Overview of Day 1 Ximena Gonzalez 4th March 2008

1. TIPS/AusAID EPA Workshop Subtitle: Overview of Day 1 Ximena Gonzalez 4th March 2008 Presenter: Date:

2. Expectations? • Understanding of EPAs; barriers between countries in Africa & how to overcome them; • Understand implications of EPAs in context of Southern African regional integration e.g. SACU • How the EPAs will affect the SACU relationship as BLNS signing own agreement • Services implications • SA’s role in process

3. Expectations? • Political economy side of EPAs & link with industry i.e. sectoral approaches • To learn about EPAs • Does EPA process convene SACU agreement • Regional configurations within EPA negotiations • Try to understand how civil society can strategise to ensure that EPA’s realise their spirit of contributing to development • Learn where EPAs are going particularly from an agricultural perspective

4. Where are we now? • EPAs introduced as Cotonou was WTO incompatible – EU waiver expired in 2007 • EU & ACP agreed to negotiate new trade agreements i.e. EPAs – defined as an FTA covering substantially all trade liberalised and negotiated in reasonable time • 6 regions: CARIFORUM, E. & S. Africa; SADC minus; Central Africa, W. Africa, Pacific (cover 77 of 29 ACP countries) • EU did not agree a figure for “substantially all”, but for Southern Africa about 76% of trade, Eastern & Southern Africa (80%) (according to Maerten formula. • From WTO perspective EPAs negotiated are enough • In fact benefits of EPAs not clear • Also difficult to ascertain development assistance of EU through EPAs – different points of view as to what this means. Different reading EPA see it ito institutional, whilst EPA sees it from a policy perspective. ACP wants dedicated financial assistance to comply

5. Perspective of SA….. • Issues reiterated by SA • Understanding of development – EU address policies instead of addressing supply side constraints first; • WTO waiver understanding of Article 24 of GATT relates to goods, therefore doesn’t require trade related issues. SA does not see legal obligations to develop commitments in services, government procurement IPRs etc. i.e. SA does not see that waiver extends to services, whilst EU does feel as comprehensive agreement it should. • SA believes a critical element of liberalisation is sequencing of policy. • EPAs do not foster RI in the region, in fact will be difficult for region to implement in light of existing commitments e.g. SACU • SA had proposed SADC EPA Strategic Framework Document to address certain issues that it felt were problematic. Proposed the need to build internal regional capacity over time and after 5/6 years assess whether can take on binding commitments. Not accepted by EU & so SA not a signatory. • SA wants a convergence of policy regulations in region e.g. common fwk on competition policy. Build regional markets; Technical exchanges on experts e.g. in telecoms regulation. Before commitments made.

6. Perspective of SA….. • Current state of play: • Interim EPA initialled by Botswana, Lesotho. Mozambique, Swaziland • Angola still finalising offer • Tanzania forced to negotiate as part of EAC joining Uganda & Kenya • Namibia initialled on basis of understanding that issues that were still not happy with would be reopened e.g. MFN • Initialling allowed trade to continue & EU was able to go to WTO to say that reciprocity, no longer discriminatory • SA position is that it cannot sign an agreement which is problematic as it stands e.g. MFN clause, definition of what constitutes a legal party to the agreement, & rushing into services liberalisation when not fully comprehending implications thereof, incl. that this defines SADC’s own agenda in this area in way forward. SA politically committed to EPA process, but its position stands for now. Implications are that SADC- not legally enforceable unless SA agrees.

7. Interim EPAs – some facts? • Who has signed? • 35 of 77 ACP have initialled. Except for CARIFORUM configurations lost members – most-non-signatories benefit from EBAs, which is why opted not to sign. • Clear differences across groupings & agreements (timespan for liberalisation; exclusion lists, when liberalisation begins) that resulted therefore complicated to assess state of play. • Other issues agreed include export duties, standstill clause…. Some leeway for SADC e.g. ito standstill clause, export duties only need to consult.

8. Interim EPAs – some facts? • Overall it appears that they do undermine regional integration & add further element of complexity to trade negotiations going forward • CARIFORUM & Pacific appear to have been able to negotiate more beneficial arrangements overall. SADC has some openness in a few areas • Key problem is that it will be difficult for EPA commitments to be reviewed, complicating ability to align to region • Agreements are complex & difficult to approach them to assess implications; • In negotiating these clear that capacities to negotiate has been limited e.g. CARIFORUM were only region to have one text i.e. same as EU (well-oiled negotiating machinery, whereby political & technical levels separated therefore ensured negotiations were well informed from a technical point of view). This meant that many countries have largely negotiated texts that were put forward as EU templates. • Still not clear what the implications are. Agreements were made in a rush due to fear that market access would be lost.

9. Costs of non-EPA? • Alternatives? • Need to differentiate between dping & LDCs (have a fall-back which others do not have) • Divided into 4 groupings of signatories & non-signatories • EU has obligation to provide with equitable alternatives to Conotou if can’t sign EPA. Not possible, so only alternatives are Standard GSP, EBA, GSP+. Problematic, however. • Downgrading to Standard GSP translates into high tariff jumps, which could lead to collapse of some industries • EBA only open to LDCs • GSP+ doesn’t cover all products & only open to 2009 (EU insisting on this) – appears to be WTO incompatible so might be challenged

10. Costs of non-EPA? • Alternatives? • Biggest group is non-EPA signatory states (25 states in Africa didn’t sign – Malawi, Zambia, Angola). Direct monetary costs = limited as had EBA as fall-back positioned. Indirect costs potentially substantial. • Non-EPA signatory developing countries (3 in Africa): direct monetary costs are limited as only small proportion of trade affected in general; indirect costs are lower than Group 1. • Signatories LDCs that might decide not to ratify (8 in Africa incl. Madagascar, Tanzania, Lesotho, Mozambique). Direct monetary costs: ltd as EBA. Those who did sign was due to e.g. strong regional trade ties. • Signatory dping countries that might not ratify: (10 in Africa e.g. Mauritius, Seychelles, Zimbabwe, BNS). All would experience large change in access, except for Botswana (due to beef industry signed) • Costs of non-EPA depend on status of African country e.g. agricultural exporters are worst affected; non-EPA may not be feasible/ desirable; potential influence on ability to access development aid money.

11. Costs of non-EPA? • Discussion: • Need to be forward looking & so EPA may be part of an overall trade diversification strategy (costs for non-signatories may seem low now, but strategically important to be dynamic). Has been strategically considered to a certain extent by e.g. Madagascar & Mozambique, not Zimbabwe where were rushed. • Option of moving to a different EPA seems possible e.g. Malawi to move to SADC-, but still questionable whether would be beneficial.

12. Challenges in 2008? • Negotiations will continue e.g. in terms of service & investment liberalisation etc. • Services: • EC proposes a positive list i.e. services that wishes to liberalise • Has to be in line with GATS (WTO), which means that substantially all services need to be incl., but more flexibilities offered in this regard as not clear what this would incl.

13. Challenges in 2008? • Group sessions: • Possible advantages & disadvantages • Adv: • Improved efficiency due to increased competition; • Skills & technology transfer resulting in innovation • Lower prices benefitting both producers & consumers • Improve business confidence & investment flows • Increased economic growth due to exporting of services under Mode 4 (downside is potential brain-drain) – Offensive interests? • Supportive function of services in trade of goods i.e. complementary nature • Forced to create regional regulatory fwk deepen & improve RI • Support to implement this chapter would lead to building capacities; • Increased transparency • Enhancing growth & development through improved infrastructure

14. Challenges in 2008? • Group sessions: • Disadv: • No regional services fwk yet, EPAs would make it difficult to reverse policies • Conflicts with national priorities – (possibly?) • Sensitive industries may be at risk e.g. health services as private hospitals attract skills away from public; Crowding out of local service providers • Commitments could potentially go too far as not informed by implications • Difficulties with regards to regulatory issues i.e. maintaining hands-on approach to regulating these services • MFN clause • African countries are also services-based, but interests are often defensive • In determining offensive vs defensive interests need to consider issues such as comparative adv. & where could we gain; what sectors are already open & where would EU be open to real asymmetry

15. Challenges in 2008? • Trade related issues: • Unclear what areas EC aims to cover – devil is in detail, however, EU keen to show successes in these areas • Poss. Trade related obligations for Africa? • National competition authorities – already taking place (in SADC case regional competition authority, which is going beyond & so need to consider if desirable?) • Listing selected entities subject to transparent public procurement (e.g. CARIFORUM will treat eligible EU suppliers same as locals – not clear what “eligible” is defined as) • Implementing IPR provisions e.g. protection of geographical indications (could potentially be excl. as not in rendez-vous) • EC would like to include services • Not sure what trade related services are to be covered & how – NB to learn from e.g. CARIFORUM text. These provide only guidelines, but contain some interesting provisions, but outcome depends on negotiations themselves.

16. Wrap-up? • Discussion: • Importance of negotiating from an informed point of view – complicated future if disputes resulting from what’s already been agreed. • IPRs – bad experience from US-SACU negotiations US pushing their interests. Possibility of developing offensive interests within the region? Jamaican rum was included by Caribbean, for example. Most probably covered by TRIPS & African countries already have their hands full ensuring other Chapters are to their benefit.