Global Financial and Economic Crisis: Analysis of and Implications for ACP-EU Economic Partnership Agreements (EPAs)
Study prepared for the German Federal Ministry for Economic Cooperation and Development (BMZ).
The financial crisis, though having its origin in developed countries, has generated a global recession that has severe consequences for developing countries, including in Africa, in terms of their prospects for economic growth and development, notably through a decline of trade and investment flows, lower remittances, some lower commodity prices with a greater volatility, which appears to already lead to a reduction of employment opportunities and an increase in poverty and malnutrition for the most vulnerable people. In this context, it becomes more urgent for African countries to unleash the potentials that regional integration processes can play to stimulate development. The creation of effective regional markets, encompassing not only institutional arrangements but also physical integration, policy coordination and the pooling of resources, can be decisive to stimulate production capacities, trade and investment flows, when integrated in a broader development strategy that does not rely on an obsolete and rigid economic orthodoxy.
The timely conclusion of economic partnership agreements (EPAs) between the European Union (EU) and some African regional groupings of the African, Caribbean and Pacific (ACP) Group must be able to contribute to such regional objectives. To do so, the content and scope of the EPAs should reflect the specific national and regional interests of countries concerned, and should not impose undue retrained on the need for these countries to pursue pro-active and counter-cyclical development policies. While some countries and regions may favour an ambitious agenda in their EPA, others may prefer a more limited and gradual approach. However, in spite of the potential merits of regional integration and EPAs in the medium and long term, they offer little prospects to address the immediate consequences of the crisis. In the short run, special attention should thus be given to the scope of commitments and their sequencing, to reflect the specific current conditions and development approaches of each country and region. Without such flexibility, EPAs may add to the pain of the crisis. The current crisis also calls for special effort to adequately address the short and medium terms adjustment needs of African ACP countries and regions; this is a necessary pre-condition for many African countries to conclude an EPA and to be able to effectively engage in the necessary reforms that can bring longer term development.