A paper has been published by the European Centre for Development Policy Management (ECDPM) seeking to identify what needs to be done to successfully conclude the EU–Africa EPA processes without undermining regional trade and economic cooperation in African regions. It argues that WTO rules allow the EU sufficient flexibility to resolve a range of contentious issues without setting precedents that could undermine broader EU trade policy objectives in the WTO.
The paper maintains that WTO rules are flexible enough to allow the EU to include tariff reduction commitments in regional EPAs involving a majority of least developed countries that are characterised by greater asymmetry and longer times frames than would generally be the norm (e.g. in West Africa), without this undermining the interpretation of WTO requirements that such agreements cover “substantially all trade”.
Such a flexible approach, it is maintained, could help to prevent tensions within African regional trading blocs arising from the different interests and perspectives of member governments with regard to the importance of concluding the EPA process.
In terms of resolving the MFN issue, where the EU wants the right to equal treatment comparable to that which any ACP government may accord to developed or advanced developing countries under future trade agreements, ECDPM calls for an extension of the concept to include an obligation on the EU to extend the same treatment to ACP countries – “for example favourable rules of origin… and other non-tariff measures that it would grant to third parties”. ECDPM also advocates for greater flexibility in the wording of MFN clauses, moving away from an automatic right, to a commitment to consult where the issue of differential treatment arises.
In terms of ACP concerns over maintaining the policy space to use a range of agricultural trade policy tools, ECDPM suggests the use of more “flexible language”, to allow the use of a range of measures provided that these are non-discriminatory and not explicitly designed to restrict trade. Under the ECDPM proposal, the use of such measures would need to be notified and discussed at the Joint Committee on EPA implementation.
On development assistance issues, ECDPM suggests broadening the dialogue on mobilising resources for EPA adjustments to include innovative approaches to mobilising private sector resources, which could build on existing discussions in the AU/ECA/ADB framework.
Overall, the ECDPM analysis concludes that if the broader EU–Africa partnership is not to be undermined, the EPA negotiations will require “a more political approach that will have to preserve the political and economic interests and objectives of the EU and ACP alike”, and that the suggested avenues for consensus will therefore need to be explored.
In terms of the scope for flexibility on the definition of “substantially all trade”, it should be recalled that in the mid 1990s, when EU–ACP reciprocal trade arrangements were first being mooted, this issue was discussed in the EC. The then Development Commissioner João de Deus Pinheiro put forward two distinct options to accommodate the complex development realities in ACP regions.
The first option was so-called economic cooperation agreements, which were explicitly seen as a half-way house between non-reciprocity and full reciprocity, with partially reciprocal arrangements being gradually expanded to provide growing levels of reciprocal preferential access. The second option was so-called economic partnership agreements, which were fully WTO-compatible FTAs.
During these discussions, the option of economic cooperation agreements was rejected by the EC’s Trade Directorate-General, which saw this as complicating the EU’s multilateral efforts to tighten up the WTO rules governing FTA agreements. The EC’s ‘political approach’ was thus set in the late 1990s.
It should also be recalled that on the eve of the conclusion of the EPA process in the summer of 2007, EU agro-food sector exporters identified the use of non-tariff measures as the critical policy obstacle to expanded EU agro-food sector exports and called on the EC to address this issue through the FTA negotiations. In the final months of the EPA negotiations, for example, this led to the EC including in draft IEPAs explicit commitments to the abolition of import licensing and similar measures.
Since this date, across the ACP, governments have sought to keep the possibility of using import licences and other non-tariff measures to create market space for the expansion of domestic production. It is therefore unclear what scope there is for flexibility, without one side or the other abandoning its position.