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Economic Partnership Agreements: A new approach

to ACP-EU economic and trade cooperation

Claude Maerten, European CommissionHead of Unit TRADE C 2 (claude.maerten@cec.eu.int)

TRALAC’s Annual International Trade Law Conference 11 November 2004

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BACKGROUNDBACKGROUND

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EU Trade relations with ACP countries still the same since Lomé I (1975)

A need for change

Agreed in ACP-EU Cotonou Agreement

WHY ?

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EU Trade relations with ACP countries Since Lomé I (1975)

Non reciprocal trade preferences

All industrial goods enter the EU duty free

80% of agricultural products enter the EU duty free, and the remaining 20% benefit from preferences

DID IT WORK ?

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EU Trade relations with ACP countries Since Lomé I (1975)

NO, few successful storiesFisheries, Agriculture, Commodities;

Mauritius, Kenya, Cameroon, Ivory Coast, Zimbabwe;

Same trade relationship during the last 30 years in a new world economic environment

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EU Trade relations with ACP countries Since Lomé I (1975)

Trade preferences had been eroded considerably (Kennedy Round, Tokyo round, Uruguay Round), and more to come with DDA

In the 80s, margin of preference around 10%

Today, lower than 4% in comparison with MFN, 2% in comparison with GS

Not enough in the past

Not a solution for the future

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Quick look at the dataQuick look at the data

Share of imports from ACP into EU

0%

1%

2%

3%

4%

5%

6%

7%

8%

1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000

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Quick look at the dataQuick look at the data

Lack of ACP export diversification5 PRODUCTS = 60 % of total Exports

(petroleum, diamonds, cocoa, fish, and wood products)

AFRICAN COUNTRIES REPRESENT

60 % OF TOTAL ACP EXPORT

Lome trade regime as a tool to promote exports failed

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Lessons learnt

Unilateral Preferences are Not Enough Trade relationship should go beyond

market access Promote a synergy between aid and

trade Mainstream trade in development

support Need for domestic reforms Develop supply capacities WTO compatibility

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RATIONALE FOR RATIONALE FOR

EPASEPAS

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Towards a new approachTowards a new approach

The Cornerstones of EPAsThe Cornerstones of EPAs

EU policies

The Cotonou Agreement

Development dimension

Regional integration

WTO compatibility

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EU Policies Trade Policy

Contribute to growth, employment and competitiveness in Europe

Multilateral route the top priority; Complete the Doha round Deepen bilateral and regional trade relations; regional

integration

Development policy The 6 priorities

CAP, Fisheries policy

EPA as a link for EU-ACP partnership

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The Cotonou Agreement Objectives

Sustainable development Poverty eradication Integration into the global economy

EPA is the trade chapter

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Development dimension Monterey consensus

sustainable, stable, transparent domestic policies in the South; Market Access granted by developed countries

Mainstream trade policies in development strategies PRSP, Integrated Framework, EU development policy; CSP; NIP and

RIP

Trade and Aid Coherence; Complementarity; Coordination (PRSP, Integrated Framework, EU development policy; CSP; NIP and

RIP) Supply capacities; private sector development, … Funding

Market access and Rules Complementarity, parallelism between DDA, EPA

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Regional integration

Support ACP political choices (coherence, AU)

First step towards gradual integration into world economy

Enlarging markets for attracting investment

Combined South-South-North cooperation (lock-in effects)

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Western Sahara

Lesotho

South Afri ca

Botswana

Mozambique

Somalia

Morocco

Algeria

Tunisia

Libya Arab Jamahi riyEgypt

Comoros

Seych elles

Mauritius

Mauritania

Chad

Cameroon

Central Afric Rep

Equatorial Guinea

Gabon

Congo

Swaziland

Namibia Zimbab weMadagascar

MalawiZambia

Angola

TanzaniaBurundi

Rwanda

R Dem Congo

Ken ya

Uganda

Ethiopia

Djibouti

EritreaSudanGambia

Senegal

Guinea BissauGuinea

Sierra Leone

Liberia

Côted’Ivoire

TogoGhana

BeninNigeria

Burkina Faso

Cape VerdeNiger

Mali

Eastern and Southern Africa

CEDEAO/ECOW AS +Mauritania

CEMAC +SaoTomePrinc

DG TRADE-c-1 (BS) Graph EPA 1LDC countrie s : i tali c nonLDC countries : und er lined

S.Tome,Princ

« SADC group »BNLS+Angola,Tanzania,Mozambique

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Western Sahara

Lesotho

South Afri ca

Botswana

Mozambique

Somalia

Morocco

Algeria

Tunisia

Libya Arab Jamahi riy

Egy pt

Comoros

Seych elles

Mauritius

Mauritania

Chad

Cameroon

Central Afric Rep

Equatorial Guinea

Gabon

Congo

Swaziland

Namibia Zimbab weMadagascar

MalawiZambia

Angola

TanzaniaBurundi

Rwanda

R Dem Congo

Ken ya

Uganda

Ethiopia

Djibouti

EritreaSudanGambia

Senegal

Guinea BissauGuinea

Sierra Leone

Liberia

Côted’Ivoire

TogoGhana

BeninNigeria

Burkina Faso

Cape VerdeNiger

Mali

CEDEAO/ECOWAS + Mauritania

CEMAC +SaoTomePrinc

DG TRADE-C-1 (BS) Graph Africa EPA 1976-2001LDC countrie s : i tali c nonLDC countries : und er lined

S.Tome,Princ

« SADC group»BNLS+Angola,Tanzania,Mozambique

1976 2001

I ntra region EU World

EEastern and SSouthern AAfrica

32 bn€

9 bn€ 30%46%

8%5%

1976 2001

I ntra region EU World

65 bn€

24 bn€ 37%

50%10%

3%

1976 2001

I ntra region EU World

15 bn€

3bn€66%

2%3%

46%

1bn€

1976 2001

I ntra region South Af rica

EU World

0%0%

33%37%

15 bn€

9%1%

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WTO Compatibility Lome/Cotonou waiver

Price to pay against ACP interests

Enabling clause Link between the level of RI and the level of our ambitions

Article XXIV GATT Existing flexibility enough The debate

Article V GATS

Meaning of WTO +

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ACP Total Trade (Imports+Exports) with EU

by region

ECOWAS43%

ESA18%

SADC group13%

CEMAC12%

ACP Caribbean13%

ACP Pacific1%

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WTO Compatibility Possible scenarios for reciprocity

West Africa 81% Central Africa 79% East and Southern Africa 80% Southern Africa 76% Caribbean 83% Pacific 67%

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Conclusion

ACP development is the objective; Trade is a tool

Regional integration as a political, economic and development challenge

EPAs are an opportunity