Implementing the Economic Partnership Agreement in the East African Community and the CARIFORUM regions: What is in it for the private sector?

African, Caribbean and Pacific (ACP) countries have been involved in negotiating the Economic Partnership Agreement (EPA) with the European Union (EU) since 2002. The shared responsibility between government and the private sector in the implementation of the EPA both at the national and regional level is widely acknowledged: while governments need to take the necessary steps to comply with the EPA commitments and are responsible for creating an enabling environment for trade and investment, the successful implementation of the EPA largely depends on the private sector’s capacity to innovatively and intelligently respond to the evolving environment.

The Caribbean Forum of ACP states (CARIFORUM) was the first, and so far the only ACP region to conclude a “comprehensive EPA” in 2007, signed in 2008. Despite this advanced partnership with the EU, businesses have so far been quite slow to take advantage of new opportunities and the volume of trade has not significantly improved so far.

Key Purpose of ECDPM Study

Based on the experience of the CARIFORUM and bringing in an African perspective, with the East African Community (EAC), this paper examines what the EPA has brought for those who are the main implementing agents: the private sector. This paper compares the outcomes of the EPA in the CARIFORUM region and the EAC region and the role of their respective private sectors. Although having contrasting economic and trade structures, both regions have one thing in common: their private sector is mainly composed of micro, small and medium enterprises (MSMEs), many of which fall in the informal sector, and relatively fewer large companies.

Key Findings of ECDPM

Analysis shows that a well-organised sector that has the knowledge of risks and opportunities in trade negotiations, strong advocacy capacity and a platform for dialogue with government that fosters good state-business relations, are more inclined to benefit from trade agreements.

However, EPAs are yet to be fully implemented, mainly for political and technical reasons. It is therefore too early to make a comprehensive assessment of its implementation.

Key lessons for private sector:

- Ensuring a functional negotiating structure
- Ensuring policy coherence
- Effective policy responses to challenges
- Engaging private sector in the domestic reform process
- Promoting efficient private sector intermediaries
- Consulting and involving the private sector in donors programming
- Establishing implementing institutions at all levels as early as possible
- Considering EPA monitoring alongside implementation to ensure proper adjustments

From the experience of the two negotiating processes, some lessons can be drawn to improve private sector participation in trade negotiations:

• Ensuring a proper and functional negotiating structure, where the negotiating regional framework or organisation has the necessary political mandate to negotiate on behalf of its members.
• Countries need to develop policy responses together with private sector stakeholders to
  address the challenges that may arise as a result of commitments taken, including
  economic reforms

Read Discussion Paper 104