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EPA Update, GREAT insights, Volume 1, Issue 8 (October 2012)

01-10-2012

Dalleau, M. 2012. EPA Update. GREAT Insights, Volume 1, Issue 8. October 2012. Maastricht: ECDPM

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This month, this section covers recent EPA developments that occurred over the past months in the EAC, West African, Caribbean, Pacific and SADC regions. Stay tuned for coverage of negotiations in other regions.

EPA Market Access Regulation 1528/2007

European Parliament votes to extend “EPA deadline” to 2016, council rejects amendment

On 13 September, the European Parliament officially rendered its final decision on the proposal of the European Commission to amend the EPA Market Access Regulation 1528/2007. The latter sought to allow the EU to exclude from the remit of the regulation countries that have not taken the necessary steps to ratify and implement their EPA agreement as from 1st January 2014. The European Parliament, meeting in plenary, voted by 322 votes to 78 (with 218 abstentions), in favour of an extension of the 2014 deadline to 2016 (1) . The council’s Trade Policy Committee, however, has gone along with the 2014 deadline, and effectively rejected Parliament’s amendment on October 5th. The proposal should now go to second reading, in search of an agreement acceptable to all three institutions.

According to EU’s MP David Martin, S&D shadow rapporteur, the new timeline “is a realistic timeframe to work towards fair and development-focused EPAs with our ACP partners. No ACP country should be forced to sign an unsatisfactory agreement (2) ”. ACP Secretary General, Mohammed Ibn Chambas, welcomed the outcome of the vote, acknowledging that such extension would “help to facilitate a more serene environment to make balanced decisions beneficial to all parties (3) ”. He called on the EC to show flexibilities on the remaining outstanding and contentious issues in the negotiations, in order for deals to be struck on time (4)

According to the new legislative proposal, if countries want to continue to benefit from EPA market access, they either have to sign and start the ratification of their existing EPA or conclude a new regional one. If none of these steps are taken, within the specified timeframe, countries will either fall under one of the schemes of the new GSP (i.e. Everything but Arms, Standard GSP or GSP Plus) or they will have no preferences (as might be the case for Botswana and Namibia). 

Southern African Development Community (SADC)

SADC meetings postponed 

Following the meeting of SADC and EU technical experts on Market Access (MA) in Johannesburg, on 18 and 19th of July, SADC member states have worked on refining their MA positions on agricultural products in particular. Inputs from South Africa on where concessions could be made and comfort measures sought, and from Namibia on issues of derogations for tuna and right of first refusal were eagerly awaited. Whilst some new offers have been submitted to the SADC EPA Secretariat, those now need to be consolidated at the regional level before submission to the EC. As a result, the SADC EPA was not yet ready for meaningful discussions on market access negotiations to hold the joint Senior Officials meeting that was foreseen in the first week of October. 

Beyond the question of market access issues in agriculture, numerous contentious issues remain: Non Agricultural Market Access (NAMA); export taxes and (agricultural) safeguards, so-called “new issues” (good governance in tax matters, and provisions related to “sustainable development”), and the question of Geographical Indications. Despite some recent progress in Pretoria on the question of the Most Favoured Nation (MFN) clause, the issue remains unsettled. 

Issues surrounding rules of origin and cumulation are also outstanding. Whilst those were to be discussed in the context of a specific technical meeting; no such gathering have occurred, with or without the EC on RoO in September. 

East African Community (EAC)

Rules of Origin and Dispute Settlement/Institutional arrangements appear more complicated than expected 

EAC and EU technical experts met in Brussels from 17-21 September 2012 to discuss the Protocol and Annex II on Rules of Origin and the text on Institutional Arrangements, Dispute Settlement and Final Provisions in preparation for an eventual Senior Officials meeting.

Some progress has been made on the Protocol on Rules of Origins (RoO), now almost finalised, but few issues remained unsolved at the end of the Brussels meeting. Replacing in the definition article, “other ACP states” by “other EPA states”, as currently proposed by the EU, remains problematic for the EAC side. In this respect, the EAC suggested including a stand alone article in the Protocol that would allow cumulation with non-EPA ACP states. The ball is now on the EU’s camp on this issue. 

The EAC also suggested it could submit a list of products potentially eligible for cumulation with South Africa. The EU seems to be willing to consider the proposal, but warned against the risk of trade diversion and stressed that in any case that the final agreement would depend on SADC-EU EPA negotiations. With regards to specific rules under Annex II on RoO, major disagreement remains on various chapters and products. Noticeably, also, no agreement was reached on the rules for marine fisheries, on which the EAC is still currently undertaking consultations.

On Dispute Settlement (DS), Institutional Arrangements (IA), and Final Provisions, whilst some progress was made in certain areas, there remain some outstanding technical issues that will need to be further discussed between the parties. Among those, one could cite a new EAC proposal on Interim measures that seems to suggest that such measures could be taken prior to any arbitration panel’s ruling – a proposal which may be difficult to accept for the EU. Similarly, the text on rules of procedure and code of conduct of the Arbitration will require further work. Beyond those issues, the text on DS/IA seems close to completion; although one should not forget that the non-execution clause, the type of dialogue and cooperation to be handled in the framework of the EPA Consultative Committee, as well as the question of whether issues related to the financing for development cooperation should fall within the scope of the present text on DS or not, are pending issues that have been deferred to Senior Officials. Those will therefore need to be agreed upon for the text to be completely finalised. 

Across-the-board, as can be inferred from the above, discussions in Brussels turned out to be more complicated than expected; more work is therefore required at the technical level before a Senior Officials’ meeting is to be convened. The next EAC-EU Technical Officials negotiations session is currently foreseen from 6-9 November in Kampala, Uganda. Both parties are however expected to finalise and exchange their positions on all outstanding issues with regards to RoOs and IA/DS by the end of October, to allow for fruitful discussions in Kampala. 

Beyond the issues mentioned above, it is worth recalling, that despite some substantial progress in the negotiations over the past months discussions over some of the ‘traditional’ contentious issues continue to hit a snag among the parties, notably when it comes to the Most Favoured Nation (MFN) clause, the new issues introduced by the EC in the negotiations (namely obligations/consequences arising from Customs Unions Agreements concluded with the EU, and the issue of good governance in the tax area), provisions related to “Trade, Environment and Sustainable Development”, as well as the sensitive questions of EU domestic support and export subsidies. 

West Africa

State of Play in the negotiations

Following an apparently fruitful round of negotiations on RoOs, technical experts and senior officials from West Africa and the EU met in Brussels from 17-25 April — a meeting that was held shortly after a meeting of the Regional preparatory Task Force on the EPA development programme (EPADP). Since then, however, no joint West Africa-EU meeting seems to have occurred between the parties. A technical meeting between the parties seemed to have been planned at the beginning of the summer in Accra, Ghana to address the question of the market access offer in goods, but as GREAT goes to press, we have not been able to get confirmation on whether this meeting occurred or not.

It is worth recalling here that discussions on this topic seem to stall on 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). As far as we know, these topics continue to be the subject of heated debates, and, although this question was the subject of further consultations in the region, it is very likely that agreement will have to come from higher political levels (5) .

On the question of the EPADP, major progress seems to have been made this year, but the question of “additionality” of funds remains unsettled and has been deferred to the political level. Similarly, the specific wording of the non-execution clause continues to remain controversial. The so-called “Turkey-clause” and the MFN clause will also require internal consultations within the region and further joint discussions. 

It is also worth noting that a regional workshop on trade in services has been organised by the ECOWAS Commission, in collaboration with the UEMOA Commission and the assistance of ILEAP, from 12-14 June in Accra, Ghana. In addition to informing the different participants on the state of trade services in the region and the importance of services for regional integration in West Africa, this meeting was an opportunity to discuss the progress made by the Thematic Working Group on Services set up by the ECOWAS and UEMOA Commissions when it comes to the preparation of the EPA negotiations in services. Participants also discussed in Accra how to concretely move forward on the elaboration of the national negotiating positions of the member states for the elaboration of the offer of the region in the negotiations. In this respect, it seems that ECOWAS may recruit, through GIZ, one national consultant per member states to help with the draft list of specific commitments to be offered by West Africa in the negotiations. Consultants may work on the national offers this fall. One should here recall, that in the current negotiations, services have been temporarily excluded to focus mainly on market access in goods.

 

West Africa progresses on the Regional EPA Fund (FRAPE)

Following on a decision of the West African Ministerial Monitoring Committee (MMC) in Niamey in November 2006, the region plans on establishing a Regional EPA Fund (FRAPE) to finance the EPADP.

As explained in a previous EPA Update, a study on the operationalisation of the fund was carried out for ECOWAS, UEMOA and the EC by a team of consultants in summer 2007. The study made proposals concerning the specific objectives, intervention areas, beneficiaries and contributions to the fund and identified different options in terms of the institutional home of the FRAPE.

When it comes to the practical modalities of implementation of the Fund, the West African EPA negotiating sub-group, responsible for the elaboration of the legal and organizational framework for the FRAPE, communicated the results of its work to the MMC last year. The MMC then called on the ECOWAS and UEMOA Commissions to finalize the implementation of the FRAPE before October 2012.

A meeting to this effect was held from 11-13 July 2012 in Dakar, Senegal, to discuss the draft Framework Document on the FRAPE (Document-cadre).

The Dakar meeting allowed to discuss the guiding principles, the financial management of the Fund, the sources of financing for that Fund as well as diverse institutional elements outlined in the Framework Document. Some of the critical recommendations made in the document concern the necessity to include and define criteria to prioritize the projects that would be financed through the Fund, as well as criteria for selecting eligible projects. It was also recommended that the functioning cycle of the FRAPE should be clearer regarding the responsibilities of the ECOWAS Bank for Investment and Development (BIDC) as ‘chef de file’ in the management of resources for the Fund.

In the future, both the BIDC and the West African Development Bank (BOAD – Banque Ouest Africaine de Developpement) – pillars of the FRAPE’s institutional anchorage — should also agree on the reference currency to be used for the Fund management in order to limit currency and exchange rates risks. They should also ensure that their financial procedures comply with EU requirements when it comes to procurement, accounting procedures and external and internal audits. When it comes to the beneficiaries of the FRAPE, it seems quite clear now that only the projects/programmes that have been presented in the national and regional operational plans can be considered for financing.

In this respect, the meeting was also an opportunity to discuss the way forward when it comes to the financing roundtables for the EPADP operational plans. Whilst the EU seems to be quite keen on organising right away roundtables on the national operational plans at the national level ; the region seems to favour a two-step approach where national roundtables would only be organised after the holding of a regional roundtable that would determine the overall envelope and guide the organisation of the national financing roundtables.

The Framework Document on the FRAPE should be finalise by the relevant working group in charge of this matter in the coming months and then be transmitted to the EU counterpart.

Caribbean

Joint CARIFORUM-EU Trade and Development Committee convened ahead of the forthcoming Joint Council

The 2nd meeting of the EPA CARIFORUM-EU Trade and Development Committee (TDC) – institution responsible for the implementation and efficient application of the provisions of the EPA – was held on 27 September in Trinidad and Tobago. Considered “successful” by both parties (6) , the meeting took stock of the progress achieved in implementing the EPA. It also prepared the ground for the Joint CARIFORUM-EU Council (JC), the highest EPA institution, that will be held on the 26 October in Brussels, Belgium.

According to the joint press statement that was issued after the meeting, the parties agreed during the TDC on a number of joint decisions to be put for adoption by the JC in October, including: the incorporation of the commitments of the Bahamas into Annex IV of the EPA, the status of permanent observer of the TDC to be granted to the Caribbean Export Development Agency (7) , as well as the establishment of membership of the Consultative Committee (institution that aims at involving the civil society in the EPA implementation process). On the latter respect, it is worth noting that the TDC followed a meeting of the CARIFORUM Directorate and representatives of CARIFORUM non-state actors in Port of Spain, Trinidad and Tobago, on 11-12 September – preliminary meeting that was precisely aimed at finalizing the CARIFORUM team for the Consultative Committee with the EU (8)

While discussions during the TDC revolve intensively on trade in goods and trade in services, officials from the EU and the CARIFORUM sides also took the time to discuss other issues, such as the monitoring of the EPA implementation process, trade related rules, as well as development cooperation matters (9) . On the latter, CARIFORUM raised its concerns with regards to the issue of “differentiation” and argued that the changes that may be brought to the pool of resources available under the National Indicative Programmes (NIPs) may negatively impact on the capacity of the region to implement the EPA – a question that may be further discussed during the JC in October (10) . 

It is worth noting that to date, only six CARIFORUM states have started to provisionally apply the agreement. The reasons why some countries have not started to make the initial tariff cuts requested under the agreement is an issue that may de facto end up on the TC agenda in October, as these clearly will need political directions and resolution. 

Pacific

PACP-EU discussions set to resume after 3 years of no joint gatherings

As GREAT insights goes to press, Pacific states of the ACP group (PACP) are meeting with their EU counterparts in the framework of the joint technical working groups on EPA, in Brussels, Belgium. Aimed at addressing the remaining outstanding and contentious issues in the negotiations, these sessions are the first formal gatherings between the parties since October 2009. Among the key questions that are likely to be debated during the discussions, the question of the market access in goods, rules of origins, not least in the fisheries sector, as well as development cooperation issues, are among prime importance for the PACP (11) .

These joint technical working groups should ideally be followed by a joint ministerial meeting aimed at providing further directions for the successful conclusion of the EPA (12)

Melissa Dalleau is Policy Officer Trade and Economic Governance at ECDPM. 

Footnotes:
1. Don´t rush least developed countries into partnership agreements, say MEPs. Report of EP Plenary Session, European Parliament. Press Release. 13 September 2012.
2. ibid.
3. ACP Secretariat. PRESS RELEASE: ACP Secretary General reacts to European Parliament vote on Market Access Regulation 1528/2007. Brussels, 13 September 2012
4. Ibid. 
5. EC DG Trade Press Release. EU and West Africa hold EPA negotiations in Brussels (18-20 April 2012). 2 May 2012
6. Joint Press Statement – CARIFORUM, EU Conclude “successful” meeting of EPA Trade and Development Committee. CARICOM Press Release 253/2012. 28 September 2012. 
7. Ibid.
8. CARIFORUM moves to ensure Non-State Actors Participation in EPA. CARICOM Press Release N239/2012. 6th September 2012. 
9. CARIFORUM gears up for key EPA Meeting. CARICOM. Press Release n252/2012. 24 September 2012. See also. Talks in T&T on EPA progress. The Trinidad Guardian Newspaper. 30 september 2012
10. Joint Press Statement – CARIFORUM, EU Conclude “successful” meeting of EPA Trade and Development Committee. CARICOM Press Release 253/2012. 28 September 2012. 
11. Meeting to progress EPA negotiations gets underway in Brussels. PFIS Press Release 112/12. 2 October 2012. 
12. PACP Leaders urge EU to show flexibility in EPA negotiations. PIFS Press Release (106/12). 29 August 2012.

This article was published in Great Insights Volume 1, Issue 8 (October 2012)

 

Economic Transformation and TradeEconomic Partnership Agreements (EPAs)CaribbeanEast AfricaPacificSouthern AfricaWest Africa

External authors

Melissa Dalleau