Progress in diverse EPA negotiations
28 November 2011
As widely reported in the press, technical consultations between EU and EAC negotiators in Zanzibar in September 2011 resulted in the agreement of a ‘road map’ for the resolution of contentious issues related to economic and development cooperation, rules of origin and agriculture, with the EAC officials asserting that the EPA negotiations are on course. The director general of the EAC Customs and Trade Directorate has maintained that ‘the question of EAC-EU EPA negotiations stalling or partner states being bulldozed does not arise,’ and the negotiations expected to be concluded as programmed. These developments followed meetings of experts on various topics in October. The mood of the negotiations is reported to be improving, including on issues such as the MFN clause and agriculture and development related issues.
However, some press reports suggest that there remain concerns over the application of various EU SPS provisions. It is maintained that the EPA text also needs to include support to capacity building and infrastructure development, as well as agreed arrangements for resolving disputes. In the short term, the prospect of a possible loss to Kenya of duty-free, quota-free access is causing concerns among commercial operators involved in the export trade, since the re-imposition of duties would leave Kenya exports ‘uncompetitive and [would] result in a sharp decline in exports’.
According to press reports, Zimbabwe is scheduled to ratify five bilateral and multilateral agreements in the coming months, including the EU–Zimbabwe IEPA initialled in November 2007.
Meanwhile, in the SADC grouping, press reports suggest that negotiations could be approaching completion, with agreement on about 80% of the agricultural products on which South Africa is seeking improved access. This however still excludes sugar, wine and starch, all of which are important for South Africa. Further concessions may be linked to a final agreement on EU concerns over geographical indications. Prospects for agreement are seen as better than they have been for some time, although Namibian concerns related to use of trade policy tools to protect infant industries still need to be addressed. This is seen as important for agro-industrial development in Namibia, where it is felt that any EPA needs to recognise the vast inequalities in size and levels of development which exist, which may require the continued use of these tools to foster local value-added agro-processing activities.
Addressing the ACP Group in Brussels in October 2011, Trade Commissioner Karel De Gucht defended the EC’s September 2011 proposal to establish a deadline of 1 January 2014 for the signing and ratification of initialled interim EPAs, after which time the duty-free, quota-free access provisions of the December 2007 regulation (no. 1528/2007) would lapse. He argued that the current situation was ‘unfair towards those which have done so’ [i.e. already signed]. While the Commissioner acknowledged that ‘the loss of preferential market access may hit several countries hard’, he pointed out that the EC was intensifying its efforts to conclude comprehensive EPAs and reaching out ‘to the governments concerned to ensure timely completion of legal obligations’.
On the issue of legal obligations, ECDPM has published a briefing note entitled ‘Legal constraints on the EU’s ability to withdraw EPA preferences under Regulation 1528/2007’. This briefing note, compiled by a legal specialist from the University of Cambridge, argues that Regulation 1527/2008 amounts to a unilateral provisional application of the respective EPAs by the EU, with this action being subject to the Vienna Convention on the Law of Treaties (VCLT). Article 25 of this convention restricts the conditions under which the EU can withdraw the preferences once provisionally implemented. In essence it is argued that the EU is now in a position where, unless it notifies the respective ACP countries that it does not intend to become a party to the respective EPAs, it is not legally permitted to terminate this provisional application of the treaty.
Editorial comment
Agriculture is at the heart of many of the contentious issues that relate to the use of traditional agricultural trade policy tools, many of which the EU continues to use (see Agritrade article ‘ Agricultural dimensions of the WTO EU trade policy review’, August 2011). The situation is complicated by the highly varied use of these tools in ACP countries. In some countries these tools are deployed transparently in support of agreed development strategies. In others they may represent obscure barriers to trade which inhibit competition and increase prices for consumers with no local production gains.
One issue to be addressed therefore is how the EPA process can foster the transparent use of trade policy tools within agreed regional trade policy frameworks. This needs to be addressed on a case-by-case, region-by-region basis.
Equally, any loss of duty-free, quota-free access would impact primarily on food and agricultural products (including fisheries products).
Sectors potentially affected facing high tariff jumps include:
- sugar (Swaziland, Fiji, Zimbabwe and Kenya);
- beef (Namibia and Botswana);
- bananas (Côte d’Ivoire, Cameroon, Ghana);
- tobacco (Zimbabwe);
Products facing moderate tariff jumps include:
- beans (Kenya);
- peas (Kenya and Zimbabwe);
- pineapples and pineapple juice (Kenya and Swaziland);
- citrus fruit (Zimbabwe and Swaziland).
(For more details, see ‘The costs to the ACP of exporting to the EU under the GSP’, ODI, Final Report, March 2007: http://www.acp-eu-trade.org/library/files/ODI_EN_010307_ODI_Costs-to-ACP...)
The EC’s announcement in September 2011 of its proposal on a January 2014 deadline for signing initialled IEPAs is of very immediate concern, and seems to impact on commercial contract negotiations in the affected sectors, and in particular on efforts to develop joint marketing strategies for quality-differentiated export products. For some sectors, such as the beef sector, it is essential that new enhanced marketing strategies are effectively in place before new tariff concessions to competitive third-country beef exporters come fully into effect (see Agritrade article ‘ Evolving beef trade patterns and the ACP’, December 2011).