Ten myths about Economic Partnership Agreements (EPAs)
Myth No.1: The December 2007 deadline is not real
The EU can, and should, roll over the Cotonou agreement until all African, Caribbean and Pacific countries (ACPs) are ready to sign. This deadline is fixed. The Cotonou agreement, which calls for EPAs to replace the current preferential regime, was signed by the African, Caribbean and Pacific (ACP) countries and the EU in June 2000. The Cotonou agreement has been deemed incompatible by World Trade Organisation (WTO) rules, and the year-end deadline is long-standing. Many WTO members, mostly other developing countries, such as Costa Rica, Indonesia, Ecuador, Uruguay, Malaysia, Thailand and Brazil, would challenge any extension of a waiver or continuation of an illegal trade regime and have signalled repeatedly that they are discriminated against by the Cotonou preferences.
Myth No.2: The WTO waiver can be extended
A waiver would need the consent of all 150 WTO members. As it is, many developing and poor countries see the Cotonou preferences as discriminatory, stifling their ability to trade with the EU. They were promised these preferences would end in 2008. A waiver would probably be impossible to agree.
Myth No.3: The duty- and quota-free offer does not improve market access for the ACPs
This is not so. Although the Cotonou Agreement is very generous to ACP countries, it still retains a number of important restrictions on ACP exports through tariff quotas on a range of products of importance to the ACP. These limit the ACP’s ability to supply more to the EU. This is, for example, true for growers of bananas, sugar, a range of fruits, vegetables and beef. For the Southern African Development Community (SADC) region, the EPA they have signed will lead to instant and important improvements in access for their grapes, beef, oranges, cereal products, and a range of fruits and vegetables.
Studies commissioned by DFID show that the EU offer will allow the ACP to
export a wider range of items to the EU market. In addition to the immediate
gains, this could provide much broader benefits. It could for example lead to
increased investment in the ACP by enterprises wanting to take advantage of the
improved access to the EU, as we have seen in the sugar industry.
We have also fought hard for improved rules of origin on, for example, textiles
and fish. This is particularly important for Pacific countries, given their
reliance on exports of fish products to the EU. The relaxation allows for fish
caught anywhere to be processed in their factories and sold to the EU.
Myth No.4: EU exports, especially in agriculture, will flood ACP markets and destroy local capacity
Nobody has asked the ACP to open their markets completely from day one. EPAs involve gradual liberalisation for periods up to 25 years. They also allow for up to 20% of sectors to be excluded from any liberalisation, so certain sensitive products will always be protected. EPAs further allow for the application of safeguards (short term measures) on EU goods when they cause injury to their local industries. Increased imports can also lead to cheaper products and inputs and more variety for both consumers and producers. Access to cheap food products in poor countries can also play a role from a health perspective, enabling more nourishing and nutritious foods at affordable prices.
Myth No.5: EPAs will result in job losses, government revenue losses and cuts in ACP public services
This is a real concern and one we recognise is important to many ACP countries. This is why we have continuously argued for a phased tariff liberalisation, consistent with countries' own national development plans. The EC is offering ACP countries exactly this and is now allowing up to 25 years to open markets for very sensitive goods, with the option of excluding some products from liberalisation altogether. The ACP can choose what to liberalise and how quickly within the flexible parameter of WTO rules.
Myth No.6: GSP+ offers a viable alternative
Generalised System of Preferences (GSP) is an EU system of generalised preferences available to all developing countries. GSP+ is an enhanced system of generalised preferences. To qualify for these, recipient countries must have ratified and effectively implemented 27 good governance and economic conventions. Non-governmental organisations (NGOs) have proposed GSP+ as a good temporary measure from January 1st 2008 until EPAs are concluded. However, most ACP countries have not ratified and implemented the 27 conventions. Also, GSP+ does not offer as good market access or as good rules of origin as an EPA or Cotonou, and GSP+ provides no provision for regional integration, which is a key development objective of EPAs.
Myth No.7: ACPs will need support to benefit from EPAs - We see no new money around
In 2005, EU partners pledged to achieve an annual aid for trade spend of €2bn by 2010. ACPs will receive some 50% of the increase in aid for trade funds.
EC: Aid for trade is not conditional on EPAs, but it has been agreed that aid
provisions should be included in EPAs. EC’s 10th European Development Fund (EDF)
offers an opportunity to synchronise trade policy decisions taken in the EPAs
and programming of new money. The regional envelope amounts to €1.7 bn for all
regions. Initial programme plans indicate a strong focus on aid for trade and
infrastructure.
Member States (MS): As negotiations on most interim EPAs are nearing completion,
MS have begun sharing information about existing commitments and identifying
further opportunities. The WTO Global Review on aid for trade has provided
important information about country needs and set in motion a process for
assessing needs and implementing aid for trade commitments, and will report
annually. We are also developing our own aid for trade strategy, looking at
needs and identifying the best channels for assistance. These discussions will
continue into 2008.
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Myth No.8: Many EU member states want Singapore issues in EPAs - the UK position is unclear
Singapore issues refer to trade-related rules in investment, competition,
procurement and trade facilitation. We have always maintained that the ACPs
should choose whether they wish to negotiate on these elements. Some regions
wish to cover services and investment as they believe this will bring
development benefits. The Caribbean has made clear they wish to negotiate a
comprehensive EPA, including goods and services, plus other trade-related areas.
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Myth No.9: EPAs are breaking up regional markets and eroding regional integration
A main aim of EPAs is to create markets among and within the ACP groupings
rather than just with the EU. The Commission-led Sustainability Impact
Assessment of EPAs concludes that "since the domestic markets in ACP countries
are, on their own, relatively small and in many instances internationally
uncompetitive, the current regional integration initiatives in the ACP regions
are a key component in the development of more integrated and competitive
markets."
Many regions have already embarked on a process of regional integration and EPAs
will support this. For example, the East African Community (EAC) established a
Customs Union on 1st January 2005 that cut duties on most exports within the
region. This has set the stage for the current fast tracking of the regional
integration process, and boosted economic growth among members (Uganda, Kenya,
Tanzania, Burundi and Rwanda) in recent years. East Africans now enjoy the
benefits of the convertibility of currencies; and eased cross-border movement of
people, goods and services within the region. The IMF expects growth in the EAC
to reach 7% in 2007 and 2008 thanks to better economic management and fiscal
reforms; this is above the average for all of sub-Saharan Africa.
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Myth No.10: The UK has abandoned its position paper of March 2005
This is not the case. The Position Paper made clear that we considered EPAs to have the potential to deliver developmental benefits for the ACP and set out a number of key challenges for the European Commission – including on duty- and quota-free access with improved rules of origin; flexibility over ACP market opening; non-inclusion of non-goods issues unless specifically requested; and that development assistance should be available to support building capacity needed to benefit from the liberalised trade environment. Rather than move from our position over the last two and a half years, we have seen the Commission and other EU Member States move towards it:
- The EU offer now includes duty and quota free access to the EU market, with improved rules of origin.
- We have secured significant flexibility for the ACP's own market opening. First, they will be able to exclude up to 20% of sectors. They also have considerable flexibility for the remaining 80%: they can liberalise up to 25 years for very sensitive sectors; they will recourse to a safeguard mechanism to prevent any surges of EU exports; they will have an infant industry facility so that in the future they can nurture fledgling sectors with the help of some tariff protection.
- The Commission has, albeit late in the day, abandoned requests to negotiate non-goods issues, focusing on those parts necessary to achieve WTO compatibility.
- In addition to the increased EDF resources available, ACP countries will see a significant share of the Commission and member state's commitments to $2 billion Aid for Trade coming their way. These funds will target the adjustment needs of ACPs, plus assist with diversification and supporting productive sectors.
Links
Below is a range of material on EPAs including UK Government policy and DFID-supported research projects:
- European Union adopts Economic Partnership Agreement regulation (11 December 2007)
- Statement from Trade and Development Minister Gareth Thomas on Economic Partnership Agreements (26 September 2007)
Consensus on Economic Partnership Agreements between EU and ACP Countries (14 March 2007)
- Written ministerial statement - Economic Partnership Agreements between the European Union and African, Caribbean and Pacific countries
(12 kb) (16 February 2006)
- A rough guide to Economic Partnership Agreements (EPAs): Questions and answers
- UK policy on EPAs
- Institute of Development Studies (IDS) - press release
- European Union (EU) - African, Caribbean and Pacific Countries (ACP) EPAs: The effects of reciprocity
- Preparing for EPAs
- Generalised System of Preferences (GSP)
Last updated 11 December 2007
