NEGOTIATIONS FOR EPAs - WHICH WAY NOW?

1. NEGOTIATIONS FOR EPAs- WHICH WAY NOW? Dr Francis Mangeni Regional Trade Policy Advisor Commission of the African Union mangenif@africa-union.org

2. Outline • Preliminary remark • Assessing the negotiations • Concessions made so far • Provisional EPAs • Transitional arrangements • Recommendations EPA Negotiations March 2007

3. - • PRELIMINARY REMARK EPA Negotiations March 2007

4. PRELIMINARY REMARK- role of AU, attitude of EC • 4 negotiating groups in Africa – implications for regional integration, need for coordination • Commission of AU has mandate to coordinate EPA negotiations, and services the Summits and Ministerial meetings • Summit and Ministerial declarations on EPAs are Common African Positions (copies) • How democratic is the European Commission • Can we ensure that the EC fully reflects the statements of the member states, parliaments, etc EPA Negotiations March 2007

5. - • ASSESSING THE NEGOTIATIONS EPA Negotiations March 2007

6. REVIEW OF EPA NEGOTIATIONS - not promising; contemplate extensn • Negotiations are behind schedule – EC delays, capacity constraints • Many outstanding issues, with wide divergence of positions • Regional integration, development a) b) , market access, trade-related areas – not adequately addressed • Measures for competitiveness are so far inadequate • ACP recommendation: sufficient time and resources needed; AU: no disruption of trade, extension • Impact of statements on extension – urgency and realism; REVIEW SHOULD BE FOLLOWED UP EPA Negotiations March 2007

7. DEVELOPMENT COOPERATION - is now for EPAs? • “Assistance could be provided against clear commitments on rules” EC response to SADC Framework Proposal • “Resources will match the level of ambition of ACP countries” EC at JMTC 1 March 2007 • EDF, for implementing EPAs; broader programmes for devp and RI could be sidelined • Trade policy should be part of the broader devp framework, not the other way round EPA Negotiations March 2007

8. EC ASSESSMENT- promising; basis for optimism? • Mandelson: there has been significant progress, the negotiations are behind schedule, there is a lot to do, let us move on with it. Pleasantly surprised with reports? • “there is no EPA that I would sign that is not development-friendly. Such EPA would be disqualified”. WE MUST MEET THE DEADLINE • Michel: there is enough money, trust the EC • No more impact assessment studies EPA Negotiations March 2007

9. ACP Ministers- • On EC's tactics in the talks: repetition of "rigid red lines and inflexible positions that do not reflect any genuine willingness to think creatively and arrive at a mutually acceptable solution that addresses the unique needs and circumstances (of the Pacific region)."Hans-Joachim Keil, Samoan Trade Minister, ACP spokesperson • CSO meeting in Brussels, 12 October 2006 EPA Negotiations March 2007

10. RESPONSE OF ACP GROUPS- cautious; don’t rush • No politician can sacrifice his people; on the alter of deadlines – ACP spokespersons: 1, 13 March • All outstanding issues should be addressed before concluding EPAs • Have political will to conclude negotiations • Uncertain about the feasibility; EC has not clarified its optimism • Concerned about disruption of trade, no transitional measures (ratification) EPA Negotiations March 2007

11. COMPATIBILITY REQUIREMENT- guesswork; finalise WTO negns • The requirement is to address the waiver – which covers goods (GATT), not necessarily services/ EU is a major trading partner • Article 24 rules not finalised, not known – ACP proposal not addressed • New developments – SVEs, obligations to LDCs, GSP case, international impetus to assist Africa (MDGs, UN conference on LDCs, Monterrey, Commission on Africa, Gleanegles G8 summit, etc) – do not require reciprocity, int’l goodwill to assist EPA Negotiations March 2007

12. - • CONCESSIONS SO FAR EPA Negotiations March 2007

13. EC CONCESSIONS- no new obligations in EPAs • Development cooperation – already part of EDF, no additional resources, no EPA facility, no separate financial protocol, no binding commitments in EPAs • Aid for Trade – for all developing countries, part of WTO negotiations and package • Market access – DFQF for LDCs is now WTO obligation to be implemented, taking into account non-LDCs at similar development levels EPA Negotiations March 2007

14. EC DEMANDS - hostile, contravene norms • Regional integration – SSL/CET, formation of customs unions; agreement to first strengthen RI is inconsistent with the urgency of liberalisation under EPAs • Development – non-discrimination rules, right of entry, etc, in investment; competition, public procurement, IPR; governance, • Market access – LDCs should reciprocate; unprecedented, mercantilist, contrary to WTO concessions and rules EPA Negotiations March 2007

15. ACP DEMANDS- with or without EPAs • Market access – full DFQF, real asymmetry, ROO, safeguards, standards, etc (2% of world trade) • Development cooperation – implement provs on competitiveness (0.7% of GDP) • Investment – consolidate regional markets, infrastructure (public investment), capacity building, harmonise business law, imrpove business environment, ACP Investment Guarantee Agency, EIB credit facilities for SMEs, CDE, Technical Centre for Agriculture and Rural Cooperation EPA Negotiations March 2007

16. ACP CONCESSIONS- pushed, driven • EASILY DROP THEIR DEMANDS – need support from EU member states, parliaments, industry, civil society and public opinion (eg WTO) • Commenced EPA negotiations – deal in CPA • Did not insist on alternatives in 2004, but the EC attitude has remained “unwilling or unprepared” • Unprecedented autonomous liberalisation – low tariffs (inputs), removal of restrictions, investor friendly economies EPA Negotiations March 2007

17. MUTUAL GAINS - EU stands to gain also • Vibrant regional markets in ACP countries • ACP/ Africa group is a partner in int’l relations (106 countries) • EU int’l standing in development cooperation, models for achieving MDGs • Cooperation with other int’l players • Peace, migration, disease, skills • Long and short term gains; magnanimity EPA Negotiations March 2007

18. Concessions in the negotiations- build upon gains for ACP • EPAs should not be strict FTAs/ alternatives? • Critical/ careful approach to liberalisation can be helpful – recent literature on liberalisation and globalisation (dislike for academics, CSOs – false prophets, nonsensical things, oil-rich countries closed to neighbours) • EPAs should consolidate international gains for ACP countries (locking in) • Autonomous liberalisation should be recognised EPA Negotiations March 2007

19. - • PROVISIONAL EPAs EPA Negotiations March 2007

20. NATURE OF PROVISIONAL EPA- simple EPA • Acceptable to some groups and EC? NOT to Cariforum – want an ambitious EPA by Sept/ July 07, not EPA late or EPA light • Scope not determined: ESA – market access and development; SADC – exclude investment, competition, gvt procurement • Conclude EPA, with an obligation to continue negotiations to finalise all outstanding issues EPA Negotiations March 2007

21. CASE FOR PROVISIONAL EPA - skip the hard work • Realism – in light of the delays, deal with manageable areas • Assists meet the WTO compatibility requirement • Avoids controversial areas • Not adequately investigated EPA Negotiations March 2007

22. CASE AGAINST- difficult to work out • NOT MANAGEABLE – wide divergences remain in key areas including, meaning of development, development cooperation, regional integration, and market access • Outstanding areas could be left unfinalised for unduly long – like implementation issues in WTO negotiations • Selected areas for the EPA might well be imposed by the EC, excl key ACP priorities • NOT YET CAREFULLY STUDIED EPA Negotiations March 2007

23. - • TRANSITIONAL ARRANGEMENTS EPA Negotiations March 2007

24. CONCLUSION BY DECEMBER - RATIFICATION DELAYED • GENERALLY REQUIRED, for instruments to enter force and to be implemented – different regimes have different rules • Examples – CPA took two years, WTO took just under a year • For EC – temporary implementation pending ratification? • For ACP – cabinet or parliament (involved?) • TRANSITIONAL PERIOD MAY BE REQUIRED EPA Negotiations March 2007

25. NOT CONCLUDED BY DECEMBER • Waiver – recommended by Parliaments and CSOs; not option for EC; USA precedents; ACP secretariat to prepare cost analysis; how would a vote go? • GSP, GSP+, EBA; enhanced GSP – simulation indicating benefits; alarming statistics from EC on duty increases; contractualisation not worked out • Continue CPA regime, notify WTO – ACP MTC proposal EPA Negotiations March 2007

26. CARIFORUM EPA CONCLUDED • IS THE FEAR ABOUT BANANA WARS? • Other products – (main ACP exports) • Could not FTAs covering these products be challenged? Less likelihood? • How come USA/ Canadian initiatives have not been challenged? • IMPORTANCE OF HARMONISED EPAs in Africa EPA Negotiations March 2007

27. - • RECOMMENDATIONS EPA Negotiations March 2007

28. MEASURES TO CONCLUDE EPAs BY DECEMBER 2007 • Development should be addressed – (meaning) • EPA process should support regional integration • Asymmetry/ variable geometry should be included • Content/ text of EPAs should be agreed • EC should respond quickly to ACP proposals • EC should also actively initiate proposals • RPTFs should work better and be part of EPA process • Political oversight of the negotiations; should include regular reviews, actions and decisions. EPA Negotiations March 2007

29. MEANING OF DEVELOPMENT- AU Nairobi Decl on EPAs, ACP • RI to consolidate regional markets, create AEC • Full market access, without NTBs • Address infrastructure and supply side constraints – to enhance capacity to produce, export, meet standards, mobilise resources; competitiveness • Through adeq financial and technical cooperation, incl technology partnerships and skills transfer • Provide for policy space – SDT: asymmetry and flexibility, varying obligations • Strengthening institutional capacities in public and private sectors EPA Negotiations March 2007

30. CHALLENGES • Elaborating politically, socially acceptable EPAs, in an inclusive manner • Inflexibility of EC negotiators and structures • Short time frame left to finalise issues • Rationalisation of RI in Africa • Coordination of EPA negotiations among the groups – common positions, difference pace • Refinement of negotiating positions • Drafting of EPA text EPA Negotiations March 2007

31. POST-DECEMBER RULES • To ensure that trade is not disrupted • To assist stability and predictability • To meet CPA obligations: explore alternatives, ensure no country is worse off, preserve acqui • Respond to AU declarations • SERIOUS WORK URGENTLY REQUIRED • WTO frameworks, CPA frameworks, etc • Write out current regimes into an agreement EPA Negotiations March 2007