ACP-EU: Analysis, conclusions on EPA talks
- Posted on Wednesday 22 August 2007 - 17:42New type of co-operation between EU and the African countries within the framework of the Economic Partnership Agreements (EPAs) – analysis and conclusions concerning the negotiations.
Compatibility with the multilateral trade rules
EU and the African, Caribbean and Pacific Group of States are currently at the end of the Economic Partnership Agreements negotiations. EPAs are going to replace up to now non-reciprocal trade preferences which tie the European Union with ACP. The negotiations started in September 2002, till the end of that year there had been taken general talks, trainings and seminaries.
Regional level negotiations started in 2003 and in 2004 all the 6 regions (4 of which are in Africa), selected from ACP Group of States, took part in them. The new trade agreement will enter into force on 1st of January 2008 (that’s the assumption), until that time the Article 36 of Cotonou Agreement maintains non-reciprocal trade preferences which were set up by IV Lomé Convention. Present trade regulations between EU and the African countries are incompatible with the World Trade Organization (WTO) rules, which exclude the possibility of non-reciprocal trade preferences.
In connection with the particularly difficult situation of Least Developed Countries, WTO decided to make the concessions and allowed rules, set up by the EU – ACP conventions, to function till the end of 2007. That is why the deadline for creating the new instruments is 1st of January 2008. If until that time the new framework is not established, the WTO protection will expire and European Union will be forced to withdraw a great part of its trade preferences, presently remaining in terms to the African countries.
Simultaneously, there has been taken an assumption that the negotiations should be run in a flexible way with the period of transition and the range of products, and with taking into account the level of sensitivity in particular sectors and the level of asymmetry in the duties reduction process. It’s also important to stress that, on the current level of the negotiations, the ACP countries guaranteed themselves the possibility to obtain the additional period of transition in order to put off the complete trade liberalisation.
Non-standard free-trade negotiations
The Economic Partnership Agreements establishes the new approach to trade preferences. They are not the conventional free-trade negotiations, they are the instruments of development – they provide more deep, than up to now trade regime, trade liberalisation based on the WTO rules.
The European Communities (EC) suggested that the trade barriers reduction should be characterised by more wide openness of the Common Market for the ACP commodities with taking into special consideration the rules of origin. EC brought to an attention the necessity to run the negotiations in the consent with EU acquis and with the respect to the economic development of the ACP countries.
EU should also take into account the influence of liberalised (on both sides) means of trade on the social-economic situation and the possibility of the African economies adaptation to the process of trade liberalisation. The Economic Partnership Agreement also provides some non-trade issues, which are: to guarantee a national treatment based on the correlation between ACP Group of States and the European Communities, and afterwards to render the services liberalisation.
The new agreements emphasize the necessity of following the General Agreement on Trade in Services (GATS) rules, having in mind the need of special and differential treatment for businessmen from ACP on the EC market. Trade in services is becoming more and more important economic sector in present days (if not the most important). Additionally, it was proved that in most sectors connected with the services, the ACP countries have relative supremacy in a relation to the merchandise sector.
Therefore, services are potentially important source of economic growth for the African countries. Simultaneously, services sector has more and more influence on trade in commodities and is a key determinant of country competition. It should be stressed here that the European Union will fully open its market on the African export (will lift duties and quotas) – periods of transition will be remained only for rice and sugar – without asking the African states to open their markets from 1st of January or any time soon.
EPAs will be built on the regional integration initiatives in the ACP states, which progressively will lead to an establishment of a free trade area with EU. After official enter into force of the new agreements, it will start a 12 year period of preparation to full trade liberalisation between two sides (EU and the ACP regions).
Partnership
Partnership is one of the fundamental assumptions on which EPAs negotiations were based. It meas that both sides have in terms to each other some commitments which are connected with some sacrifices. European Union Commissioner for External Trade – Peter Mandelson – stressed that if we want EPAs to become reality, if we want to modernise and increase development effectiveness and if we want to build better “trade policy technology”, we have to create common and based on partnership principle co-operation between the EU and ACP regions.
The European Union will deal with main trade barriers and employee flow in EU – ACP relations. ACP states will implement equivalent policies, increase productivity and reduce transaction costs. Both side will concentrate not only on market access for goods, but will also focus on important global problems, like for example: services, intellectual poverty, rules of competition, sanitary and fito-sanitary measures, working standards and environment.
It was stressed in partnership that systems of institutions and economies of ACP countries need to be strengthened trough a development of democracy, private property and private sector which will be able to stand competition on EU internal market. It is equally important to bring African governments practices closer to international standards. Management of African countries should be compatible with universal rules and economic. Only by trying to achieve above goals it will be possible to create attractive for business environment – reliable rules for investors and transparent law for consumers.
Regional integration
Key elements of the EPAs conception, without which a potential advantage of the trade liberalisation won’t be fully achieved and without which to direct EPAs to all areas connected with trade would be considerably more difficult, are: to strengthen regional integration structures in ACP countries and to eliminate factors causing markets segmentation. EU examines the matter that real advantages for ACP regions are not based on markets openness but on their strength.
The Development means building strong regional economies, based on increasing investments and trade exchange. Regional integration processes are instruments of building strong markets, which are currently rare among small and sensitive economies of the African countries. Only stable and open markets will be attractive for the private investments, which hopefully will go out beyond a raw materials sector.
EPAs will bring Europe’ s support (for The African Union and The New Partnership for Africa’s Development – NEPAD) which will show private sector that regional African markets are “attractive and legal reality”.
Financial support
Process of integration and trade support will be accompanied by an ascending financial support. The Economic Partnership Agreements will work in connection with development assistance and Trade Related Technical Assistance. Which mean that EU will increase its development support for building infrastructure (which is one of the basic trade productivity timbers) and for the EPAs regional funds for enterprise the development. In accordance with assurance about 23 milliard Euro financial support from the European Development Fund and the European Union commitment to increase Aid for Trade we don’t have to worry that EPAs will fall by reason of lack of the financial instruments.
Why should EU and Africa introduce any changes in their relations?
Important actors on the international sage try, by different means, to lead to the politic and economic stabilisation in Africa. One of these means, being used by EU, is to introduce specified rules in reciprocal trade relations. These rules state to respect the law and human rights, and to introduce the WTO and the free-trade economy principles.
All of them are the fundaments of the presently being negotiated Economic Partnership Agreements. Its important that after 30 years of the preferential access to the European Community market, export from Africa to the EU Member States is limited to a few basic commodities. Most of them is being sold in lower prices than 20 years ago and they engage a small part of the EU market.
The trade preferences are having only a little influence on the African economics diversification on high-value products. Currently, the African continent account for less than 2% of the world’s foreign direct investments. The economic relations, which lasts since 50 years, based on preferences and trade in commodities, have failed – didn’t contribute to the sustainable development. Therefore, the UE decided to change the strategy from usual trade preferences to a close co-operation with 6 ACP regions.
EPAs aim to create new possibilities for business by building bigger and more dynamic regional markets. It is the fact that the ACP economies are to small to individually and meaningfully influence the development of its countries. Its also important that than African, Caribbean and Pacific states carry on a bigger trade exchange with the European Union the with their neighbours.
Most of their economies depend on the export to EU. For example, 49% of Ghana’s export goes to the Union and to the neighbouring Benin only 2,6%. The real integration and the elimination of neighbouring countries barriers will increase trade exchange between them and will have positive influence on their economic growth.
The regional integration will create bigger markets, which will become more attractive to the investors and will facilitate trade with Land-Locked Countries. In spite of all charges put against the new agreements, EPAs represent a perspective approach, extremely different to the Asian states politic towards Africa.
The Economic Partnership Agreements aim to have the influence on the poverty problem solution, not through a temporary financing the African governments policies in exchange for the raw materials, but through forming, based on the partnership, rules of co-operation, which, in longer perspective and with the appropriate monitoring, will have a strong influence on the Intra-African integration and will increase, based on the international rules, trade exchange between the European Union and Africa, and between particular African countries. It will make possible to bring Less Developed Countries into a principal stream of the global economy which, in the further perspective, will enable them to the more self-contained functioning.
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- Posted on Thursday 04 October 2007 18:01Interessting Article!
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