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Initial review of impact of EU–US trade partnership on selected developing countries

19 January 2014

The European Centre for Development Policy Management has published a paper on the possible impact of the proposed Transatlantic Trade and Investment Partnership (TTIP) between the USA and the EU on 43 low-income developing countries (LICs), 33 of which are ACP countries. The paper, based on a report commissioned by the UK Department for International Development, reviewed two potential areas of impact on imports from the selected LICs, namely:

  • the impact of removing MFN tariffs on EU–US trade;
  • the impact of EU–US regulatory integration.

The analysis found that, in general, the larger the MFN (and the lower the duty paid by the country reviewed), the higher the potential loss of preferential margins. However, it found also that tariff reductions under the TTIP carry a potential threat only for some countries in very specific products, since there is little overlap between the structure of US–EU trade and the non-fuel exports of the countries reviewed. Assessing these specific impacts requires country- and product-specific analysis at a more detailed six-digit level (i.e. of the international HS product codes). Currently, most of the areas of impact are in non-agricultural products (the only identified exception is Malawian tobacco exports to the USA).

In terms of possible policy responses, the report suggested that affected developing countries could lobby for the exclusion from liberalisation of those export products which face high MFN tariffs. Since many of these products correspond to domestic sensitivities in the US or EU, many of these products may already be scheduled for exclusion from any EU–US tariff liberalisation process.

Potential effects of the TTIP on ACP and non-ACP countries

  LIC with 5 or more of the top 20 exports that attract MFN tariff above 10% LIC with one or more of the top 20 exports that attract MFN tariff above 15% LIC with 10 or more of the top 20 exports that are sensitive to SPS measures

Haiti, Mauritania, Madagascar

(Non-ACP: Bangladesh, Cambodia, Nepal, Pakistan)

Chad, Burundi, Ghana, Madagascar, Malawi, Togo

(Non-ACP: Cambodia)

Burkina Faso, Burundi, DRC, Gambia, Ghana, Kenya, Mauritania, Rwanda, Somalia, Sudan, Uganda

(Non-ACP: Palestinian Occupied Territories)


Haiti, Kenya, Madagascar

(Non-ACP: Bangladesh, Cambodia, Pakistan)

Burkina Faso, Ethiopia, Guinea, Haiti, Kenya, Madagascar, Malawi, Mali, Mozambique, Rwanda, Togo, Uganda

(Non-ACP: Bangladesh, Cambodia, Kyrgyzstan, Palestinian Occupied territories, Pakistan)

Ghana, Nigeria, Malawi, Togo, Uganda

Source: ECDPM, ‘Potential effects of EU–US economic integration on selected developing countries’ (see below)

In terms of SPS measures, 11 of the 12 countries that have 10 of their top 20 exports subject to SPS regulatory regimes – where changes could potentially be introduced that affect exports to the EU – are ACP countries. Of the countries potentially affected that export to the US, all five are ACP countries. These ACP countries could be adversely affected if stricter SPS standards were applied as a result of regulatory harmonisation. However, how individual ACP countries are affected will depend on their compliance capacities.

Countries identified as currently coping well with SPS requirements include Kenya, Uganda, Tanzania, Zambia and Zimbabwe: for these countries, regulatory harmonisation could well result in cost savings in serving both EU and US markets. For countries currently facing challenges in meeting existing SPS requirements, which include Ghana, Gambia, Guinea, Madagascar, Mauritania and Mozambique, regulatory harmonisation will pose new challenges.

However, it should be noted that the ambitions for regulatory harmonisation under the TTIP are described as “quite modest”, with regulatory changes potentially being quite limited, given the sensitivity of this issue on both sides of the Atlantic.

The analysis noted that in the regulatory field, “if the EU and US succeed in pursuing effective mutual recognition agreements (MRAs), LICs could lobby for these MRAs to be open to third countries meeting the rules of either the EU or US”, with, where the changes made so require, assistance being extended to increase compliance capacities. This could take the form of “training or perhaps loans for capital investment”.

Overall, the review of the TTIP process has highlighted the importance of continued investment in developing countries in enhancing competitiveness. 

Editorial comment

A major challenge facing the ACP as a group is determining which of dozens of trade negotiations to prioritise in terms of policy dialogues. The current report is of value, since it provides a starting point (at least for the 33 ACP countries covered) for identifying the potential impact of the TTIP. The ACP Group now needs to do its homework on the likely impact of MFN tariffs on individual products of export interest to individual countries, and the products most likely to be sensitive to probable regulatory harmonisation.

An identification of the product/country combinations where EU–US regulatory harmonisation could potentially impact would allow both an identification of the specific areas where dialogue with the EU/US should be sought (in the case of the EU, under Article 12 of the Cotonou Agreement) and an identification of potential areas for targeted SPS capacity-building support.

This could potentially be modelled on the US programmes set up in the Caribbean in the light of the US Food Safety Modernisation Act (see Agritrade article ‘ Serious food safety challenges face Jamaican exports to US markets’, 6 October 2011). It could also include preferential treatment in the application of moves towards full cost recovery for all official food and feed controls (similar to the exemptions to be granted EU small businesses - see Agritrade article ‘ New EU food and feed controls to include full cost recovery’, 7 July 2013).

In addition, given its capacity constraints in negotiating equivalency agreements, the EU has to prioritise. Priority is commonly given to negotiations with countries where the EU has a major export interest (e.g. China). Smaller economies where the EU has less export interest find it more difficult to initiate equivalency consultations. Some level of ACP cooperation on this issue (given the collective size of the ACP) could potentially shift the balance of priorities in this area.


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