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ECDPM Preliminary Overview of EPA Review Process

10-03-2007

ECDPM. 2007. Preliminary Overview of EPA Review Process 20-03-2007 Maastricht: ECDPM

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Warning and acknowledgments

This draft paper aims to inform and facilitate exchanges among concerned stakeholders on the current review of the negotiations on Economic Partnership Agreements between the European Union and the African, Caribbean and Pacific countries, as foreseen in Article 37(4) of the Cotonou Partnershiip Agreement (CPA).. Since the EPA Review is still ongoing in most six ACP groupings negotiating an EPA, this paper is based on limited and incomplete information available to ECDPM at the time of writing. The views expressed are those of a number of key stakeholders in each region, but may not reflect the official position of the region; nor does it reflect the views of ECDPM. 

Introduction

The EU and the ACP started negotiating a new trade regime in 2002 with the intention of concluding Economic Partnership Agreements (EPAs) by the end of 2007. Regional-level negotiations on EPAs between the EU and 6 ACP regional configurations have been formally underway for about 2-3 years. Some regions have made considerable advances on the substantive trade negotiations, while other regions stumbled on principles and fundamental issues with the European Commission (EC), which has made progress more difficult. In this context, Article 37(4) of the Cotonou Partnership Agreement (CPA) mandates the parties to undertake a formal and comprehensive review of the EPA negotiations during 2006: The Parties will regularly review the progress of the preparations and negotiations and, will in 2006 carry out a formal and comprehensive review of the arrangements planned for all countries to ensure that no further time is needed for preparations or negotiations.

This review is meant to assess the progress made, identify the outstanding issues and challenges, and make suggestions on the way forward. At the start of 2007, it is not yet possible to draw definite conclusions because various ACP regions are at different stages of completing their reviews and the joint reviews. This is particularly true for the EPA negotiations with Central Africa and Southern Africa, where only limited, questionnaire-based reviews have become available so far. Each region has adopted its own approach to conduct the review. Most ACP regions have decided to undertake their internal review first, as a basis for the formal joint Art. 37(4) review with the EC. The internal regional reviews have been carried out either by regional negotiators and officials or by consultants (to ensure independence or for lack of time and capacity). In parallel, other civil society or international organizations have also produced independent assessments of the EPA negotiations. Some regions did use the review process as an opportunity to organize consultations with a wide range of stakeholders at national and regional level, while other regions have planned a presentation of the final document to civil society and private sector afterwards. The different reviews have employed different lines and methods of enquiry, and have divergent areas of focus.

The formal Article 37(4) joint reviews are due to be completed for all regions by May 2007. ECDPM has been trying to follow the review process in all ACP regions. Based on the incomplete information gathered so far, this draft paper provides a region-by-region outline of the EPA review(s) process. ECDPM intends to publish a more comprehensive overview of the Article 37(4) reviews when the process will be completed and all relevant documents will be made available.

The all-ACP view

The overarching message from the review processes seem to be that the EPA negotiations have been extremely challenging so far, both in terms of process and substance. As a result, there has been only limited substantive progress in most negotiations. An extension beyond the deadline of 31 December 2007 appears necessary in many regions to satisfactorily conclude negotiations.

The Caribbean region is perhaps the only exception to this trend. A few broadly common factors, explaining the problems and delays in the EPA negotiations, can be drawn from the review process of the various regional negotiations: Development issues Negotiators and stakeholders from all ACP regions have serious concerns regarding the ‘development dimension’ of the EPAs. They hold that if an EPA is to promote development in the ACP regions, this objective must permeate all aspects of the EPA agreement and that the EPA must be accompanied by appropriately sequenced financial support to address supply-side constraints. The ACP side also calls for measures to mitigate the adjustment costs of an EPA. In several regions, particularly Central Africa and Eastern and Southern Africa, the requirement for prior development of production and trading capacities has become a fundamental point of disagreement in the EPA negotiations The EC has proven reluctant to discuss these issues to the satisfaction of the ACP in the EPA negotiating sessions. In particular it has required that the issue of development financing in support of an EPA be addressed, not in the EPA negotiations themselves, but through the Regional Preparatory Task Forces (RPTF), which are supposed to link the EPA negotiations with the programming of EC development finance. To date, for the ACP regional groups, the RPTFs have not been a sufficiently strong elaboration of the development aspect of an EPA. Capacity constraints In terms of conducting the negotiations, the ACP, at regional and national level, face the challenges of a range of institutional and technical capacity constraints. Apparently, these constraints have not been sufficiently addressed under the EPA process, specifically in terms of the provision of funding, and time, for building negotiating capacity. As a result, pressing forward with substantive issues in negotiations will continue to be difficult and would likely result in unsatisfactory articulation and defence of interests on the ACP side.

Lack of capacity has also hampered the effective consultation and involvement of civil society in the ACP regions in the EPA process, a fact which also hinders ACP negotiating positions. Regional Integration While the EPAs are supposed to foster regional integration, the approach on issues related to regional integration in negotiations is presenting serious problems for many of the ACP regional economic communities (RECs) which are conducting the EPA negotiations. These issues include: EC proposals for tariff harmonization and liberalization which cut across or pre-empt existing regional integration initiatives; a lack of consideration of the complexity and importance of the existing regional integration efforts; and pressure to negotiate on trade-related issues, such as investment and government procurement, in cases where there is little capacity or incentive at either regional or national level, to assume commitments in such areas. Added to these cross-cutting issues, the reviews of the EPA negotiations point out a range of region-specific problems and disagreements which hamper progress in the negotiations.

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    ESA-EU EPA

    Background

    The ESA region is the only African region that has engaged in text-based negotiations with the EU in the context of the on-going EPA process. The first discussions on the draft-EPA text took place in September 2006.

    Process of the negotiations

    With regard to the Joint Road map agreed upon in February 2004, the ESA-EC EPA negotiations have made some substantial progress but are generally behind schedule.

    The negotiating structure as such is largely participatory and representative, involving various stakeholders at national and regional level. It has also been instrumental in moving the ESA EPA agenda forward, with the region taking strong leadership in the negotiations. This has allowed for intensive technical discussions to take place at the regional level in preparation for the EPA negotiations. Detailed work on the main negotiable issues has led to a draft EPA text being drawn up by the ESA region, in which priority is given to the development dimension of the EPA, namely building and consolidating ESA regional markets. The first text-based negotiations were held in September 2006 It has however been reported that the draft text, in its fourth version, has been rejected by the EU. See Richard Kamidza, “EPA Road-show rolls on”, www.pambazuka.org/.

    However, several fundamental factors, relating to both the negotiating structures and strategies, have hampered faster progress in the negotiations:

    At national level, effective preparation for the EPA negotiations has been limited due to institutional, financial and capacity problems. As a result, the public has not been sufficiently sensitized and there is limited understanding and general hostility to EPAs;
    Whereas there have been some arrangements for non-state actors (NSAs) to participate in the negotiations both at national and regional level, the lack of consultation or deep involvement of non-state stakeholders at the various stages of the negotiations has been deplored “Since the launch of the ESA-EPA road map in Mauritius, February 2004, the intellectual leadership has not organised a single meeting with non-state actors, particularly civil society, a separate platform that is necessary to broaden their horizon on issues of livelihoods and survival strategies of ordinary citizens.” Richard Kamidza, id.;
    Insufficient familiarity with and/or technical skills on all the issues of negotiators at national and regional level (including at the level of the Secretariat) has also hindered the successful conduct of the negotiations. There is also concern that only a few countries are driving the process of the negotiations and setting the priorities;
    The information flow from the regional to the national level is poor;
    Effective preparation at the regional level was also prevented by the lack of available and sufficient funds. As a result, dedicated ESA sessions on key issues were missed or skipped;
    The EC’s refusal to include the development dimension as envisaged by the region, and its delay in responding to ESA proposals;

    There is an increased perception that the conclusion of the ESA-EPA negotiations will miss the timeframe as per the roadmap, as pertinent and strategic issues vital for the development of the ESA region remain un-addressed.

    State of play

    Negotiations have taken place on six main clusters, namely, development cooperation, market access, services, agriculture, fisheries and trade-related issues.

    Development cooperationThis is the key priority for the ESA region and is cross-cutting to the various negotiation clusters. It is also where the main divergence with the EC lies and will determine the success or failure of the EPA negotiations.

    For ESA, cooperation in this area should aim at effective capacity and regulatory measures, and providing financial resources to support the structural transformation of the region by establishing a strong, competitive and diversified economic base in the ESA countries.

    The EC has refused to negotiate the development cluster, claiming that it does not have the mandate to do so. It furthermore argues that the development objectives are already covered under the CPA and that resources to ensure that the EPA fulfils its pro-development objectives aims will be programmed under the 10th EDF.

    The delay to conclude a regional development matrix for ESA is also seen as hampering the negotiations.

    Agriculture

    There has been no progress in this area, as the EC still needs to respond to ESA’s proposal. The EC has however made clear that it will not discuss the CAP reforms or the issue of commodity protocols (which ESA wants to maintain) under the EPA.

    Market access

    Both parties agree that the negotiations under this cluster have not progressed satisfactorily.

    The EC has not been wholly receptive to the ESA position on market issues and has not committed itself to providing full market access as demanded by the ESA region. It further argues that the level of liberalisation by ESA countries, the transitional period and list of sensitive products are subject to negotiations.

    The EC has also rejected the ESA demand to exempt LDCs from any tariff liberalisation under an EPA. This poses a significant challenge for the cohesion of the ESA region.

    The ESA region still needs to agree internally on a number of key issues pertaining to market access (CET, regional sensitive list of products, RoO, safeguards, SPS and TBT).
    However, before liberalising under the EPA, ESA wants first to ensure that the transitional periods are sufficient to encourage meaningful development and proper gearing up of ESA economies.

    Rules of origin 

    The EC is pushing for the use of the value-addition criterion, whereas the ESA is proposing cumulation and wholly obtaining criteria.

    SPS

    The EC has insisted on compliance with SPS standards. ESA’s concern is to first strengthen its capacity to meet the SPS standards and EU market requirements.

    Fisheries

    There has been commendable progress on fisheries as compared to other clusters. The EC has agreed to use the proposed Fisheries Framework Agreement (FFA) as a basis for negotiations but has refused to treat it as a standalone agreement.
    Furthermore, disagreements in this cluster remain on rules of origin, development aspects, SPS and capacity building components. On the particular issue of rules of origin, the two parties diverge over how to determine the origin of the fish caught (vessel vs. territorial waters) and the EC has opposed the compulsory landing called for by ESA.

    Services

    There is no ESA agreement on the principles, objectives and scope for cooperation with the EC on this cluster as yet. In fact, only a few ESA countries are pushing for opening up the sector, and the EC is asking for full liberalisation However, it has been recently reported in the press that the two parties have agreed in principle to include the services sector, which the region will first discuss internally before engaging in bilateral negotiations with the EC. See Abdulsamad Ali, “East Africa: Services, investment to be covered by the new trade deal with EU”, The East African, 19 December 2006, http://allafrica.com/stories/200612190763.html .

    Trade-related issues

    The two parties diverge in their approach to negotiations on this cluster. The EU appears to be demanding more than that which has been agreed in the context of the Doha negotiations and in the CPA, and is calling for liberalisation of the so-called Singapore issues. ESA’s mandate is to emphasize the need for building adequate legal and institutional capacities and therefore locking the benefits for COMESA’s overall integration programme before negotiating with the EC on these issues.

    Development aspects

    Strong divergences remain between the EC and the ESA on the actual definition of development.

    Financing of EPAs

    The availability of sufficient funds for the timely conclusion of the negotiating process has been limited, both at national and at regional level. In terms of implementation, the ESA is calling for the setting up of an Adjustment facility, through which budget support would be provided to the ESA countries over and above the resources available under the EDF.
    The EC has not committed itself to such a facility, reiterating that the need for additional resources for the implementation of EPAs will be met through the utilisation of EDF funds and possibly through the Aid for Trade (AfT) package. It however remains unclear as to how the AfT package will be implemented.

    The Regional Preparatory Task Force

    From its inception in May 2004, the RPTF was to serve as a mechanism for addressing the EPA developmental elements identified in the Cotonou Agreement, such as capacity-building, supply-side constraints and other developmental programmes of the regional integration agenda. While it is not a decision-making body, the RPTF is involved in the necessary preparations of the negotiations.

    However, in terms of procedure, there seems to be concerns with the RPTF that is has overstepped its mandate and terms of reference by discussing issues in detail. At the same time, there is also a realisation that the RPTF in the ESA region has a somewhat different mandate than in other regions. It is considered that harmonisation of the terms of reference of the ESA RPTF with those of the other regions would bring better alignment of the development matrices with the negotiations.

    Regional integration

    For the ESA region, the sequencing of trade liberalisation with regional integration processes is critical in achieving the development dimension. Reciprocity should only occur when regional integration and capacity of the ESA regional markets are robust enough. The extent of asymmetry in liberalization should be guided by development benchmarks and there should be flexibility for equitable rules.
    Arguably, the EPA has provided some stimulus for further integration, pushing the ESA region to deal with the various problems of overlapping membership.
    However, the ESA configuration still has a lot to do to solve this problem. As a result the requirement that the EPA process should be built on and deepen existing integration initiatives has been difficult to satisfy.
    Perceptions at the national level are that there is no coherence between the EPAs and the regional integration processes of the EPAs
    In addition, external pressure by the EPA process is distorting region-specific internal processes and factors, leaving little space and time to focus on them and find solutions. For instance, it appears that the EPA process is rushing the programme for attainment of the CET.
    Furthermore, while COMESA has committed to achieving a customs union in 2008, it is not clear whether this is the one that will be adopted for ESA. This also leaves the question of non-EPA negotiating members of COMESA unresolved, as well as that of ESA countries, like Uganda and Kenya, which already belong to the EAC Customs Union with Tanzania In this respect, Kenya has recently moved to convince Tanzania to re-enter the COMESA grouping which it left in 2000. “We have a dilemma. We cannot belong to an EAC customs union and a COMESA customs union unless Tanzania joins COMESA” (Kenyan Trade and Industry Minister Mukhisa Kituyi). See “Tanzania must join the COMESA, says Kenya” on IPPmedia, 11 January 2007, http://www.ippmedia.com/ipp/guardian/2007/01/11/82089.html.

    Other outstanding issues

    For the ESA region, the suspension of the Doha Round is an impediment to the conclusion of the EPA negotiations, particularly with regards to the issue of compatibility. The ESA countries fear that commitments under the EPAs will be WTO-plus and some are suggesting that an extension of the WTO waiver should be considered an option.
    Another key issue to be solved is the question of the legality of the ESA as a regional entity able to enter into binding commitments. One suggestion has been to convert ESA to a COMESA-EPA. However, there is no consensus on this as it would for instance leave the question of non-EPA negotiating members unresolved.

    Outstanding issues

    It is essential that the development dimension be adequately addressed, as the ESA region has indicated that the entire process may derail otherwise.
    The lack of human, institutional and infrastructure capacity at both national and regional level needs to be urgently addressed, as well as the lack of market deepening activities and competitiveness enhancing measures.
    The issue of financing for EPAs will be critical in this respect and needs to be clarified.
    Better and more effective participation of non-state actors in the EPA negotiation and implementation processes needs to be facilitated.

    There are strong views that more time is needed to enhance the capacity of the ESA region to effectively negotiate and prepare their economies for the implementation stage:
    National governments of the ESA countries need to mainstream EPAs into their trade and development policies
    Information flow within the ESA negotiating structure needs to be improved
    The issue of the ESA configuration (overlapping membership and coherence of the EPA negotiations with ESA regional integration processes) need to be addressed
    Coordination with other regions should be improved
    It has been suggested that three more years are needed for the region to fully complete negotiations

    SADC-EU EPA

    Background



    SADC EPA members are involved in a web of regional trade agreements. South Africa (SA) and the BLNS (Botswana, Lesotho, Namibia and Swaziland) have formed the Southern African Customs Union (SACU). A possible SADC customs union will require alignment with the SACU common external tariff. Two SADC EPA members (Angola and Swaziland) also belong to the Common Market of Eastern and Southern Africa (COMESA), while Tanzania also belongs to the East African Community (EAC), which became a customs union in 2005.
Other SADC Members will negotiate an EPA under other regional configurations. However, the SADC-EPA group has decided to keep the door open for any other SADC member that may wish to join the negotiation at a later stage.




    Process of the negotiations



    Negotiations and technical sessions have effectively been on hold in 2006. The SADC group made its proposal in March 2006 and has resisted continuing with negotiations until the European Commission presents its formal response. The EC regretted SADC’s decision to suspend technical negotiations, while the SADC EPA group indicated that they were frustrated by the long delay considering the short time left to negotiate EPAs.

     

Until now negotiations are still blocked on the fundamental issues of negotiation and there is little hope on the SADC side that negotiations will be completed by end of 2007. 

SADC has repeatedly called for a longer implementation period for the EPA to adjust and develop capacity to meet EU SPS regulations. 

    

Lack of preparation and capacity to negotiate


    SADC countries have been able to agree on the main modalities but voice concern that they lack a thorough assessment of national needs and priorities and an economic or welfare assessment of the impact of the EPA.
According to the SADC group a limited capacity to negotiate (financial and human resources) hinders the success of negotiations. This is not only due to a lack of capacity at national level but also a lack capacity of the SADC secretariat to mobilise action among member states.

    

Lack of involvement from civil society

    
CSOs find it difficult to procure the information they require to effectively monitor the EPA. They also lack the information, awareness, and do not have sufficient human and other resources to play an active role in the EPA process.

    

Suboptimal negotiation configuration


    The configuration of the SADC group presents challenges due to the high diversity in terms of development between SADC members (South Africa, LDCs, non-LDCs).
Through the overlapping memberships SADC countries have been involved in a double process of integration which hinders the possibility to find compromises.

    



State of play

    

Negotiation configuration

    
In March 2006 the SADC EPA group presented “A framework for the EPA negotiations between SADC and the EU” which sets out principles, objectives and key elements to define their new approach to the EPA negotiations. In this document the SADC EPA group formally suggested the inclusion of South Africa (SA) as a negotiation party, and to align the TDCA review with the EPA negotiations. The proposal is based on the notion of an agreement for the SACU 5 countries based on the TDCA and EBA access for the Least Developed countries, Mozambique, Angola, Tanzania (MAT) in that group.
A response by the EC was given in December 2006. The EC accepted the SADC request that SA join the Southern African configuration. SA will then be part of an EPA. However, the EC will maintain a separate trade regime for South Africa through a “rigorous system of control for rules of origin and the establishment of an autonomous safeguard mechanism”.
The difficulties of concluding one agreement for the whole SACU EPA group which is composed of LDCs, Non-LDCS and SA will remain a major challenge. The EC states that the involvement of South Africa in the negotiations delays and complicates the process.

    

Market access for Goods


    SACU offers differentiated geometry


    BLNS countries offered reciprocity to the EU considering the TDCA as the basis for tariff negotiations but ask for adjustments to accommodate sensitive products and the consideration of the special status of Lesotho. Additionally the SADC group calls for compensation for tariff revenue losses and adjustment costs.
MAT as LDCs should not offer reciprocity.
SADC further calls on the EU to grant full EBA market access to all SADC Member States in 2008.
The EC refuses increase in tariffs by BLNS for sensitive products since these adjustments would also apply to SA. EBA access for SA is also rejected.
Furthermore, the EC opposed contractual EBA access for MAT as being not compatible with WTO rules.



    Rules of Origin

    
The SADC EPA group aims for simplified and more liberal Rules of Origin to secure greater access to EU markets. Discussions are still going.

Standards
Both parties have made proposals on the structure of an EPA chapter on SPS and TBT. The SADC EPA group asks the EC to focus on capacity building measures to address SPS and TBT through enhanced technical and financial assistance.
SADC countries note that non-tariff barriers are important issue for SADC countries which are mostly dependent on one ore two commodities for the bulk of their export earnings.
Product standards are one of the major concerns for SADC countries.



    Other trade-related areas

    The EU considers trade related issues as pillars of development. 
SADC claims to have limited institutional and negotiating capacity to negotiate these issues under an EPA and therefore does not want to include trade-rated issues in a binding manner into an EPA. The SADC EPA group has voiced concern that it is difficult to engage in negotiations since the SADC EPA group has no common policies in this areas.

    Regional Integration

    Various regional arrangements and different integration and trade programmes result in conflicting obligations.
So far, very little progress has been made in the negotiations to address these RI challenges. The SADC countries have made similarly little progress in formulating a coherent common trade policy.
NGOs claim that the implementation of separate trade regimes as envisaged by the EU for SA and BLNS will hinder regional integration.
The SADC EPA group has voiced concern that the EPA negotiations have divided the SADC group and thus, undermined regional integration in Southern Africa.
While the EU is asking SADC to institute a common external tariff by 2008, there is growing consensus that the EU is in fact pushing regional integration too quickly.

    RPTF & Financial support

    An RPTF has been established to bolster the strategic link between the EPA negotiations and development cooperation. However, as in other regions, agreement on the issue of development funding has not been achieved. While the SADC region asks for significantly enhanced financial support and capacity building, the EU refuses to negotiate additional financial development support under EPA.

    
Outstanding Issues

    
The limited capacity of the SADC EPA group hinders the success of negotiations. These capacity constraints include both, supply side constraints (taking advantage of preferences) and the capacity to negotiate (financial and human resources).
Flexibility and sufficient adjustment periods will be important for many SADC countries in order to cope with adjustment challenges and to foster regional integration.
The EU should not push the SADC group to rush into EPAs until the domestic concerns facing producers are solved, whereas SADC countries need to enhance their regional integration incentives.

    
Effective coordination is needed both between the SADC EPA members and between the different regional integration initiatives in Southern Africa.
CSOs should organize themselves to be involved in the process of the negotiations.
The legal foundation for the new EPA configuration, which includes South Africa, will make it difficult to conclude one agreement for the entire SADC EPA group, which is a highly heterogeneous group.
Harmonisation of objectives or abolition of multiple membership by SADC countries in conflicting economic integration blocks will be crucial

     

     

    PACP-EU EPA

    Background

    The Pacific ACP group of countries (PACPs) is distinguished from the other regions by some unique characteristics:
    Geographical isolation: Small economies and isolation are a comparative disadvantage and increase transportation costs.
    Marginal trade flows with the EU: except for Fiji, Papa New Guinea and Vanuatu, PACP countries have little or no trade with the EU
    An EPA would probably only have minimal direct economic effects but important indirect effects on the region’s trade relations (discussed below).

    Process of Negotiations

    Discussions in the Joint Technical Working Groups have centred on overarching issues such as: the architecture of an EPA Agreement; the link between trade and development; and selected priority issues such as services and investment, fisheries, rules of origin and trade in goods.

    So far, only a small degree of progress has been made in the Pacific EPA negotiations and most of the stakeholders believe that negotiations are well behind schedule and doubt that negotiations can be concluded by the end of 2007.

    Additional time alone, however, will not be sufficient to address the problem, since PACPs are lacking in negotiating capacity in terms of human resources and in qualitative technical assistance.
    Furthermore, PACPs claim that more capacity at national level is needed to prepare negotiation positions and raise awareness.
    PACPs also criticise the amount or quality of support received to improve negotiating capacity. 
    The degree of private sector participation and NSA involvement is regarded as poor especially at regional level;
    While the opportunity to participate in negotiations has been there for all countries, only few countries are able to articulate their position due to the lack of awareness and resources. Growing concern exists that only a few countries in that region drive the process and set priorities.

    State of Play

    The parties agreed on a flexible structure for the EPA master agreement, which should be signed by all 14 PACP countries and will establish the principles governing the EPA relationship. The Trade in Goods Agreement (as part of an overall EPA) will only be signed by countries actually having an interest and capacity for trading with the EC. Probably 4 to 6 PACP countries could sign up initially. A flexible framework for the agreement should allow any other Pacific ACP country to sign up later.

    Apart form this general agreement on the architecture of an EPA, fundamental divergences of negotiation positions remain in nearly all important areas (Rules of Origin, Services, Investment, Fisheries and Development Cooperation).

    Market Access for Goods

    Parties agreed that access to EU markets should go beyond the current market access and PACPs shall achieve full market access to the greatest extent possible. Tariff schedules for PACPs will be adapted for each country individually.
    PACPs stress the need to foresee sufficiently long transition periods, appropriate exemptions and safeguard clauses. 
    Details have not been negotiated yet but the PACP has started to draw up possible national demands and offers.

    Rules of origin

    Agreement on this issue seems to be far away. The EC suggested a value added approach which was not appropriate for the PACPs which is composed mostly small-scale enterprises. The PACPs have proposed a system based on a simple change of tariff heading as the main criterion to determine origin. The EC announced that they would respond as soon as possible with a proposal on how to reform RoO
    Discussion about trade defence instruments remains general with special emphasis on a possible infant industry clause. Both sides have underlined that they see the subject of trade defence instruments as an important element in the overall structure of a trade in goods agreement. It has been agreed to include provisions on sanitary and phytosanitary measures in the EPA. However, discussions have remained general and need to be intensified.

    Services

    The temporary movement of labour has received substantial attention in negotiations and will be another crucial issue for the completion of negotiations.
    The PACP have emphasised EU mode 4 concessions (‘temporary movement of labour’) as a crucial element to foster their development. They have proposed a quota-based approach for skilled and semi-skilled workers, with a view to addressing shortages in labour supply in EU member states such as in the construction, health care and maritime sectors. 
    The EC wants negotiations on services to be comprehensive and conducted within the framework of GATS and states that only persons with academic qualifications can be considered under the mode 4 context. In addition the EC remarks that mode 4 issues fall within the competence of the Member States and thus, have to be discussed with the individual EU Member States
    To this end, the PACP plan a Ministerial mission in early 2007 to relevant EU capitals in order to present their ideas.
    However, the disagreement on service issues is one of the major obstacles in current negotiations. If the EU is not willing to make commitments in this area a lot of PACPs will not be interested in negotiating an agreement on services.

    Investment

    Investments have not been discussed much in the negotiation process until now. An investment chapter was included in the draft EPA text submitted to the EC in July 2006. PACP asks for the inclusion of provisions to regionalize existing investment funds (EIB, CDE, PROINVEST) and to re-organise the related institutions to better serve development needs of SMEs.
    The EC points out that EIB and CDE matters are regulated within the Cotonou Agreement and thus will not be part of the partnership agreement or re-organised.

     

    Fisheries

    The PACPs see fisheries as one of their key sectors and ask for continuation of the tariff free access currently granted bilaterally for three Pacific ACPs and for less restrictive Rules of Origin. The EC does not want to negotiate stand alone agreements and wants any provisions concerning fisheries to be fully integrated into an EPA. The EC offered technical negotiations within a sub group of experts in 2007.

    Other Trade-Related Areas

    The EC wants to integrate a range of trade-related areas into EPA, such as: competition policies, transparency in government procurement, intellectual property rights, sustainable development clauses and trade and labour rights. 
    The PACPs, however, do not see themselves in a position to start negotiations on most of these issues due to a lack of capacity.

    Development Aspects

    Regional Integration

    For the PACP countries their, obligations with other RECs, and the indirect effects of an EPA will be more important than the direct impacts of an EU trade arrangement. Under the Pacific Agreement on Closer Economic Relations (PACER), Pacific ACPs are obliged to start negotiating free trade agreements with New Zealand and Australia as soon as they commence negotiations with another developed country including the EU. This causes major concerns since those PACPs that sign a Free Trade Agreement will automatically trigger negotiations with New Zealand and Australia.
    On the other hand NSAs and PACPs claim that the push from the EU to rush through an EPA undermines regional integration.
    NGOs criticise the EU’s pursuit of bilateral fisheries agreements as being inconsistent with their stated aim of promoting regional integration.
    Within the region, and between PACP and EU very different perceptions of the role, directions, scope and timing of regional integration exist.

    Contribution of RPTF

    The establishment of a Regional Preparatory Task Force (RPTF) was jointly agreed in the Roadmap for negotiations. In 2005, TORs specifying the role and functions of the RPTF were elaborated. However, the RPTF has still not been established, since the PACPs point out that the setting of RPTF only makes sense if additional funding for EPA was available.

    Financial support from EDF

    The PACPs claim that important elements to build productive capacity and compensate for adjustment costs are not addressed in negotiations. 
    The process of programming of the 10th EDF is nearly completed for the Pacific, with focal sectors and amounts agreed. At both regional and national level, the PACP position is that additional resources beyond the 10th EDF are needed to implement an EPA. This has resulted in a refusal to include EPA-related issues in the RIP and NIPs.
    In this regard, the PACPs’ refusal to form an RPFT is based on the opinion that existing RIPs would be used to fund EPA adjustment.
    The EC, on the other hand, refuses to discuss development aspects as an integral part of an EPA. They state that DG Trade does not have the mandate to negotiate development aspects under the EPA negotiations, and that funding should not be provided through an EPA. The EC emphasises that the RPTF should be the platform for discussion about the link between trade and development.

    Further development issues

    It is still unclear to what degree the EU is willing to accept special and differential treatment issues. The PACPs claim that these issues have not been discussed sufficiently. 
    On the other hand the criticism has been made that PACPs equate the EPA development dimension simply with additional funds.

    Outstanding issues

    Concerning some major issues, negotiations have hardly made any progress or not even started. Thus, discussions and negotiations must accelerate if the deadline of 2007 December 2007 is to be met.
    Since both parties have emphasised that meeting the deadline is determining and binding for them and that they want comply with it, a tight schedule and intensified negotiations will be necessary. 
    The lack of negotiating capacity on the PACP side also needs to be addressed. Many stakeholders claim that more work is required to identify national needs for EPA implementation assistance and that institutional preparedness is too weak for implementation.
    The political situation in Fiji is likely to hamper progress in negotiations.
    The EU deemed some areas as formally not negotiable under EPAs. Most of these areas are however of major concern to PACPs. Compromises are necessary from both side
    The major obstacle will be the disagreement on the service sector, especially concerning Mode 4 issues.
    However, for PACPs alternatives to EPAs will be more attractive than for other regions. First, only few countries actually trade or have a capacity to trade with the EU. Second, countries that do not sign a free trade agreement with the EU will not trigger negotiations with Australia and New Zealand which makes any alternative trade arrangements with the EU even more attractive.
    Thus, various stakeholders, especially NGOs see a need to explore alternatives to EPAs.

    ECOWAS-EU EPA

    Background

    A number of external factors impact on the EPA negotiations for the West Africa region: 
    Cape Verde is willing to withdraw from the EPA negotiations
    Coup d’Etat on 3rd August 2005 in Mauritania
    Conflicts in Ivory Coast
    Restart of the EC development cooperation in Togo 
    Violent demonstration in Guinea 

    Process of the negotiations

    Since the opening of the West Africa – EC EPA negotiations on 2nd October 2003, the process has not registered significant progress. Many delays have been registered and are likely to be translated in to delays for the conclusion of an agreement. West Africa initially called for an extension of the negotiation deadline until 2011. The EC has nonetheless indicated that it is not possible to extend negotiations until 2011 because the issues are too important to delay the implementation of an EPA. Both parties agreed to keep the end of 2007 deadlines’ objective. The delays in the negotiations are explained by several reasons:

    Internal reasons:

    West Africa is composed of heterogeneous countries. A majority of the countries in the region are LDCs, while the remainder are developing countries; some countries are francophone, others are Anglophone and Lusophone; some countries have ongoing internal conflicts while others are coming out of war and internal turmoil; As a result, the countries of the West Africa region have diverse priorities in terms of EPAs;
    The ECOWAS custom union and the common market are not implemented effectively; the free movement of goods and persons is not respected in all the ECOWAS countries; and on the monetary side, the process towards getting a unique currency within the sub-region has registered significant delays;
    The only RIP for the period 2003-2007 has still not been implemented. This is a constraint to the effective implementation of an EPA by 1st January 2008.

     

    External issues:

    The suspension of the Doha negotiations:
    The degree of liberalization will depend on the definition of the article XXIV on the free trade area
    The definition of sensitive products and safeguard mechanisms 
    The issue on the Common Agriculture Policy
    The absence of a firm commitment on the part of the EU in respect of its interpretation of the flexibility of Article XXIV of the GATT. 

    Institutional reasons: 

    There is inadequate communication between all levels: between the regional negotiation structure, the Member States and civil society;
    The non-existence of a national EPA Committee in most ECOWAS Member States despite the efforts made to impress on states the importance of such a structure Where such committees do exist, they are hindered in the full execution of their role because of capacity constraints and other organizational deficiencies;
    The preparation of West African countries is also hindered by the competition of the different regional institutions;
    There is a lack of institutional capacity (RPTF, ECOWAS Secretariat): human competences, human resources, role, mandate, financial resources;
    There has been poor attendance at meetings of the Ministerial Monitoring Committee by Finance ministers and in some cases by the Ministers in charge of development issues;
    The second stage of negotiations began even though the issues of the first stage had not been fully resolved.

    State of play

    At the end of the first phase of the regional negotiations, progress in certain areas was registered: 

    The adoption of a Road Map for the conclusion of the EPA (4 august 2004)
    The joint adoption of several technical thematic reports on: ‘Free trade area, customs union and trade facilitation’; ‘“Standardisation, quality control and related services, SPS measures and TBT’; ’intellectual property rights’; and ’services’
    Reports have also been adopted on the: ‘EPA reference framework’ and ‘sectors of production’ 
    There was agreement to create three new negotiation groups for phase 2 of negotiations on: drafting of the text of the Agreement, sectors of production and market access. 
    Agreement in principle to include in the EPA, a revision clause that makes possible to replicate in the EPA, any results of the Doha Round, which are more favourable than the provisions agreed in the West Africa-EPA
    Agreement in principle, on the creation of a Special EPA Fund with modalities for speedy disbursements. The conditions for the establishment and the rules of operation of the Fund still have to be defined by both parties.

    Broad areas of disagreement remained however at the end of phase one: 
    Differences in perception in respect of the inclusion of a development dimension in the EPA, and the broader link between trade and development
    Modalities for covering the different costs of adjustment associated with the implementation of the EPA, including the question of additional or supplementary resources for financing the different costs of adjustment;
    The respective degrees and areas of tariff liberalization;
    The opening of negotiations on competition and investment (although both parties have agreed in principle to consider these issues from the perspective of the enhancement of regional integration).
    The inclusion of a new ‘non-Road Map’ issues such as public sector markets, labour standards and environment;

    Regarding intellectual property rights, negotiations have focused on the harmonisation of rules and their enforcement at the regional level. The EC approved the West African list of sensitive sectors (public health, piracy and counterfeiting, technological transfer, industrial property and copyright) but dismissed the demand to add genetic resources, traditional sciences and folklore, at least for now. Joint reports have been drafted and are almost agreed.

    In the negotiations on trade in services, a consensus has been reached on gradual liberalisation in West Africa. However, ECOWAS continues to stress the need for technology transfer and appropriate capacity building programmes, in the services market in particular. A common report and common list of priority sectors have been identified. 

    In negotiations on the productive sector, little progress has been made. Given the enormous task and the aspiration to reach a common understanding with the EC, West African countries decided to extend the talks into the phase 2 of the negotiations. 

    The question of access market also remains unsolved. The EC wants to take into account the sensitive products list in EBA regime whereas West Africa wants a total liberalisation of the EU market without product exclusion.

    In talks on technical barriers to trade (SPS requirements, rules of origin and non-tariff barriers), recommendations on technical standards and SPS have been made based on a report on the trade impact of technical standards and regulations. During the last Expert meeting (23-26 January 2007), the group recommended a product approach at intra and bi-regional level, to enable the region to improve its insertion in the global system. The Expert group has also proposed orientations (objectives, principles, recommendations) for discussion. A list of products which can be affected by SPS measures has also been drafted. 

    Agriculture is the centrepiece of the regional economy but also probably the most vulnerable as is hindered by: a dominant informal sector; low skills, a pre-eminence of traditional technology; low productivity’ concentration in a small range of primary products with declining and volatile world market prices; and affected by the EU Common Agricultural Policy. For farmer organisations, the implementation of the ECOWAP (the regional common agricultural policy) is the main objective. Thus, they stress that any liberalisation proposal or process that could devalue West Africa’s current trade preferences should be approached with extreme caution and with an eye both to development aspects at the WTO level and to regional economic policies. West Africa is currently preparing a sensitive products list which will be followed by a Commission EPA draft text and then lead the way into the final phase of negotiations.

    Finally, while the details are not yet available, it is known that several joint reports have recently been elaborated: on intellectual property; on productive sector; and on services. During the Expert meeting of 23-26 January, both parties agreed on a schedule of meetings for negotiations up to September 2007: 1 meeting of chief negotiators, 2 meetings of senior officials, and 4 technical meetings for better programming of subsequent programmes. 

    Development aspects

    The difference in perception in respect of the development dimension of the EPA, and the link between trade and development is the primary disagreement. For the EC, trade is the best tool to establish the foundations for development while the West African region speaks more in terms of programme financing, and the provision of additional or supplementary resources for EPA implementation.

    EPA financing support modalities represent the second area of major disagreement. From the West African point of view, it is incumbent on the EU to provide the requisite financial support. For the EC, however, this support can also be ensured by others sources of funding. 

    In terms of the modalities for covering the different costs of adjustment, the EC envisages development financing being provided through the 10th EDF process. ECOWAS, however, wishes it to be supported by a special regional fund. 

    The Regional Preparatory Task Force (RPTF) has met twice in “plenary” and meets regularly at the “Secretariat” level. It also met twice with the development partners. At this stage of the negotiations, the RPTF has not encountered problems with regard to funding of projects. However, the implementation of the RPTF’s recommendations is experiencing delays due to the complex nature of EDF procedures, the new adopted procedures, the non-management of the NIP’s and the RIP by the countries of region themselves, and the lack of involvement of NAOs in the RPTF. 
    To date, implementation has commenced on only 14 recommendations while the RPTF has provided funding for most of the recommendations of the negotiators. Moreover, the RPTF is criticized for its lack of a binding negotiating mandate and its lack of financial and human resources.

    The recent Expert’s meeting made several recommendations as regards the RPTF: 
    Strengthen the capacities of the Secretariat; 
    Formulate better the organizational and monitoring process for implementing the RPTF’s recommendations;
    Better involve the NAOs;
    Invite the EPA thematic group negotiators to contribute to the work of the RPTF in order to involve them in the implementation process;
    Develop a high-level political dialogue to discuss the EPA development aspects. 

    Outstanding issues

    Conduct a study on sensitive products.
    Formulation and commencement of programmes for upgrading and improving competitiveness.
    Harmonisation of policies on standardisation, certification, SPS measures and legal metrology.
    Determination of border protection measures.
    Analysis of different liberalisation options.
    Negotiation of schedules for the liberalisation of the two markets.
    drafting of the text of the Agreement.
    Definition within the RPTF of modalities to compensate the revenue losses due to the full implementation of the ECOWAS customs union under the terms of an EPA.
    Finalize the definition of, and implement the ECOWAS-CET tariffs.
    Elaboration and implementation of a mechanism to protect productive sectors and services: including safeguard mechanisms and an anti-dumping code 

    CEMAC-EU EPA

    Background

    At a global level, the trade share of Central Africa remains insignificant despite past liberalisation efforts and the leading economies of the region being very open. In 2004, it accounted for barely 0.28% of EU exports and 0.35% of EU imports. The Central African region is composed of 8 countries: all of which are classified are LDCs except Cameroon and Gabon. 

    Process of the negotiations

    There is a huge concern among all stakeholders on the Central African side about the deadline of December 2007 for conclusion of negotiations. This deadline will not be met under the current position and it is considered necessary to extend the negotiating period between 2 to 5 years beyond the original deadline. There are various contributory factors to this significant delay:

    Internal reasons:

    Lack of preparation of the region to negotiate and to implement an EPA;
    Several countries have not completed their development matrix needs, thus the regional one has still not been established;
    The absence of real effective delegation of a negotiations mandate from the Member States; 
    Lack of commitment to building a regional market, in the Central African region;
    The large economic disparities in the region and serious infrastructural constraints throughout.

    External issues: 

    The time it takes for the EC to respond to issues that are formally presented to it, is seen by Central African actors as too long;
    They also judge that the EC is not flexible enough especially on supply side constraints issues; and that there is a lack of appreciation of the major adjustment challenges from the EC; 
    Many countries in the Central African region would prefer to wait for significant improvement in Article XXIV of the GATT.

    Institutional reasons: 

    The creation of a group on ‘capacity building’ took a long time and its operation was not still agreed as of November 2006;
    There is a clear lack of resources to conduct the negotiations adequately and optimally;
    Civil society and private sectors joined the negotiation instruments at the national level quite late, hampering their involvement in the process;
    Impact studies for the region were not all realized;
    Negotiations began after a two year delay because the roadmap was established late; 

    State of play

    A broad agreement has been reached on most of the draft structure and its key concepts. Details on the substance of the negotiations have not been widely shared, but it is clear that the EPA negotiations in Central Africa have made little progress. 

    The main divergences revolve around the issue of reinforcement of production capacities and the inclusion of financing mechanisms in the EPAs that would provide for resources additional to the EDF.

    CEMAC has been stressing the importance of adopting a broad understanding of the reinforcement of production capacities, to include in the EPA text issues such as: improving the business environment; putting in place a system of finance for SMEs; and support to increase or create basic infrastructure (e.g. electricity, roads) to reduce costs of production. 

    For the EC, CEMAC is adopting a far-reaching methodology which applies to issues of general economic development that are already covered by DG Development and catered for under the European Development Fund. European negotiators are thus calling for an informed exchange on sensitive products in preparation of the negotiations on market access and in combination with an analysis of appropriate accompanying measures for the EPA.

    Central Africa has made clear that no agreement could be envisaged without massive intensification of human, institutional and financial capacities, and improvements in infrastructure.

    The political dimension of EPAs also remains an area of divergence amongst the two parties. Central Africa opposes EC proposals to include references to the essential elements of the Cotonou agreement (human rights, democracy and the rule of law) and to good governance, also a fundamental element of Cotonou

    Development aspects

    There is a unanimous voice among those who participated in the review process that the development dimension of the EPA has not been taken sufficiently taken into account. It is felt that the EC is very reluctant to discuss and conclude on development issues, or even to agree on development benchmarks. 

    Most of the Central African countries are worried about the cost of reciprocity. Therefore, the region considers that the EU should ensure that the costs of liberalization would be compensated by financial assistance, but also by a better development package to make up for shortfalls in the loss of government revenues and the costs of labour market adjustments. Such support should be de-linked from the market access negotiations. The EC, however, does not want to discuss this aspect before the overall institutional framework of the Agreement is established.

    There have been numerous formal requests from the Central African side to include development support as part of the EPA negotiations. They underline that no agreement could be envisaged without massive intensification of capacities.

    Capacity building in various dimensions (human resources, export capacities, infrastructure, industry upgrade, competitiveness and other measures) is clearly the key issue for Central Africa in the EPA negotiations. However, the roadmap for negotiations is not precise on the terms under which capacity building is to be discussed.

    Regional Integration:

    It is primarily in terms of capacity building, that CEMAC understands regional integration as an issue in the EPA negotiations. 

    The EC’s lack of commitment to promote the building of regional markets and to address production capacity constraints in the sub-region, before EPA commitments are taken on, leads stakeholders to believe that regional integration has not been properly addressed in negotiations to date. 

    The consolidation of the CEMAC customs union and its extension to Sao Tome and Principe is a central objective of the EPA negotiations. However, the regional integration process is hampered by several obstacles and challenges, both internal and external: intra-regional linkages remain limited there are a wide range of political obstacles and administrative barriers; the persistence of double taxation; problems linked to the customs and tax regimes which not have been completely implemented; harmonised policies in trade-related areas are either non-existent or not respected in practice; lack of human and financial resources; and weak institutions and enforcement 

    Outstanding issues

    Discussion on the liberalisation of goods and services;
    Drafting of a list of priority products which would benefit from efforts to improve regulatory and SPS compliance;
    Elaboration of a study on Rules of Origin;
    Discussion on services, investment policies and competition areas are to be discussed during the next step of the negotiations;
    Discussion of the draft on the future structure of the EPA;
    Discussion on the reinforcement of production capacities;
    A clear review of the Article XXIV of GATT is indispensable.

    CARIFORUM-EU EPA

    Background

    The Caribbean region has made significant progress in its negotiations with the EU, although several disagreements remain on substantive issues. 

     

    Process of the negotiations

    The review process has not dwelt on either sides’ experience or assessment of the process of negotiating the EPA so far. However, two points concerning process can be noted:

    Negotiations have followed the phases originally indicated in the Joint Plan and Schedule for the negotiations, which was adopted in April 2004. Furthermore, both sides have expressed, at Ministerial level, their shared political commitment to completing the negotiations in a timeframe that does not require another WTO waiver. This is reflected in the negotiating schedule for 2007. For CARIFORUM, this commitment is on condition that the EPA will be development friendly and support the objectives of the region.

    Under the EC’s ‘Capacity building in support of the preparation of EPAs’ Programme, the Caribbean has obtained assistance at regional and national level to address technical and capacity constraints, amounting to some €3 million. Further assistance to the Caribbean EPA negotiations is foreseen in 2007 and beyond, within the Caribbean Integration Support Programme. 

     

    State of play

     Grouped under four overarching headings, the major issues in the negotiations are:

    (a) Legal and Institutional Issues:

    – Structure and scope of the Agreement
    There is general agreement on these issues, except on the EPA Adjustment Facility. This issue reflects the sharp disagreement on EC development financing instruments, which is detailed below.

    – Definition of the parties to the Agreement
    This question is linked to the organisation and development of CARIFORUM regional integration. 

    CARIFORUM argues that it has neither the legal, nor policy competence to assume region-wide EPA commitments. Commitments must be assumed on the basis of the current nature of the Caribbean economic space (CSME, CARICOM-DR FTA, Haiti, The Bahamas). 

    CARIFORUM further argues that its EPA commitments must be consistent with the principles of variable geometry and differentiation, which are part of its regional integration process.

    The EC considers that a common set of rights and obligations would strengthen Caribbean regional integration. It also believes that the benefits of a strengthened regional market would be held back if CARIFORUM markets remain fragmented by differentiated trade regimes.

    Both sides agree to examine the EPA disciplines where commitments assumed by CARIFORUM will be region-wide or national in application.

    – Dispute settlement mechanism
    CARIFORUM envisages its individual member states having the right to initiate and defend dispute settlement proceedings. The EC considers this approach contrary to a region-to-region agreement and to regional integration. There is broad agreement however, that the dispute settlement provisions should be flexible to allow for subject-specific variation.

    – Inter-relationship between EPA provisions and the Cotonou Agreement
    This matter is proving a major challenge in negotiations, particularly concerning the scope of the non-execution clause and the treatment of EC development cooperation.

    Also, because the Cotonou Agreement is time-bound (expiring in 2020), while the EPA provisions are not, CARIFORUM seeks the insertion of a rendezvous clause that commits both sides to negotiate post-Cotonou arrangements before 2020. 

    The EC understands that development cooperation with CARIFORUM will continue beyond 2020 and is considering how to reflect this in appropriate language in the EPA.

    – EPA Council
    Both sides agree that there should be a Ministerial-level EPA Council mandated to implement and review the Agreement and to ensure that the EPA achieves its stated development objectives. 

    (b) Market Access (Goods):

    – Tariff liberalisation
    There has been little progress on issues related to tariff liberalisation.

    There is disagreement on the use of base rates; the EC seeks to use applied tariffs, while CARIFORUM favours bound rates. 

    There is also disagreement also on the path to liberalisation. The EC proposes to harmonise CARIFORUM tariffs before liberalisation, in cases where duty differentials are small or where trade is insignificant. Remaining tariff lines (accounting for 70% of CARIFORUM imports from the EU) would be treated on a case-by-case basis.

    CARIFORUM holds that there is no precedent for harmonising tariffs, and that the objective should instead be to arrive at modalities for achieving eventual tariff liberalisation. CARIFORUM’s approach is based on a common exclusion list and 15 national schedules of items that it will commit to zero duties at the commencement of liberalisation and schedules of products that would be subject to phased reduction of duties.

    The possibility of a transitional period of 25 years has been established for some very sensitive CARIFORUM products.

    – Agriculture & Fisheries
    CARIFORUM seeks to institute a collaborative mechanism to secure improved investment flows, value added, competitiveness and technology use in the region’s agricultural and fisheries sectors. The EC however notes the significant volume of assistance already funnelled into the region’s agriculture and the sector’s lack of sustainability.

    Concerning the treatment of agricultural subsidies, the EC has recalled its ‘double zero’ approach on export subsidies (i.e. parallelism for liberalisation and application of export subsidies).

    On the matter of full duty-free and quota free access to the EU market the EC’s orientation is towards improved access although no commitment has yet been made regarding the extent of such improvements

    – Rules of origin
    Progress in negotiations on rules of origin is constrained on both sides: for CARIFORUM, by the effort to develop an all-ACP approach; and for the EC, by the fact that its preference for a value added criterion represents its general approach, and still subject to internal assessment.

    On the substantive issues, CARIFORUM has been rejecting the value added criteria as the sole determination of origin and seeks a modification of the current Cotonou-based rules. No agreement has been reached on issues of: cumulation; administrative requirements and procedures; and co-operation mechanisms.

    – Customs & trade facilitation
    Negotiations are advanced and have resulted in a consensus text. Outstanding issues include the date of implementing a CARIFORUM Single Administrative Document and the nature of CARIFORUM advance binding rules.

    – Technical barriers to trade and sanitary and phytosanitary measures
    Negotiations are advanced and remaining disagreements are now resolved ‘ad referendum’.

    – Trade defence measures
    Negotiations have focused on safeguards, anti-dumping, anti-subsidies. CARIFORUM considers that adaptation to WTO rules on safeguards is warranted due to its limited chance of inflicting economic injury on the EU. These proposals remain under consideration.

    (c) Services & Investment:

    Some level of alignment has been reached on developing a framework for both services and investment, and the constructive exchange of views makes clear that further progress can be achieved. Both Parties aim at exchanging offers in both services and investment in the first months of 2007.

    The EC has presented the advantages for development of liberalisation in a number of important services sectors. It has also advocated the advantages of an aligned approach to services and investment through a common set of provisions and positive lists.

    CARIFORUM seeks use of the GATS methodology (which includes positive lists) for scheduling commitments in services. On investment, CARIFORUM seeks an agreement that covers market access, and promotion and protection of investment. It has a strong preference for negative lists in investment.

    Both sides agree to insert mode 4 commitments in the EPA: CARIFORUM wants a scheme that could cover skilled and less-skilled workers. The EC has proposed ‘tailor-made’ solutions on mode 4 for the EPA negotiations. In this context it will take commitments on skilled service providers.

    CARIFORUM also seeks a Mutual Recognition Agreement that would underpin the benefits of some mode 4 commitments. In reply, the EC has proposed specific provisions, so that the Parties encourage the relevant professional bodies to provide specific recommendations. The Parties could then explore the viability of specific agreements on mutual recognition. 

    At CARIFORUM’s request, a sub-group is to be established to sharpen the developmental orientation of the negotiations on services and investment. Work will focus on how small suppliers can effectively take advantage of enhanced access to the EU market.

    (d) Trade-Related Areas:

    – Intellectual property
    The trading of counterfeit and pirated products will be addressed. Flexibilities inherent in multilateral agreements to promote both public health and rural livelihoods will be applied. Discussions have been pursued on: how to extend commitments beyond those of the TRIPS; and the relationship between IP commitments and CARIFORUM’s priorities for fostering of innovation in the Caribbean.

    – Personal data protection
    Considerable progress has been recorded and is reflected in a draft consensus text which refers to the use of existing international standards while taking into account the Caribbean’s resource constraints. 

    – Competition policy
    A consensus text has been developed which would provide for cooperation between the European Commission and the CARICOM Competition Commission and the Dominican Republic competition authority (both yet to be established).

    – Government procurement
    A consensus text on transparency obtains with only a few outstanding issues including: the entities to be covered by GP provisions, and the threshold above which commitments would become applicable. A difference of views remains on the merit of including market access commitments. This will be considered only when the negotiations on transparency have concluded.

    – Good governance
    The EC’s proposal on the exchange of views, the promotion of dialogue and cooperation on good governance issues remains to be considered. 

    – Sustainable development
    Negotiations on the environmental dimension are advanced. The EC is also seeking to include provisions on social aspects. CARIFORUM agrees with the inclusion of social issues such as, the right of association and the banning of child labour, and has a preference for the use of best endeavour language for such provisions. 

    Development Aspects

    – EC development cooperation
    Disagreement remains on EC development financing instruments for the EPA: the EC favours the 10th EDF with its existing rules and procedures; CARIFORUM favours a more expansive band of funding instruments (including the EPA Adjustment Facility) with binding commitments on delivery. Both sides however agree that CARIFORUM’s prioritised needs with regard to EC development cooperation will be detailed in each relevant discipline of the EPA.

    CARIFORUM’s proposal that a development chapter should be inserted in the EPA was considered useful by the EC. Four elements could constitute this chapter:
    advancing CARIFORUM RI;
    pursuit of sustainable development;
    cross-reference to EC development funding instruments;
    cooperation in international fora such the WTO.

    – Regional Preparatory Task Force (RPTF)
    The RPTF, is intended provide the link between the EPA negotiations and the development strategies and resource requirements of the Caribbean. In shadowing the EPA negotiations, it has examined Caribbean regional integration processes and trade and integration-related assistance programmes in the Caribbean. It also worked on producing projects for consideration in the areas of SPS, TBT, Investment promotion and statistics and financial services. 

    During the final phase of the negotiations, the RPTF with the active collaboration of the trade negotiators is expected to identify the various areas that need to be addressed so as to produce meaningful EPA-related support projects. Such activities are to be deployed in accordance with the time-sensitive nature of EPA implementation. 

    – Regional Integration aspects
    Support to the Caribbean Single Market and Economy (CSME) and to the EPA process is of strategic importance for the 9th EDF Regional Indicative Programme for the Caribbean (CRIP). A €41.5 million Caribbean Integration Support Programme will be shortly implemented, over a period of 3 years. Funds from the Caribbean’s allocation from the 10th EDF will also be assigned to regional integration and EPA-related actions.

     

    Outstanding Issues

    As noted, both sides aim to complete the EPA negotiations so that another WTO waiver is not required. For CARIFORUM this is conditional on the EPA meeting its development expectations and supporting its other regional objectives. Both parties acknowledge that considerable progress has been made in negotiations. However, considerable disagreements remain in a broad range of areas. In summary, the areas which now present the greatest challenges and where progress must be made if negotiations are to be concluded in the expected timeframe are:

    (a) Legal & Institutional Issues:
    EPA Adjustment Facility and related issues with EC development cooperation
    Nature of the Parties
    Dispute Settlement Mechanism
    Inter-relationship with the Cotonou Agreement

    (b) Market Access (Goods):
    Tariff Liberalisation
    Agriculture
    Rules of Origin
    Trade Defence Measures

    (c) Services & Investment:
    Scheduling of commitments in Services and Investment
    Mutual Recognition of Professional Qualifications

    (d) Trade-related Areas:
    Government Procurement (Issue of market access)

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