agritrade

Malawian government looking to sign interim EPA

16 December 2012

Press reports indicate that despite fears expressed by the previous President of Malawi, Bingu wa Mutharika, the government of President Joyce Banda may be considering concluding the EPA process. According to IPS, Trade Minister John Bande has said that the country is ‘reviewing [its] position on EPA’ and considering the potential benefits, and that ‘development will still be at the heart of our negotiations because Malawi is facing supply-side constraints which have had an impact on our competitiveness.’

The IPS report notes that while an EPA is seen as being good for Malawi’s sugar sector, ‘the Malawi Confederation of Chambers of Commerce and Industry (MCCCI)…does not see the EPAs in their current form as benefiting Malawi’, with the MCCCI CEO arguing that ‘the capacity of business in ACP countries is not strong enough to face the reality of opening the markets.’ He added that assistance was needed to enable ACP countries ‘to effectively trade with the EU’.

In October 2012, the EC reported that two new financing agreements were signed by the EU and Malawi to provide EU support to programmes to strengthen agricultural productivity and expand the area under irrigation, and to provide direct cash transfers to extremely poor households, at a cost of €63 million and €35 million respectively.

In terms of the wider EU–ESA agreement, the rapporteur of the European Parliament Development Committee called on the Parliament in October 2012 to ‘decline to give its consent’ to the EU–ESA interim EPAs (IEPAs) already signed by the governments of Madagascar, Mauritius, Seychelles and Zimbabwe, given the potential negative effects of the interim EPAs on regional integration in Eastern and Southern Africa.

The rapporteur pointed out that while 16 governments originally formed part of the ESA group, only six had concluded IEPAs and only four had signed IEPAs, with widely differing tariff elimination commitments and schedules. In addition, it was noted that Madagascar (the only ESA LDC to have signed an IEPA) had recently requested a 5-year moratorium on implementation of its EPA commitments, in view of their revenue implications.

At the end of October 2012, the Co-Chair of the ACP trade ministers called for ‘a reality check on what is achievable’ and for the EU ‘to lower its ambitions, moderate its expectations and perhaps reduce the scope of the EPAs to a scale that is attainable’. Trade Commissioner Karel De Gucht for his part told ACP ministers that ‘we have achieved less than I expected a year ago, and worse – we have achieved less than was possible.’

ACP ministers called for the establishment of ‘designated working groups at technical and political levels, to address long-standing contentious and unresolved issues’, affirming that the ACP ‘is willing to conduct studies at the regional level to determine the real implications of subject areas that are posing difficulties.’ 

Editorial comment

The ACP call by trade ministers for the establishment of designated joint Working Groups ‘to address long-standing contentious and unresolved issues’, and the affirmation of their willingness ‘to conduct studies at the regional level’ potentially offer a means of both assisting ACP regions in moving forward collectively with the EPA process and getting to grips with a range of issues that also pose challenges for the deepening of regional trade integration.

A number of these issues relate to the use of agricultural trade policy tools, which have ripple effects that eventually give rise to intra-regional trade disputes. The creation of a national duty-free sugar import quota for Uganda at the beginning of 2012 and the subsequent actions of the Kenyan Revenue Authority in establishing a prior cash bond requirement for Ugandan sugar imports through Mombasa, and subsequently requiring insurance guarantees, is a case in point. This served to hinder trade within the EAC customs union, led to sugar shortages and rising prices in Uganda, and resulted in strong Ugandan ministerial protests over the unilateral Kenyan action.

Addressing ‘contentious issues’ in the context of ACP regional realities could thus bring benefits that reach beyond just the trade relationship with the EU.




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