PRIVATE SECTOR VIEWS ON EPA NEGOTIATIONS

1. PRIVATE SECTOR VIEWS ON EPA NEGOTIATIONS Presentation to EPA Negotiations Coordination Meeting 17-18 May 2012 Prepared by EABC

2. Presentation Outline: • State of Play of EAC-EU EPA Negotiations and Private Sector Views • State of Play of ESA-EU EPA Negotiations and private Sector views • State of Play on the ECOWAS and Private Sector views • Overall views of private sector • Conclusions

3. 1. Background to EPAs (cont) • The Seven regional configurations formed by ACP were as follow: • the Economic Community of West African States(ECOWAS) • the Economic Community of Central African States(ECCAS) • the Southern African Development Community(SADC) • the Eastern and Southern Africa (ESA) • the Caribbean Community + Dominican Republic (CARIFORUM) • the Pacific region. • the East African Community(EAC)

4. 2. State of Play EAC-EU EPA • EAC-EPAs configured in 2007 after EAC Partner States found out that signing EPA in different configurations has negative impact on EAC Customs Union. Private sector view is that, whatever negotiations are negotiated, negotiators should be cautious; protect; and preserve the so far registered progress and potential benefits of EAC Customs Union. The guarantee clauses should clearly be spelt. • Prior to 2007 Tanzania was under SADC-EPA while Kenya, Uganda, Rwanda and Burundi were under ESA-EPA. Private sector has urged and continue to urge Partner States to negotiate as a bloc- EAC. • In Nov 2007 EAC FEPA was initiated to avoid trade disruption as WTO waiver tending to expiry and negotiations could not be concluded by 31st Dec 2007 (deadline for the negotiations) • EAC FEPA contained: Trade in Goods; Fisheries; Development Clause; Rendezvous Clause

5. 2. State of Play EAC-EU EPA (cont.….) • FEPA not signed in June 2010 because of contentious issues such as MFN Clause, Standstill Clause, Export Taxes, and Development clauses/annexes • Road map towards conclusion of Comprehensive EPA: • EAC –EC joint agreement is to conclude negotiations by 31st July 2012 . Private sector views are that negotiations require sufficient time to consult and understand more. However negotiations under pressure requires caution. • Coverage of the EAC EPA Agreed Scope: a) Trade in Goods, including Rules of Origin, Fisheries,

6. 2. State of Play EAC-EU EPA (cont.….) Scope: b) Customs & trade facilitation; Technical Barriers to Trade (TBT) and Sanitary & Phytosanitary Measures (SPS) c) An elaborated dispute settlement mechanism and institutional arrangements d) Economic and development e) Agriculture New Issues introduced by EU but not Agreed as part of the scope Trade, Environment and sustainable development Governance in Tax Areas

7. 2. State of Play EAC-EU EPA (cont.….) Private sector opinion on contentious issues under EAC-EPA: A. Standstill Clause (Article 13) a) The clause proposed by EU suggests, upon entry into force of EPAs to: i) No introduction of new tariffs ii) Not raise existing tariffs iii) Once eliminated, will not be re-introduced Private Sector view is that our negotiators should stick to principles. The principle of flexibility of policies is important for our economies and businesses. This clause freezes out tariff on applied rates to all those products expected to be liberalised in future, hence making transition to full liberalisation redundant. The Private Sector agree with EACs’ suggestion to redraft the clause to allow flexibility. However EU has shown reluctance to allow for future tariff modifications. Persist.

8. State of Play EAC-EU EPA (cont.….) B. Duties and Export Taxes (Article 15) The Private Sector views, in spite of the position by EU, export taxes are development tool to encourage value added production. In order to take necessary measures for the future development, private sector views are thus in support of EAC’s position not to allow the clause suggesting elimination of export taxes and quantitative restrictions (imports and exports)…hopefully this is ACP position.EAC is in the position that the Article should be formulated in such way that it allows EAC Partner States to impose taxes for industrialization purposes. C. Most Favored Nation (MFN) Clause (Article 16) About the EU proposed inclusion of an MFN clause, (requiring EAC to extend to the EU any more favorable treatment that it may give in the future to major trade partners)

9. State of Play EAC-EU EPA (cont.….) Private Sector position supports EAC Partner States, with the opinion that the MFN clause should be removed at best or reformulated at worst so as to allow EAC opportunities to expand trade with other partners. Economic & Development Cooperation Article 36 The EAC & EU had agreed on the substance of the whole text with the exception of two brackets under the “General Provisions” namely: (1.) The EAC EPA Development Matrix should be annexed to the EPA Agreement (EAC Party position). Private Sector is in full support of this position-only hop it can be ACP position

10. State of Play EAC-EU EPA (cont.….) (2) The benchmarks, indicators and targets should be developed after the signature of the Agreement (EAC Party position). The benchmarks, indicators and targets should be developed after the entry into force of the Agreement (the EU Party position) The Private Sector believes and support the view that benchmarks/indicators and targets should be developed upon signature of the agreement in order to facilitate timely evaluations Agriculture The two parties have agreed on the Joint Agriculture Text. Only two issues waiting EAC responses from EU’s revised text: Domestic Support and Export Subsidies Geographical Indications (3) Institutional Arrangements, Dispute Settlement and Final Provisions Private sector views are that the EAC, committed as it is to the negotiations, need to continue with negotiations.

11. State of Play EAC-EU EPA (cont.….) Trade and Sustainable Development (TSD) EU had proposed chapter on Trade & Sustainable Development highlighting the key areas with specific focus on the substance to be covered on environment and labor -including scope of cooperation and institutional arrangements. Good Governance in the Tax Area The EU had already proposed text on Good Governance in Tax Area and EAC is undertaking consultations on the text. Private sector community in EAC will provide their views/inputs in due course.

12. State of Play on the ESA-EU EPA This is a diverse EPA group that includes: • Indian Ocean islands (Comoros, Madagascar, Mauritius and Seychelles), • Horn of Africa (Djibouti, Ethiopia, Eritrea and Sudan) \ • land-locked countries of Southern Africa (Malawi, Zambia and Zimbabwe). • At the end of 2007, 6 ESA States (Comoros, Madagascar, Mauritius, Seychelles, Zambia and Zimbabwe) concluded an interim EPA with the EU. • The agreement was signed/ initialled on a bilateral basis by four countries (Madagascar, Mauritius, Seychelles and Zimbabwe) in August 2009 in Mauritius.

13. State of Play on the ESA-EU EPA The main areas under negotiations within ESA-EU are: development co-operation; market access in trade in goods, services, agriculture, fisheries; trade-related issues; dispute avoidance and settlement; and institutional and final provisions. So far ESA and EU have agreed in following areas: Trade in Goods; all provisions on SPS, TBT trade facilitation, capital movements, and general and specific security provisions were agreed. MFN clause also agreed. Services; Articles on principles (including on variable geometry), market access, other agreements, sections on tourism and travel, postal, maritime and computer services and chapter on capital movement were fully agreed, as well as most definitions (except the EU clarifying footnote and definition of enhanced mode 4).

14. State of Play on the ESA-EU EPA • Agreement in sectoral sections; was reached with the exception of development support related provisions to be discussed together with development cooperation chapter. b) Trade related issues; all provisions on competition policy were agreed except those relating to technical cooperation and capacity building, while on sustainable development, the Parties agreed to work on the basis of a joint text. Texts on agriculture and development are almost agreed except on a few issues. c) Implementation Status: In regarding with the implementation of the Interim EPA ESA configurations has done following : All four countries (Madagascar, Mauritius, Seychelles and Zimbabwe) that signed the interim EPA have now ratified it. It will soon come into effect after the deposition of ratification instruments by Zimbabwe, which ratified it last.

15. State of Play on ESA-EPA / Private sector views (SADC/COMESA) a) EU’s demand that LDCs like non-LDCs open up 80% of their trade over 15years - Private sector/ASSCI suggests that due to supply side constrains there is need for more time, beyond 15 years to liberalise and to ring fence more sectors. b) Implementation of the EPAs; Private sector suggests that resources for the implementation be negotiated as will entail substantial restructuring and engender adjustment costs c) EC demand to veto export tax policy by ESA states;Private sector suggests that since export taxes are essential for enhancing value addition and industrialization and ESA countries are primarily exporters of raw materials – be excluded from the negotiations -policy space is needed by ESA states to address supply side issues as they are primarily exporters of raw materials;

16. Private sector views on ESA-EPA d) Issues of MFN and special safeguards for agriculture; The Private sector is of the view that effects of EU export subsidies be included on the negotiation agenda; e) For each alternative position or options there is need to clearly outline and quantify the costs to each member country individually and then collectively as a region f)Flexibility, based on quantified options will allow ESA to move collectively together so that we do not end up having other countries put against the wall g) Instead of pushing the contentious issues to the political level, technical experts need to exercise their minds and suggest viable options to Ministers in order to resolve the impasse h) The EPA should be concluded on the basis of what is mutually agreeable. i) There is need to capacitate relevant ESA government authorities on trade defence instruments and dispute settlement

17. State of Play on ECOWAS: Private Sector views • 1. The cohesion of the ECOWAS region as a negotiation block is threatened by the continuous pressure put on the non-LCD countries, principally Ghana, Nigeria and Cote d’Ivoire to sign on the EPAs individually. • 2. The programme for upgrading the productive capacities of the West African companies should be run in all the 15 countries. • 3. The ECOWAS private sector would like to see an agreement on the proposed EPA for Development Programme (EPADP) before the completion of the negotiations

18. Way forward-Overall views/suggestions of Private Sector 1. Private Sector views are that; African configurations should develop a common understanding and approach on EPA issues such as TBT, SPS, Rules of Origin, as well as the contentions issues such as MFN Clause, Stand still Clause, Export taxes. 2. African configurations should lobby to EU to postpone the withdraw of market access regulation 1528/07 the instrument adopted by EU on 30 Sept 2007 to extend duty free quota free market access to ACP countries that either signed or initialled the interim EPA. There is need to retain the regulation until all configurations conclude full EPA without pressure. 3. EAC as Customs Union should continue to negotiate and sign full EPA as group – but also aim to negotiate with other trading partners on favourable terms ie ASIA, Africa Regional Blocs

19. 4. To make EPA a development tool, African configurations should strive to have agreement which address their supply side constraints by making sure EU is committed to provide new or additional resources to implement EPA. This can be made through annexing development matrix to the EPA agreement and development of the benchmarks, indicators and targets should be done after the signature of the EPA agreement. 5. African configurations should aim at having Rules of Origin which favor all-ACP cummulation and take into account; the difference in the levels of development between the ACP and EU Member States, food security, poverty alleviation and industrialization. 6. More involvement of Non Actors especially Private Sector in the negotiations as it is key implementer of the agreement

20. Conclusion Given the importance of trade, and its trading relation with EU, African countries should ensure to have a quality EPA but not at the expense of enhanced intra African trade. The world trade pattern is also shifting, more economies are progressively and competitively trading more with Africa. And Africa is progressively trading more within. Negotiate with other major trading partners; Intra Africa trade (between RECs) The EPAs should be cognizant of this new development Negotiate outside the situation of intimidation; pressure and threats! Consult more and more with private sector, the situation and conditions do regularly change – keep constant ear on the ground

21. THANK YOU