The interim EPAs – some facts

1. The interim EPAs – some facts TIPS Workshop, Pretoria 4-5 March Dr Mareike Meyn

2. Overview • Which countries are the EPA signatories? • What do the liberalisation schedules say? • What else had been agreed? (Export duties, standstill clauses, MFN, SPS/TBT…) • Trade defense • Infant industry protection • The rendez-vous clauses The interim EPAs - some facts. TIPS workshop March 2008

3. 1. The EPA signatories • 35 of 77 ACP countries initialled an EPA • Except CARIFORUM all EPA configurations lost members • Most non-signatories benefit from EBA except six Pacific and three African non-LDCs • Except CARIFORUM ‘interim EPAs’ with ‘sub-regions’ were initialled • In Central Africa only Cameroon initialled • In West Africa two countries initialled separate agreements • In Southern and Eastern Africa the picture is most complex • Negotiations continue in 2008. Objective: comprehensive, regional EPAs The interim EPAs - some facts. TIPS workshop March 2008

4. 3 2 1 1. SADC EPA 2. EAC 5 3. ESA EPA

5. Original EPA configurations and signatory states in southern and eastern Africa The interim EPAs - some facts. TIPS workshop March 2008

6. 2. What do the liberalisation schedules say? East African Community (EAC) • Only region where all countries have identical schedule based on EAC CET • 25 years (2 years moratorium) • Regional exclusion basket of about 20% of EU import value • 3 tranches; ‘real’ liberalisation only starts in 2015 • Revenue impact will be faced in the middle of the implementation period (2015-23) and will be significant • Not all countries have yet applied EAC CET • Most products will be liberalised in this period • Consumer/producer effects will be end loaded The interim EPAs - some facts. TIPS workshop March 2008

7. 2. What do the liberalisation schedules say? Eastern and Southern Africa (ESA) • 5 of 15 Countries have established individual liberalisation schedules in relation to COMESA CET • COMESA CET has not yet been implemented • Liberalisation occurs in 15 years (5 years moratorium) • 2008-2013: tariff reduction to meet COMESA three bands tariffs • Countries never agreed a formal definition that allocated the items in the nomenclature according to the groups • Chromium and thallium waste • Mauritius and Comoros: raw material • Seychelles: intermediate • Madagascar and Zimbabwe: final The interim EPAs - some facts. TIPS workshop March 2008

8. 2. What do the liberalisation schedules say? Eastern and Southern Africa (ESA) • Exclusion basket differs between 2.5 to about 20% of EU import value among the countries • Revenue impact will be faced in the first tranche and will be very different among the countries • Depends to what extent country’s tariff differs from COMESA CET • Whether tariffs can be replaced by sales tax • Consequences for regional integration? • Review of EPA commitments in light of COMESA CET becomes impossible The interim EPAs - some facts. TIPS workshop March 2008

9. 2. What do the liberalisation schedules say? Southern African Development Community (SADC) • 5 of 8 countries established 2 liberalisation schedules • Liberalisation over 10 years, no moratorium • Exclusion baskets • Mozambique: large exclusion basket about 38% of EU import value (2004-2006) • BLNS: nobody knows… • Theory: TDCA exclusion basket plus small number of BLNS sensitive products should mirror BLNS EPA exclusion basket • Practice: Impossible to compare TDCA (negative list) with EPA (positive list) • BLNS are de facto implementing TDCA The interim EPAs - some facts. TIPS workshop March 2008

10. Summary of liberalisation schedules The interim EPAs - some facts. TIPS workshop March 2008

11. 3. What else had been agreed? • Export duties • no African EPA text foresees their abolition but only that duties shall not be increased/new duties introduced • Exemption from this principle for SADC and EAC in ‘exceptional circumstances’ (such as infant industry protection or to maintain currency stability) • EAC needs consent of the EU; SADC only needs to consult • “Standstill clause” (freezing of applied tariffs level) • Found in all EPA texts except CARIFORUM • EAC and ESA: agreement not to increase applied customs duties comprises ‘all trade’ • SADC: only for ‘all products subject to liberalisation’ The interim EPAs - some facts. TIPS workshop March 2008

12. 3. What else had been agreed? • MFN clause (need to extent preferences granted to ‘major trading economies’ to the EU) • Can be found in all texts • But: exemptions for CARIFORUM and PACP (Part I, Art. 16) 2.With respect to the subject matter covered by this Chapter, the Pacific States shall accord to the EC Party any more favourable treatment applicable as a result of the Pacific States becoming party to a free trade agreement with any major trading economy after the signature of this Agreement. 3. Where a Pacific State or the Pacific States can demonstrate that they have been offered by a third Party a substantially more favourable treatment in goods, including rules of origin, than that offered by the EC Party, the Parties will consult and may jointly decide how best to implement the provisions of paragraph 2. • What does this mean in practice? The interim EPAs - some facts. TIPS workshop March 2008

13. 3. What else had been agreed? • Special provision on administrative cooperation • All texts: Refusal or undue delays of administrative cooperation can result in the temporary suspension of trade preferences. • Non-tariff barriers and subsidies • All texts: Prohibition of import or export restrictions other than customs duties and taxes (notwithstanding anti-dumping/counter-vailing measures and infant industry provisions). • Some texts: agricultural export subsidies shall be abolished; all texts: national subsidies are allowed – value of provisions? • Exemptions in case of infant industry protection in some texts The interim EPAs - some facts. TIPS workshop March 2008

14. 3. What else had been agreed? • Customs and trade facilitation • Central element in the EPAs • SADC: partially regional approach: customs legislation and procedures shall be harmonised • Chapter has not yet been drafted in EAC and ESA • Sanitary and phytosanitary standards/technical barriers to trade • Chapter outlines cooperation areas and technical support • SADC: list of ‘priority products’ • A) increasing understanding of and compliance with EU standards • B) products where regional standards shall be harmonised • Chapters have not yet been drafted in EAC and ESA The interim EPAs - some facts. TIPS workshop March 2008

15. African ‘priority products’ The interim EPAs - some facts. TIPS workshop March 2008

16. 4. Trade defence in the EPAs • TDCA and Central and West Africa EPAs: • pre-emptive safeguards if ‘availability or access to foodstuff is endangered’ • No link in ESA, EAC, and SADC between safeguards and food security The interim EPAs - some facts. TIPS workshop March 2008

17. Bilateral safeguard conditions in the ESA EPA (Art. 21) 2. Safeguard … may be taken where a product originating in one Party is being imported into the territory of the other Party insuch increased quantities and under such conditions as to cause or threaten to cause: (a) serious injury to the domestic industry … or; (b) disturbances in a sector of the economy, .., or (c) disturbances in the markets of agricultural like or directly competitive products … 3. Safeguard measures referred to in this Article shall not exceed what is necessary to remedy or prevent the serious injury or disturbances, as defined in paragraph 2 and 5(b). Those safeguard measures of the importing Party may only consist of one or more of the following: • suspension of the further reduction of the rate of import duty • increase in the customs duty on the product concerned up to a level which does not exceed the customs duty applied to other WTO Members, and • introduction of tariff quotas on the product concerned. The interim EPAs - some facts. TIPS workshop March 2008

18. 5. Infant industry protection • Provisions to apply safeguard measures in order to protect infant industries are more generous than in TDCA • However: only applicable for 10-15 years; thereafter only safeguards • Is this a problem??? The interim EPAs - some facts. TIPS workshop March 2008

19. 6. The rendez-vous clause The interim EPAs - some facts. TIPS workshop March 2008

20. 6. The rendez-vous clause • What are the binding commitments in the IEPA? • Parties committed to continue negotiations on the topics outlined in the rendez-vous clause and any other topic they would like to include • But: • African countries did not commit to agree on any of the provisions that are subject to continued negotiations • The rendez-vous clauses for SADC, EAC and ESA do not mention • Intellectual property rights protection • Social issues (such as commitment to respect international labour standards • Provisions for personal data protection The interim EPAs - some facts. TIPS workshop March 2008

21. Main messages • Only CARIFORUM has yet completed the EPA negotiations • Except CARIFORUM and EAC only ‘sub-regional’ or country EPAs exist • The implications for economic regional integration: • Offering chances for EAC • Destroy de facto SADC and COMESA • Some clauses (MFN, standstill) are inferior than in CARIFORUM and/or PAC • ‘Any other area the parties feel being relevant’ can be subject to ongoing negotiations • What remains disputed: • To what extent can single provisions be renegotiated? • Can a region ‘import’ any superior provision reached within another region? The interim EPAs - some facts. TIPS workshop March 2008

22. The interim EPAs – some facts TIPS Workshop 5-6 March 2008