A review by the European Centre for International Political Economy (ECIPE) of what it calls “mega-regional” FTAs argues that ACP states will have to adapt to the regulatory harmonisation that will arise from the conclusion of transatlantic and trans-Pacific trade agreements. The current negotiating agendas of the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP) are reviewed, as are the conclusions of impact assessments and possible consequences for ACP countries.
While acknowledging that the results of the negotiations are impossible to predict accurately, given the domestic sensitivity of many of the areas to be discussed, the analysis argues that there could be “measurable progress in reforming some of the most intractable… [problems affecting] a limited number of commodities… including rice, dairy, sugar and cotton”.
Although the ACP group is not party to either set of negotiations, ACP member states will be affected whatever the outcome. The report sketches the potential impact under three scenarios:
- full success in the two mega-regional FTAs;
- partial success;
The report notes a consensus among analysts that it is “the reduction of non-tariff measures and regulatory differences” between the EU and USA that “will play a much more significant role… than a reduction in traditional tariff duties”.
Changes to the regulatory regimes in the EU, USA and other parties are likely to have an impact on some ACP exports to some markets. The ACP could gain if this were to happen via mutual recognition agreements so that any exports that currently meet the requirements of one market will automatically meet them in the others. However, if some countries to which ACP countries export or wish to develop exports adjust their requirements to those of a partner where ACP exporters already face regulatory problems, this could give rise to new barriers to ACP exports.
Even if no mega-regional FTAs were concluded, the review maintains that the ACP could still be affected, as “there could well be a backlash from the USA and the EU, since this scenario would hasten potential Chinese leadership of the global trading system.” The report argues, for example, that there is already a “growing likelihood that AGOA [the US African Growth and Opportunity Act] will be replaced in the future by the ‘offer’ of reciprocal FTAs”.
The report’s recommendations for ACP action are premised on the argument that “the pressure on the ACP to adhere to rigorous behind the border regulatory norms and to liberalize trade policies is very unlikely to disappear.” It is argued that ACP states need to reform domestic regulatory regimes to prepare for this to get ahead of the game. In addition, ACP states may wish to consider taking up the behind-the-border issues that are being negotiated under the “mega-regional” FTAs in the WTO, where ACP governments could fully participate in the negotiations and make sure their views are taken on board.
Not only is “the devil in the detail” in trade negotiation, but the most critical detail tends to be agreed only at the end. Forecasting the impact of ongoing negotiations on third parties is therefore inherently speculative, and the ECIPE report is appropriately broad-brush. But the fact that the ACP’s largest trade partners are negotiating deals (with the possibility that even China might join) means that what is happening under the TTP and TTIP must be kept under review.
For the ACP, regulatory harmonisation is likely to have the greatest impact on agriculture, which is both a sensitive area (with increasingly stringent rich-country standards) and, after oil and minerals, the ACP’s most substantial export. The report argues that “the ‘do nothing’ option does not seem to be available.”
But what should ACP states do, given the extreme uncertainty of outcomes? One recommendation in the report should find favour, since it is a goal to which ACP states have already committed themselves and which will bring gains regardless of the TTP and TTIP outcomes. It is to “experiment” in regional groupings “with negotiations on ‘behind the border’ issues, using the forum as a testing ground for the much more exacting trials with bigger developed and developing countries that lie ahead” (see also Agritrade article ‘ EU–US trade talks reportedly on track’, 24 February 2014).