Eye on trade: The choice is yours – EU Trade Commissioner to ACP countries
Brussels, 2 December 2013/ ACP/ PCBE: As the world eyes the 9th ministerial meeting of the World Trade Organisation in Bali from 3 to 6 December, the European Union and the ACP Group of States continue to struggle with their own trade dilemmas, mainly in the form of the long-drawn-out negotiations on the Economic Partnership Agreements (EPAs).
In the most recent ACP-EU joint trade meeting between ACP Ministers and EU Trade Commissioner Karel De Gucht in October, it was made clear: the EPA conditions are the best the EU will offer, take it or leave it.
In fact, the deadline of 1stOctober 2014 is now effectively final for all negotiating ACP regions, to close the decade-long talks and commit to EPA ratification, or lose the current preferential access to EU markets which they now enjoy. Individual countries could go it alone, but this would hurt regional integration.
“Don’t be so defensive. In this world, you need to be offensive. There’s a lot of opportunities, and we will be there to help you,” Commissioner De Gucht told a room full of doubtful ACP trade ministers and officials at the annual ACP-EU Joint Ministerial Trade Committee (JMTC) meeting.
The history of the EPA talks is long and complex. In general, they came about in trying to align the ACP-EU trade setup to WTO rules, aiming to liberalise trade between ACP and EU countries over a period of time. Talks began in the early 2000’s. To be fair, it was expected that the Doha Development Round would conclude in 2005 and boost the development dimension of the EPA process. As well all know, this was not the case.
“The ACP Group asserts that EPAs must prove to be instruments for development, assist to build ACP competitiveness, foster regional integration, address supply side and trade related infrastructure constraints, in order to build export capacity and improve trade with the EU. That is why the ACP States set out to negotiate these EPAs in the first place,” explained Alva Baptiste, Minister for External Affairs and International Trade of St Lucia, who co-chaired the JMTC meeting.
In essence, ACP countries want a deal with the EU, but as developing countries are wary of opening up their markets to a much more powerful partner – albeit one that gives about €4 billion in aid to 78 of its members each year.
It also means getting rid of customs duties and tariffs, a key source of income for some ACP states. The ACP includes 40 of the world’s 49 Least Developed Countries, 36 Small Island Developing States, and 15 Landlocked Developing Countries as members.
So far, out of the seven regional groupings negotiating EPAs – five in Africa plus the Caribbean and Pacific groups – only the Caribbean has signed and concluded a comprehensive regional agreement. The rest remains a mixed bag of progress.
Still, De Gucht says the EPAs are the “most generous” deal the EU has given to any set of countries: non-reciprocal duty free quota free access to lucrative EU markets for about 15 years while ACP countries reform their economies and gradually open up at least 80% of their own markets to the EU.
In fact, some ACP countries have initialled or signed interim EPA agreements, with the understanding that this would safeguard their duty free quota free access while they continued to negotiate a final agreement.
But the pressure is on now to ratify what they signed and begin implementation. If countries don’t ratify by 1 October 2014, they will begin paying full or partial tariffs on their imports to the EU. Leeway is given for LDCs, which may still have privileged access under the Everything But Arms agreement.
The devil in the detail
“It’s not a simple matter. Both ACP and EU sides have to be patient and persistent because the ramifications of such a trade agreement is far reaching. We all have good intentions but you have to tread carefully. The decision to press a deadline will take us backwards,” said Dorcas Makgato-Malesu, Minister of Trade and Industry for Botswana.
The technical issues involved in EPAs are knotty. The European NGO coalition CONCORD asserts that “ratifying [interim] EPAs means accepting the standstill clause, the most favoured nation (MFN) clause, the ban on export tariffs and quantitative restrictions, the weak safeguards, the EU’s interpretation of GATT Article XXIV, and EU’s agriculture (export-) subsidies.”
What’s more, while duty free quota free access to Europe is a terrific opportunity, taking advantage of it is another story. Local ACP producers face serious barriers such as strict product standards that can be difficult or costly to meet and “rules of origin” that require a product to have mostly local components in order to enter the EU duty free.
Meanwhile, the ACP Group has pleaded for flexibility on the degree of liberalisation and the types of goods covered – West Africa for instance asked for a 75% open trade rather than 80% – but were turned down.
The lack of trade-related infrastructure, technology and know-how remains a hindrance to growth.
Without additional support to address these issues, ACP countries cannot fully make use of the privileged market access under EPAs. As one expert on the issue put it: “It’s like being awarded a visa to enter a country, but finding you cannot even afford the plane ticket to get there.”
The EU has made its decision and will stick to it. As the biggest trading bloc in the world, it continues to make prolific trade deals with a host of other nations in Asia and Latin America, whether the ACP keeps up or not. A request is on the table for a high level meeting between political heads of the EU and ACP Group to resolve areas of conflict and review support for ACPs in the liberalisation process. It is yet to happen.
As it stands there could be potential for growth in the EPAs, but the ACP’s is in a dilemma of whether the cost of getting into an EPA is worth the benefits.
– By Josephine Latu-Sanft/ ACP Press
*An earlier version of this article was first published in the Press Club Brussels-EU magazine.