Madagascar and St Kitts & Nevis seeking deferment of EPA implementation schedule

15 October 2012

While the interim Economic Partnership Agreements concluded between the EU and four ESA configuration countries (Mauritius, Seychelles, Zimbabwe and Madagascar) were scheduled to commence implementation from 1 January 2013, press reports in September 2011 indicated that the government of Madagascar was seeking a 5-year deferment of its implementation schedule in the light of the economic crisis and the need to ‘enable the country to prepare itself for the negative impacts of tariff reductions’.

This move follows a workshop held on 3 September 2012 which was organised by Madagascar’s Trade Ministry to review the IEPA negotiations and implementation.

Meanwhile, according to press reports, the government of St Kitts & Nevis ‘is seeking an extension in implementing certain measures under the Economic Partnership Agreement (EPA)’. In a radio interview, Prime Minister Dr Denzil Douglas argued that while the government was mindful of its multilateral and EPA commitments, it could not simply take steps that could harm the economy without first undertaking ‘appropriate economic analysis’. He suggested that through dialogue with the EC there could be scope for ‘prolonging’ implementation of certain EPA commitments, with the government planning to approach the EU on this issue. Particular concerns were expressed over revenue losses arising from the implementation of tariff elimination commitments. 

Editorial comment

In both the Caribbean and Indian Ocean, concerns have now arisen over the fiscal implications of EPA tariff elimination commitments. The statement from the Prime Minister of St Kitts & Nevis reflects wider Caribbean concerns that the two processes of internal tax restructuring and implementation of tariff reduction commitments ‘are not in tandem with each other’ (see Agritrade article ‘ Implementation of Caribbean tariff cuts in the spotlight’, 27 August 2012). The problem of getting to grips with the fiscal implications of EPA commitments has been greatly complicated by the global economic downturn, with least developed and small island economies facing particular challenges.

The emerging positions of the governments of Madagascar and St Kitts & Nevis on negotiating a deferment of EPA implementation commitments need to be seen in the light of the recent agreement between the government of Algeria and the EU to defer the full implementation of Algerian tariff elimination commitments from 2017 to 2020 (see Agritrade article ‘ Deferment of Algerian FTA implementation commitments’, 22 October 2012).

In the case of Madagascar, the emerging position on the need for deferment of EPA commitments also needs to be seen in the light of the recent European Parliament vote on the deferment of the deadline for completion of the EPA negotiation process (from 1 January 2014 to 1 January 2016) and ACP concerns over the adverse effects of implementing bilaterally concluded agreements on regional integration efforts (see Agritrade article ‘ MEPs vote for deferment of EPA negotiations deadline until 2016’, 22 October 2012).

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