim EPAs of the concluded in the Eastern and Southern Africa region, concerning Madagascar, Mauritius, the Seychelles and Zimbabwe, were given the European Parliament’s (EP) “consent” on January 17th 2013 during the EP’s plenary session in Strasbourg, securing a majority of 494 votes. The Draft Report recommending the adoption of the text by the EP had gone through the EP’s International Trade committee on the 18th of December 2012, with 20 votes in favor, 5 against and 1 abstention. The text has been provisionally applied since May 2012, and will officially come into force once ratified by EU Member States and ESA countries (9). 

In related news, the European Commission released a draft proposal for consideration by the Council outlining the institutional setup of the bodies governing the EPA, as laid out in the agreement’s text (10). 

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

Footnotes
1. See Dalleau, M. 2012. EPA Update. GREAT Insights, Volume 1, Issue 7. September 2012 www.ecdpm.org/great_1_7
2. Ibid.
3. see Roquefeuil, Q. de, 2012. EPA Update. GREAT Insights, Volume 1, Issue 10. December 2012 – www.ecdpm.org/great_1_10
4. http://trade.ec.europa.eu/eutn/psendmessage.htm?tranid=7062
5. http://news.ecowas.int/presseshow.php?nb=037&lang=en&annee=2013 
6. http://news.ecowas.int/presseshow.php?nb=051&lang=en&annee=2013 
7. http://news.ecowas.int/presseshow.php?nb=037&lang=en&annee=2013 
8. Available at http://www.endacacid.org/fr/index.php/mp-organisation/190-actualites/402-la-societe-civile-ouest-africaine-s-oppose-farouchement-a-toute-nouvelle-concession-d-ouverture-du-marche-ouest-africain-a-l-union-europeenne 
9. http://trade.ec.europa.eu/doclib/press/index.cfm?id=863
10. http://www.ipex.eu/IPEXL-WEB/dossier/document/COM20130086.do 

This article was published in Great Insights Volume 2, Issue 2 (February-March 2013)

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Economic Transformation and TradeExtractive SectorsEconomic Partnership Agreements (EPAs)AfricaEast AfricaWest Africa