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EPA Negotiations: The honeymoon is over…

14-10-2011

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The European Commission (EC) finally announced today that countries that have concluded an Economic Partnership Agreement (EPA) but not taken the necessary steps to ratify and implement it would no longer benefit from the EPA market access to Europe as from 1st January 2014.

The EC Market Access Regulation (MAR) 1528 of 1st January 2008 provides duty free quota free market access for African Caribbean and Pacific countries that have concluded an EPA. The Regulation requires countries to sign, ratify and implement the Agreement within a “reasonable period of time”. At it currently stands, the MAR is a temporary, unilateral instrument of the EU to ensure that, pending the implementation of the agreement by ACP countries, there would be no trade disruption.

A quick glance at it reveals the following facts: Only 18 island countries from the 36 ACP countries that had initialled or signed an arrangement have consumed the marriage. The other remaining countries are yet to complete the nuptial contract, with the risk of seeing their marriage cancelled…

The announcement of this proposal is no surprise: Trade Commissioner De Grucht and other representatives of the European Commission have constantly been warning that this situation was not sustainable and would therefore have to end at some point in time.

The Proposal should come into effect on 1 January 2014. It is worth mentioning that although MAR 1528 was adopted in 2007, prior to the entry into force of the Lisbon Treaty, it is nevertheless subject to the Ordinary Legislative Procedures5. The Proposal has now been submitted to the Council and to the European Parliament, who will both have to give their approval before the amendments to the Regulation enter into force.

The timing is also not surprising: 1st January 2014 is also the time when the new Generalised System of Preferences (GSP) Regulation should come into effect. It is also the date when the countries that have signed and ratified an EPA will have to start implementing their respective trade liberalisation commitments (remember some countries had a 5 year moratorium before starting liberalisation).

The message is therefore clear: if countries want to continue to benefit from EPA market access, either they have to sign and start implementing their existing EPA or conclude a new regional EPA. For others, either they will 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).

What does this imply?

This coming year will be a political litmus test for the relationship between the EU and its African and Pacific partners. If from a legal and a “coherence” perspective the Proposal of the EU is well understood, there are also good reasons why, four years down the road, since the MAR in 2008, nothing has happened. First, some compromise on many issues, including on the accompanying development measures, are yet to be agreed. Moreover, most countries are also engaged in building their regional integration agenda:  many are either consolidating their existing customs union or setting it up. And Europe is well placed to know that regional integration takes time. So while a deadline by 1st January 2014 might seem a reasonable time for the EU, it is in fact very short for the proper sequencing of regional agenda with trade negotiations with third countries. Finally, some might have simply lost interest in the process.

So, like in 2007, expect some tensions in the coming months: some countries might be pressured to sign, ratify and implement the EPA that might not fulfil their ambitions and interests in terms of content, timing and geographical configuration by fear of market disruption, in particular if they risk loosing preferential access to the EU.  Others might simply walk out. If no common position can be found at the regional level, the EPAs could seriously disrupt any regional integration effort.

But 2014 is not 2007. The world has changed and this time the response might be different. The financial crisis invited itself to the dance, Africa has gained a lot more confidence in its economic prospects and the increasing importance of “emerging” partners has brought in a new geopolitical dynamism, de facto reducing the leverage of the EU.

Finally, it takes two to tango. African and Pacific countries now have to reveal their strategies, interests and preferences regarding their relationship with the EU. It is a question of political will in many cases and for those interested in an EPA, it will require some effort to reach a compromise. At the same time, while one might understand the European logic to put an end to an instrument that has remained “temporary” for too long and is not compatible with rules of the WTO, there are still some “contentious issues” that remain unresolved. The EU has also to reveal its cards on how far it would be willing to accommodate some genuine concerns that are blocking the negotiations. Setting a deadline is therefore not sufficient, the EU should come up with concrete proposals on how to move the negotiations forward.

Just putting a deadline could open the way for a new impetus to the current negotiations towards the conclusion of regional EPAs. But it could well turn out to be a guillotine if no flexibility is provided to advance the negotiations.

Join the discussion in the run up to the ACP and EU decisions on the EC proposal and share your views on the following questions:

  1. Will this proposal lead to tensions? Will some countries be pressured to sign, ratify and implement the EPA that might not fulfil their ambitions and interests in terms of content, timing and geographical configuration by fear of market disruption, in particular if they risk loosing preferential access to the EU? Might others simply walk out? If no common position can be found at the regional level, could the EPAs seriously disrupt any regional integration effort?
  2. Is setting a deadline sufficient? Or should the EU come up with concrete proposals on how to move the negotiations forward? Will ACP countries reveal their strategies, interests and preferences regarding their relationship with the EU? Is there political will to reach a compromise solution?

ECDPM values your views on these questions.

Please send your input (anonymously if you prefer) to Melissa Julian, the editor of the Weekly Compass and Talking Points by email mj@ecdpm.org or phone her on +32 (0)47 328 11 65, or comment on our blog on http://www.ecdpm-talkingpoints.org/epa-negotiations-the-honeymoon-is-over/

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Isabelle Ramdoo is Policy Officer Economic and Trade Cooperation at ECDPM.

San Bilal, who co-authored this article, is the Head of Programme Economic and Trade Cooperation at ECDPM.

 

This blog post features the author’s personal view and does not represent the view of ECDPM.

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Comments

ECDPM Editorial Team

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2011-11-07 10:23:48

Posted on behalf of an anonymous reader: The EC would be playing its true role of helping in poverty reduction, integrating the economies of ACP States into the world market etc if it does some introspection now to find out where and why most of the countries negotiating the EPAs could not sign any agreement. What really went wrong? What happens to the regional integration process when individual countries are to be coerced to sign and ratify a full EPA? The stand being proposed by the EC is nothing but coercion or better still gunboat diplomacy if one wants to be blunt. It is like forcing a lame man you are fighting with to stand up when you know very well that he cannot stand on his feet. The whole concept needs some rethinking and not coercion. If only the ACP states would put their acts together and look elsewhere for credible trading partners, the EC would understand that life can still go on without EPAs.

sam

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2011-11-02 16:45:49

The amendments by the EU to regulation 1528 is not cast in stone, it can be redone to suit new circumstances that are justifiable.However, there is need to realize that this was a bridge to sustaining the Cotonou trade preferences at the end of 2007. Therefore, the need for ACP to come to the reality that it was not permanent provision. It was bound to change at some stage or end. The stage is here, what next for the ACP?? In principle ACP Configurations are free and open to exploring different approaches in the EPA negotiations and any work ahead. A number of them have emphasized that such approaches needed to remain consistent with the Cotonou agreement and mandate and not undermine the principles and practices which have served the ACP in the Cotonou; transparency, inclusiveness and the centrality of the ACP trade and development agenda. To fail to provide for development for the negotiating partners in various configurations has been the challenge to the negotiation process and the EC has been adamant that there are no additional resources apart EDF has stalled and will stall the processes unless the is room for flexibility by the EC. What the ACP needs now are concrete steps to generate trust in the ability of the ACP family to keep moving forward the agenda of concluding a WTO compatible agreement. To meet this credibility test, configurations have look beyond the so nicknamed 2014 deadline. They obviously are not there yet and they will need to keep working hard together to A PREFERRED destiny, it is their obligation, no one will work for them.

ECDPM Editorial Team

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2011-10-28 16:21:40

We corrected the paragraph Bernd Schneider is referring to and would like to thank for his comment.

ECDPM Editorial Team

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2011-10-27 09:57:00

At the ACP-EU Joint Parliamentary Assembly’s Economic Development, Finance and Trade Committee meeting in Brussels on 4 October, EC Directorate-General for Trade’s Director responsible for EPAs, Peter Thompson, presented the EC’s proposal. In response, the South African representative read out a statement on behalf of the Southern African Development Community (SADC) EPA group on the EC’s EPA and Generalised System of Preferences (GSP) review proposals recognizing their negative impact, particularly on some non-LDC ACP States. He also noted that these proposals were a way of “coercing regions to conclude an agreement which is not credible”. The statement underlines that the EC’s EPA proposal came as a surprise because the EC and the SADC EPA group made a joint statement to delay ratification and implementation of the SADC EPA until regional development friendly agreements are reached. The two proposals bring a lot of pressure which might undermine current negotiations - at a time when a renewed/positive momentum is observed - and compromise the credibility of the final agreement. The statement also says that EPAs are supposed to support the ongoing regional integration processes, but that the EC’s differentiated approach contained in the proposal will significantly undermine these efforts. The SADC statement reiterated the region’s commitment to EPA negotiations and to continue to work towards a balanced and mutually satisfactory outcome and reaffirmed at the same time the vital importance of addressing and resolving in a fair and balanced manner outstanding issues, which include MFN Clause, regional levies, standstill clause, export taxes, development cooperation and rules of origin. According to the Namibian representative there are several complex issues that still need to be resolved in the SADC-EC EPA negotiations in order to ensure the continuation of regional integration efforts. He added that the EC proposals may undermine the process made so far and the ability of the Namibian government to scrutinise the EPA. In his statement, the Namibian representative calls for European Parliament and Member States’ support to ensure ACP countries are not forced to sign an EPA for fear of losing market access even if such EPAs would not in all respect comply with their needs and requirements. In replying to the debate, Peter Thompson said the EC has shown flexibility in the EPA negotiations on issues such as market access, infant industry and export duties, but that there are limits to what the EC can offer. Stressing that the EPA market access regulation has been questioned in the WTO, he stated that this Regulation needs to be replaced by a legally sustainable trade regime in order to provide investor security. The EC thinks negotiations can be completed by 2014, “but this is not a deadline”. “EPA negotiations can go on ad infinitum” he added.

ECDPM Editorial Team

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2011-10-22 07:49:01

Thanks for your most important comment. This comes as a surprise, though, since in a study we did last year on the trade relevant provisions in the Treaty of Lisbon (www.ecdpm.org/dp98), many legal experts, including from the Council and the Commission, told us that the EP would have no formal role in amending the Annex I of the MAR. We explain it on page 9: A new regulation on market access for ACP countries should be decided under OLP procedures. However, the existing EU EPA market access 1528 Regulation itself stipulates certain rules for its amendments.15 In particular, the Council, acting by qualified majority upon a proposal from the Commission, has the authority to remove a region or state being granted market access from the Annex I of countries under certain circumstances. To the extent that this is considered to concern implementation issues currently attributed to the Council, the EP will not play any role in a decision to add or remove an ACP country/region from the Regulation Annex that lists the countries that have concluded an (interim) EPA and are committed to sign, ratify and implementing in a reasonable period of time and thus could benefit from the duty-free-quota-free market access to the EU under the EPA. This seemed to be a common understanding at the time. What is the reason for the change? Is it a political decision/agreement between EP and Council, or a new legal interpretation? On the process, and implications of the EP, I'll also be eager to hear your views.

ICTSD • MISE À JOUR SPÉCIALE : la Commission européenne renforce la pression sur la négociation des APE

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2011-10-18 15:49:02

[...] articles sur ce sujet peuvent être consultés sur le blog « Talking Point » d’ECDPM « EPA Negotiations: The honeymoon is over… »; dans Éclairage « Pris dans la tempête, les APE couleront-ils? » et « APE: Perdre ses amis ou [...]

ICTSD • SPECIAL UPDATE: European Commission puts renewed pressure on EPA negotiations

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2011-10-11 16:40:09

[...] articles can be found on  the ECDPM Talking Point Blog “EPA Negotiations: The honeymoon is over…”; in Trade Negotiations Insights “Riding out the storm: Will the EPAs sink?“; and [...]

Trade Negotiations Insights receiving comments on this Talking Points blog article

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2011-10-05 22:46:01

Trade Negotiations Insights, an ECDPM-ICTSD publication, has posted ECDPM's Talking Points blog article "EPA Negotiations: The honeymoon is over" and is receiving comments from readers. Check them out at: http://ictsd.org/i/news/tni/114645/

bagumhe

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2011-10-05 21:03:08

Thanks for reminding us that the MAR 1528 will be tabled to the parliament and it was adopted before the Lisbon treat. in my view there is two thing need to be considered here, that the question of setting deadline and forcing ACP to abide to your deadline in terms of committing their countries in a very sensitive issues to the health of their economy is not proper. if the development aspect will not be addressed it will mean that ACP will be net importer from EC. this will add more instability to the economies of ACP in terms of continuous falling of the their exchange rate that will impact to all macroeconomic variables.

Bernd Schneider

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2011-10-04 09:27:51

Comment on: "The proposal will come into effect on 1st January 2014, after approval by the Council. It is worth mentioning here that MAR 1528 in 2008, was adopted prior to the Lisbon Treaty, and therefore the Parliament will not have to give its assent to it. " This is not correct, fortunately. The file has arrived in Parliament for co-decision and will be distributed to a political group during the coordinators meeting on Tuesday 11th October. In general, when pre-Lisbon legislation is amended, this happens under Lisbon and follows the ordinary procedure, which also means that it is not about giving Parliament's assent, but about scrutinising every paragraph of the proposal and eventually changing it. I will advise GUE/NGL to reject the proposal alltogether and can only hope that other political groups will receive similar advice.

bagumhe

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2011-10-04 08:25:55

Yes the European Union have decried that the honeymoon is over, but they have no know that signing a trade agreement is upon each country wishes and on how they see it fit for their development. if the agreement does not include development packages. then the so called duty free, quota free market access is nothing to ACP countries

Harvey Purse

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2011-10-04 03:51:25

Complete self interest - you should have pointed out that you have a very persoanl reason for this attitude which is that you are the representative for European bussiness interests that have built their fortunes on exploitation of the ACP countries. Shame on you. We need to fight and create genuine and real change not adjuts ot unjust and unfair changes that entrecnh the rich and devalue the poor. "going the way of the dinosaurs" is what the so called new policies of the EU garauntee.

Errol Humphrey

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2011-10-03 23:04:19

David Lewis' right wing bias might be showing. I don't forsee an American style 'Tea Party' emerging in the EU within the next 1-2 or even 10-15 years with comparable influence to the movement in the US. The social contract between the government and the governed is very different in Europe from that which exists in the US. With respect to David Lewis' principal point, it might be popular with right wing ideologues in the US to ignore the less privileged in developing countries around the world, but one might ask whether it is less costly to wage war on those in developing countries or is it better to provide development support along with constructive engagement. When I consider the cost of armed conflict, not only financial cost, but more importantly, the human cost, I have no hesitation in opting for well-calibrated development support. I can ageee with David Lewis when he expresses doubts about those developing country leaders, who waste their countries' resources. However, there are many developing countries in which such waste is an aberration rather than the norm. Furthermore, cuddling the leaders of failed or failing states, while punishing their general populations, is a recipe for future conflict. Those who do not care about the poor are likely to regret their lack of humanity.

Sunil Bodhoo

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2011-10-03 11:43:24

It`s a wake up call may be for those who thought that the honeymoon will last forever. The EPA negotiations were launched in sept 2002 at the ACP level and in 2004 at the regional level.After so many years one can only conclude that few countries in the different configurations are really interested to conclude a new generation of Agreement that might initiate a process of economic reform which is badly needed in so many African and Pacific countries. Those who are really interested are unfortunaltely bound by decisions taken at regional levels where in most cases there is a tacit opposition to EPAs , especially coming from LDCs who have an alternative in the EBA. The deadline therefore may help untangle a complicated situation by clearly delineating those who are interested to concluding within the next two years a comprehensive Agreement with the EU and those who are not. It will be for each individual country to make a choice . I understand that the Commision is prepared to conclude an Agreement with those willing to do so. Those who are not interested do have alternatives in the EBA and the GSP. Notwithstanding the above, I fully subscribe to the point that the Commission should display more flexibility in the talks. The LDC`s should not be forced to take a level of commitment they are not prepared to take because of a unilateral interpretation of certain WTO rules by the EC. In addition the EC should be more forthcoming on the issue of additional resources to address adjustment costs. This one has been on the table since day one and it is quite unfortunate to note that the EC has not changed its position . Some positive signal on this score will help unravel the stalemate.

sam

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2011-10-03 11:39:22

The delay on concluding EPAs cannot and will not be resolved through the EC deadlines,in any case they have shown a lot of laxity in responding to proposed texts by other parties only to come up with new proposals.Ingenuity has prevailed in some of the configurations and the main culprit is the EC whose trade negotiation tactics are working well to their advantage but not for the mutual benefit.If it is give and take policy then things may move, but a hard stand will continue to stall the process and 2014 is around the corner whereas new avenues are arising along the Indian Ocean Rim Region for configurations closer to the area may choose to use in the long run

Melissa Julian for Dr. David E. Lewis

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2011-10-01 07:39:22

Posted on behalf of Dr. David E. Lewis, Vice President, Manchester Trade Ltd. International Business Advisors: About time and bound to happen sooner than later.... EU and US and other "developed world" taxpayers need their monies to support their own populations... many of which come from EPA partner countries too! Why do they need to continue this subsidy of "developing countries" when even those countries do no good with their own monies and growth earnings from boom in commodities, China business, etc.???? Charity begins at home nuh?!?! And does anybody in their right mind truly believe than any EU decision-maker is losing sleep over ACP countries not ratifying/implementing EPA by the deadline imposed? They will just move on... with their new EPA dance partners in Central and South America!!!! Careful what you wish for, EU 'tea party' is just 1-2 years away from becoming a major force in many EU countries... the entire Lome era balance of power/forces in Europe has changed completely and will never revert to what it was... Caribbean, Africa and Pacific agenda in EU is nothing of importance compared to the heyday 1980s... we ALL need to adjust to the changes or go the way of the dinosaurs... :(

Economic Transformation and TradeRegional IntegrationTrade Policy and Economic Partnership AgreementsEconomic Partnership Agreements (EPAs)