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Problems faced in Pacific EPA negotiations despite Commissioner’s upbeat assessment

10 November 2013

At the ACP–EU joint Ministerial Trade Committee on 11 October 2013, EU Trade Commissioner Karel De Gucht maintained that the EPA negotiations in the Pacific were “following a regular pace, with clear commitment on both sides to forge an agreement.” It was acknowledged, however, that technical meetings had “revealed large differences, especially on fisheries”.

These differences appeared so large that on 14 October, 3 days after the Commissioner’s address to the Committee in Brussels, EC officials informed the lead negotiator for the Pacific countries that “since Papua New Guinea would not be participating in the comprehensive EPA negotiations, the EU could not proceed [and suspended] the negotiations indefinitely”. A press article from the region reported that “according to the EU, a fundamental principle for the EPA was that signatories to the Interim EPA… must be part of the comprehensive EPA.” Officials are reported as saying that Papua New Guinea (PNG) “has indicated it won’t join the rest of its Pacific neighbours in the move to negotiate for a comprehensive EPA with the EU.”

According to the press article, the government of PNG appears to prefer to stick to the current Interim EPA agreement (which it has signed, ratified and implemented) rather than risk any erosion of the global sourcing provisions for fisheries products agreed under that Interim EPA, as a result of which PNG has experienced a major increase in local investment and employment creation in the tuna canning sector.

The EU Trade Commissioner noted that the agreement with PNG has already led to “major investments in the fisheries sector coming on stream”, with “the creation – directly or indirectly – of around 30,000 new jobs, mainly for women and locals”.

The EC’s move to suspend the EPA negotiations on the basis of PNG’s non participation in the process led to the cancellation of the Pacific Ministerial-level meeting with the EC.

The developments in Brussels may well explain why, in opening the 13th ACP Ministerial Meeting on Sugar, the Fijian Prime Minister and Minister of Sugar expressed concerns over the possible “premature end of market access” for sugar as a result of the EC proposal to suspend the application of Market Access Regulation (MAR) 1528 from 1 October 2014. He described any such move as “disastrous” for the Fijian sugar sector.

However, it should be recalled that in addressing ACP Trade Ministers in Brussels on 11 October, Commissioner De Gucht made it clear that if Interim EPAs were ratified and implemented, then existing market access benefits would continue. Separate from this, ongoing comprehensive EPA negotiations could then “continue as long as they have the prospect to bear fruit”.

Pacific Trade and Fisheries Ministers are scheduled to meet towards the end of 2013 “to reflect on this latest development and where to go from here on the EPA”.

Current developments need to be seen against the background of growing concerns in the Pacific over the long-term value of a trade deal with the EU, given the processes of preference erosion under way and the market consequences of the scheduled removal of EU sugar production quotas from 1 October 2017. According to Fiji’s Trade Minister, “this means that in the long term, the Economic Partnership Agreement will have limited market access benefits.”

Editorial comment

While fisheries issues have long been a source of tension in the Pacific–EU EPA, in the agricultural sector the suspension of negotiations would mainly affect Fiji if it failed to move ahead with ratifying and implementing its bilateral Interim EPA.

In the context of an indefinite suspension of the comprehensive EPA negotiations with the Pacific, unilateral action by the government of Fiji to ratify and implement its initialled Interim EPA appears the only way of maintaining current terms of access to the EU market. Commissioner De Gucht has quite explicitly stated that “there will be no new bridging measure” to extend the provisions of MAR 1528/2007.

This potentially raises questions over the impact of such reciprocal bilateral trade arrangements on other Pacific ACP countries, in the context of regional trade integration initiatives. Given that the EU is not a major source of food and agricultural imports to Pacific ACP countries, the direct effects may be limited. However, if Australia and New Zealand were to use the concessions granted to the EU under the bilateral agreements with Fiji and PNG as the benchmark for tariff negotiations in the PACER-Plus agreement (an intention which has openly been announced), this could carry more important implications for Pacific ACP agro-food sectors, given the intensity of the trade relationship with Australia and New Zealand.

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