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Europe's Reflection in the EPA Mirror: Open Europe Seminar - March 2007

This seminar discusses the ongoing debate on Economic Partnership Agreements (EPAs) in Europe, the potential consequences of not reaching an agreement, and possible alternatives. It also highlights the impact of the Generalized System of Preferences (GSP) on ACP exports.

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Europe's Reflection in the EPA Mirror: Open Europe Seminar - March 2007

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  1. Europe’s Reflection in the EPA MirrorDr Christopher StevensOpen Europe Seminar26 March 2007

  2. What sort of Europe do we want? • The EPA debate is old and jaded – under way since 1996: • but cannot be resolved until an EPA exists; • hypothetical EPAs can be created which are development friendly; • but will they be agreed? • But the Commission has recently raised the stakes. • Already too late to complete EPAs in 2007 that are: • detailed; • genuinely negotiated with stakeholder buy-in; • apply to regions. • What happens in January 2008 - will: • the current trade regime be extended temporarily – the usual precedent; • a default regime be imposed – what the Commission threatens? Europe's Reflection in the EPA Mirror: Open Europe, 26 March 2007

  3. Europe as Caesar’s wife • Time runs out because: • Cotonou says so; • the WTO waiver expires, which: • does not require action for at least 2 years; • but EU claims it must be squeaky clean. • But there is also Cotonou Article 37(6): In 2004, the Community will assess the situation of the non-LDC which, after consultations with the Community, decide they are not in a position to enter into economic partnership agreements and will examine all alternative possibilities, in order to provide these countries with a new framework for trade which is equivalent to their existing situation and in conformity with WTO rules. Europe's Reflection in the EPA Mirror: Open Europe, 26 March 2007

  4. Complying with Article 37(6) • When it signed Cotonou the EU made a promise it could not fulfil at that time. • In 2000 there was no off-the-peg trade regime that was: • equivalent to Cotonou; • clearly WTO conforming. • In 2007 there still isn’t! • Either the EU negotiated in bad faith; • or it must create such a regime. Europe's Reflection in the EPA Mirror: Open Europe, 26 March 2007

  5. Enter the GSP • The Commission’s threat must assume that the GSP fulfils Article 37(6). • ODI research shows that it doesn’t. • Instead it will cause: • tariffs to be raised, not lowered, (in the name of being squeaky clean in the WTO); • ACP exporters to pay taxes to Europe; • the collapse of some ACP exports. Europe's Reflection in the EPA Mirror: Open Europe, 26 March 2007

  6. The ODI research • Analysed all significant ACP exports to EU in 2005 to see the tariff implications of replacing Cotonou with the GSP. • Identified products with: • no change; • moderate change (tariff jump under 10%); • large change (10%+ tariff jump or new/increased specific duty). • Category 2 exports: • some may decline/cease in medium term, but unpredictably; • all will pay trade taxes to the EU. • Category 3 exports: • easier to spot the casualties. Europe's Reflection in the EPA Mirror: Open Europe, 26 March 2007

  7. Proportion of value of total trade represented by exports each accounting for 1% or more of the total which would experience a change in access All non-LDC ACP are affected Europe's Reflection in the EPA Mirror: Open Europe, 26 March 2007

  8. How badly affected? • EU tax take on Category 2 imports: • €156 million p.a. (equals 2.6 time EuropeAid’s 2005 commitments to health projects in all ACP); • assumes no fall in exports because of the tax. • Some ACP exports will cease - with sugar, bananas, beef, rice, horticulture, citrus and processed fruits at most risk. • Because some competitors will have more favourable (often non-reciprocal) access. Europe's Reflection in the EPA Mirror: Open Europe, 26 March 2007

  9. The way out • The Commission threatens: • to impose taxes not levied for 30 years; • without recourse to Member States or Parliament; • in violation of Treaty commitments; • in the name of WTO respectability! • An alternative exists: • the EU can create the regime that did not exist in 2000; • based on the GSP+ (currently available to 15 states); • extended to cover some key ACP exports. • This would: • follow established precedent; • buy time for EPA negotiations to conclude. • But will the Commission do it? Europe's Reflection in the EPA Mirror: Open Europe, 26 March 2007

  10. Europe’s Reflection in the EPA MirrorDr Christopher StevensOpen Europe Seminar26 March 2007

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