An analysis of the EPA process published by ECDPM in its August’s GREAT Insights has highlighted the gap between EU aspirations and ACP expectations throughout the EPA negotiations process. The article maintains that while the EC was ‘ambitious’ in seeking ‘comprehensive deep integration’ FTAs, covering trade in goods, investment liberalisation and ‘disciplines for competition, government procurement, trade facilitation, intellectual property rights and data protection’, ACP governments hoped for ‘agreements that would offer a flexible fix for the WTO compatibility issue and that would otherwise concentrate on strengthening their productive capacities, their infrastructure, institutions and regional integration efforts’.
The analysis notes that ‘the EU’s comprehensive deep integration concept went well beyond what was foreseen by the Cotonou Agreement or what was required by the WTO.’ However, it required no policy changes on the part of the EU, based as it was on ‘existing EU practices and regulatory approaches’. It notes that the EC sought to get others to ‘sign up to the EU’s regulatory approach’, since this would be ‘a great advantage for the EU, in particular in the WTO’.
In contrast, the analysis points out that for ACP governments, ‘everything in the EU’s EPA would require huge reforms: administrative, legal and constitutional.’ It further notes that ‘for many issues that the EU wanted to address in the EPAs, ACP countries had not yet designed domestic policies, let alone regional schemes or international plans.’ As a consequence, ‘the EU’s EPA concept… was much more than a trade agreement; it was a huge economic reform programme.’
In terms of the development implications of the EC’s approach, the analysis notes the findings of a study commissioned by DG Development suggesting that ‘the development outcome of trade liberalisation cannot be taken for granted: trade liberalisation can improve but also harm economic development and poverty reduction.’ The study, quoted in an EC staff working document, also notes that ‘the countries that have benefited the most are those that have carried out selective and gradual liberalisation and have continued to provide state support to a number of key economic sectors.’(source 3 of the ECDPM article)
The ECDPM article highlights the many preconditions for liberalisation that need to be met if poverty-focused development is to be delivered, and raises the question of whether such extensive economic reform programmes as those implicitly required under the EPA process can be ‘elaborated in the context of trade negotiations’.
The analysis suggests that trade negotiations are an inappropriate forum for the elaboration of major reform efforts required of ACP governments, since these need to be firmly rooted in national and regional development strategies, endorsed and owned by the concerned stakeholders.
Reviewing the current status of the negotiations, the analysis suggests that bilaterally concluded interim EPAs have sown divisions in regional groupings seeking to establish common customs arrangements.
Finally, the analysis observes that major changes have taken place in the global and EU economies since EPAs were first conceived in the mid 1990s. It argues that ‘preferential market access to the EU has been eroded by reforms (CAP reform, abolition of commodity protocols, more stringent sanitary standards) and EU bilateral trade agreements.’ As a consequence, it is maintained, ‘for many ACP countries, the current cost of losing EU preferential tariffs is far less than the revenue lost when eliminating their own tariffs on EU imports.’
While the gap between EU aspirations and ACP expectations is probably greatest in the area of trade in services and trade-related areas, it is also apparent in food and agricultural sector trade relations.
On the ACP side, the much-heralded granting of full duty-free, quota-free access to the EU market has been overshadowed by:
- the effects of CAP reforms (most notably through the price reductions in the sugar and rice sectors);
- the stricter application of SPS and food safety standards (most notably in the horticulture and beef sectors);
- global market developments (e.g. in the sugar sector, where, for 18 months, average world market prices were higher than EU market prices).
In addition, ongoing ACP concerns over the external effects of the deployment of reformed CAP instruments and the process of preference erosion, arising from broader EU trade policy initiatives, have largely remained unaddressed within EPA negotiations processes.
On the EU side, the aspirations of food product exporters with regard to the systematic elimination of non-tariff barriers to trade, through the implementation of interim EPA provisions on the removal of import licences and similar measures, have largely remained unfulfilled, as these provisions remain a major issue of contention in a number of EPA negotiation processes (see Agritrade article ‘Challenges facing the EU flour milling sector’, forthcoming, 2012).
It is unclear whether within the current processes of EPA negotiations sufficient common ground can be found to bridge the gap in aspirations and expectations on food and agriculture sector-related issues.