UN-ATPC - EPA Negotiations - African Countries Continental Review

8/2/2019 UN-ATPC - EPA Negotiations - African Countries Continental Review

1/101

EPA NegotiationAfrican Countries Continent

Revie

ATPCWork in Progress

No. 64

African Trade Policy Cent

ATPC

conomic Commission for Africa

February 2007 ATPC is a project of the Economic Commission for Africawith nancial support of the Canada Fund for Africa


2/101

APC is a project o the Economic Commission or Arica with nancial support o the Canada Funor Arica

Tis publication was produced with the support o the Royal Danish Government.

Material rom this publication may be reely quoted or reprinted. Acknowledgement is requested, togetwith a copy o the publication Te views expressed are those o its authors and do not necessarily rethose o the United Nations.


3/101

EPA Negotiations:

African Countries Continental

Review*

Review Report+

ATPCWork in Progress

Economic Commission for Africa

* Te ACP Secretariat initiated the Arica ACP review exercise through the APC and their guidance and that o the Arican Union Commissionis greatly appreciated. Contributions rom Ambassador Ferdinand Nyabenda, Morgan Karinge Githinji o the ACP Secretariat and FrancisMangeni o the AU Commission are greatly appreciated. Tis report also beneted greatly rom comments made at the validation meeting o12-13 February 2007 in Nairobi, Kenya organized with the generous support o the Royal Danish Government that brought together national

experts rom over 31 Arican countries negotiating the EPAs.

+ Te initial technical EPA review work was carried out under the direction o Hakim Ben Hammouda, Director, rade, Finance and EconomicDevelopment Division o the ECA. Adeyemi Dipeolu, Stephen N. Karingi, Remi Lang, Ben Idrissa Ouedraogo, Nassim Oulmane, PeterRobleh, and Mustapha Sadni-Jallab wrote this report collaboratively with the generous support o the International Organisation or theFrancophone in collecting the data. Te statistical data rom the questionnaires was summarised by Swaleh Islam. Romain Perez o UNDESAcontribution in designing the questionnaire is greatly acknowledged. Te views in this report do not in any way represent the views o the United

Nations or supporting institutions.


4/101


5/101

Table of Contents

Chapter I: Continental Synthesis ..................................................................................... 11.1 Introduction ....................................................................................................................... 11.2 Methodology o the review.................................................................................................. 11.3 Negotiations process ........................................................................................................... 21.4 Overall assessment o the negotiations ................................................................................. 31.5 Main challenges .................................................................................................................. 61.6 Outstanding issues .............................................................................................................. 71.7 Measures or timely completion o the negotiations ............................................................ 8

Chapter II: Regional Review: CEMAC-EU EPA Negotiations ........................................ 112.1 Introduction .................................................................................................................... 112.2 Assessment o the negotiations .......................................................................................... 112.3 Concluding remarks .......................................................................................................... 26

Chapter III: Regional Review: SADC-EU EPA Negotiations ..........................................273.1 SADC EU EPA Review: Background inormation ........................................................... 273.2 A qualitative review- Te view o the actors ....................................................................... 283.3 EPA Review- A quantitative assessment ............................................................................. 303.4 Policy recommendations and way orward ........................................................................ 41

Chapter IV: Regional Review: ECOWAS-EU EPA Negotiations ....................................464.1 Introduction .................................................................................................................... 464.2 State o play o the negotiations ........................................................................................ 464.3 Negotiating time rames and exibilities ........................................................................... 484.4 EU negotiating stance and tactics ...................................................................................... 514.5 Institutional issues ............................................................................................................. 514.6 Preparedness o the WAR economies to implement the EPAs ............................................ 534.7 Outstanding issues in the negotiations in WAR................................................................. 544.8 Other capacity related issues.............................................................................................. 594.9 EPAs ratication and alternatives ...................................................................................... 61

4.10 Te case o Burkina Faso ................................................................................................. 634.11 Conclusions .................................................................................................................... 64


6/101

iv

Chapter V: Regional Review: ESA-EU EPA Negotiations ...............................................5.1 Overall assessment o the negotiations ..............................................................................5.2 Negotiations structure and strategy ...................................................................................

5.3 Outstanding issues ............................................................................................................5.4 Negotiations progress vis--vis the roadmap ......................................................................5.5 Development-acilitating trade related measures ................................................................5.6 Measures required or timely completion o negotiations and implementation ..................5.7 Coherence o EPAs with regional integration processes o ESA countries ..........................5.8 Alternatives to EPAs and Article 37.6 o the Cotonou Agreement .....................................5.9 Conclusions ......................................................................................................................

Annex I: erms o Reerence and Preliminary drat budget .............................................

Annex II: A Comprehensive Review o EPAs Negotiations Questionnaire .....................


7/101

Chapter I: Continental Synthesis

1.1 Introduction

Negotiations on an Economic Partnership Agreement (EPA) between the European Union and the ACP(Arica, Caribbean, and Pacic) countries were launched in Brussels on 27 September 2002. Te CotonouAgreement provides or the legal basis o the negotiations, which are expected to end in December 2007with the new agreement coming into orce by 1 January 2008.

In July, the ACP-EU Committee o Ambassadors agreed upon a joint declaration setting out the modalitiesand terms o reerence or the implementation o the Review o the Economic Partnership Agreements(EPAs) negotiations set out in the Cotonou Agreements Article 37.4. Tis article states Te Parties will

regularly review the progress o the preparations and negotiations and will in 2006 carry out a ormaland comprehensive review o the arrangements planned or all countries to ensure that no urther timeis needed or preparations or negotiations. Te declaration states that the review will be undertakenjointly in each o the regional EPA negotiations and include the structure, process and substance o thenegotiations. It will assess what progress has been achieved on both trade and development issues and thework plan o negotiations, in order to identiy any necessary measures to support the timely completiono the negotiations beore the January 1st 2008 deadline or entry into orce o the new arrangements ori more time is needed to eectively conduct the negotiations. Te review will also identiy proceduresnecessary to support the eective implementation o the EPAs.

Tis report is a synthesis o a survey undertaken as part o the review o EPA negotiations at the dierentsub-regions in Arica. It thereore reects the situation at the continental level or Arica. Te report isorganised as ollows. It contains ve main sections or chapters. In the rst chapter, the methodologyo the survey review and a global synthesis o the crosscutting messages emerging rom the dierentsub-regions in Arica are presented. Te remaining our chapters then present more detailed analysis ointerviews and statistical results rom each o the sub-regions negotiating an EPA with the EU.

1.2 Methodology o the review

Te terms o reerence or the review were agreed jointly, as indicated above, between the European

Union and the ACP countries. On the basis o these terms o reerence, the ACP Secretariat requestedthe ECA under the auspices o the Arican rade Policy Centre (APC) . Te terms o reerence as set outby the ACP Secretariat in its request to the ECA are presented as Annex I to this report.


8/101

2

On the basis o the terms o reerence in Annex I, a survey instrument was designed to help gather required inormation that would assist in analysing the progress made in the EPAs negotiations. Tsurvey instrument is presented as Annex II to this report.

How was the review data actually collected? wo main modes o data collection were applied. First, ato-ace discussions were conducted with participants in three Regional Negotiating Forums (RNFBesides the ace-to-ace interviews, the questionnaire in Annex II was also distributed during the RNincluding that o ECOWAS in Abuja. Te questionnaires were thereore used to collect inormation rthe representatives o the National Development rade Policy Forums (NDPFs) in the sub-regions.addition to the interviews that were conducted and the distribution o the questionnaires at the RNdetailed country missions were undertaken in selected countries in all the our sub-regions. Te counvisits allowed more detailed discussions with members o the NDPFs o the selected countries. Trepresentation at the RNFs allowed the data to be collected rom majority o countries negotiating EPAs. By using the RNFs, it also presented the opportunity to gather views rom the dierent actorsthe negotiations. Te detailed country missions were instrumental to collaborating the messages at RNFs level with events on the ground.

Te statistical data collected through the RNFs and the country missions and during an EPA-ocuExpert Group Meeting attended by over 40 Arican countries is summarised in Annex III. Te ull samon which the statistics in this report are based was 94 respondents comprising o sub-regional responas ollows: CEMAC (18); ESA (38); ECOWAS (15); and SADC (23). While Chapters 2-5 capture dierences at the sub-regional level, the remainder o this chapter synthesis should be read hand-in-hawith the statistical data summarised in Annex III which gives the global picture at the Arica ACP lev

1.3 Negotiations process

In general and with a ew exceptions such as Kenya, our review ound that the process o negotiatiois not sufciently inclusive. Some other countries were indicated to go out o their way to ensure ththe Non-State Actors take part in the negotiations. But in general, Non-State Actors (NSAs) suchCivil Society Organizations (CSOs) and private sector representatives, but also the Parliaments are onot inormed sufciently o the negotiation processes. Tey have also complained o a lack o unds their participation in the negotiations process, including the NDPF or at least a lack o transparenin the utilization o these unds. CSOs have also expressed concerns that the array o topics to ollowbeyond their capacity, which spreads them thin on individual issues and leaves them with little time a

capacities or lobbying appropriate government agencies. It was emphasised however that or the EPnegotiations to succeed and the ratication process to be smooth, there is need or the parliamentarito be more involved. In addition, a need was expressed especially by Government ofcials or the nostate actors to pro-actively participate in national orums on EPAs.


9/101

In general, Regional Preparatory asks Forces (RPFs) are assessed as not ully efcient. Moreover, theirrole being only consultative, they do not have the clout to perorm in a satisactory way. All the regionsexpressed concerns that the secretariat o their RECs lacks sufcient capacities to conduct the negotiations

eectively. Both ECOWAS and CEMAC members expressed concerns over the relationship between theRECs secretariats and the Member States in the negotiations process, albeit or very dierent reasons.ECOWAS Member States expressed concerns over the lack o clarity in the role o both the ECOWASsecretariat and the UEMOA Commissions, both o whom are involved in the negotiations. Tere arealso concerns over the lack o transparency caused by this specic arrangement and the quality o theeedback provided to Member States. On the contrary, in the Central Arican Region, several intervieweesstated that the lack o capacity o the CEMAC secretariat prevented it rom operating eectively in thenegotiations. Te negotiations in this sub-region were almost at a stand-still and more because o capacityconstraints. Tereore in that region, Member States are playing a prominent role in the negotiations,sometimes to the detriment o coordination.

Several interviewees rom dierent regions called or an increased coordination among RECs, perhaps atthe AU level. Tis would be necessary to avoid potential competing positions by dierent RECs also toovercome the problem o overlapping o some RECs. Clearly, there has been insufcient technical andpolitical coordination o the negotiations at the continental level. Te idea o negotiating groups having aorum or regularly sharing o experiences was agreed to be invaluable. Beyond that, in order to enhancecoordination, it was elt that sub-regions should endeavour to implement the decisions at the AricanUnion Summit level and Declarations by rade Ministers on EPAs issues.

1.4 Overall assessment o the negotiations

In each and every region delays in the negotiations are looking more and more likely. It appears veryunlikely that any o the our regions will be able to complete the negotiations and come-up with an EPAagreement beore 31st December 2007. Tis means there is a likelihood that there will be need or moretime. Looking at the statistical evidence on the question regarding more time, it was clear that whateveradditional time is required is not very long. However, it was suggested that any extension o the deadlineneed to be linked with specic actions. In other words, any more time allocated or the negotiationsshould be specic on what will be done during the additional time. Subsequently, the extension needs tobe mapped with the outstanding issues in each o the sub-regions based on the specic sub-regions reviewreports on the negotiations.

Tere are several actors or the current situation where slow progress has been registered.

First and oremost there is clear lack o preparedness at the country and regional level in all the sub-regions. Tis lack o preparedness is in both important dimensions o the negotiations. o begin with,there is a clear lack o capacities to prepare and conduct the negotiations, at all levels. All the sub-regions


10/101

are aced with issues o capacity and shortage o nancial resources. Tis is the case o regional secretarias noted above, but also o national authorities and o Non State Actors. Tere is a lack o awareness ainvolvements in these negotiations rom all these actors. Te importance o Non States Actor (NSA

to the EPA negotiation process has been accepted in principle, as can be seen by the procedures thave been recommended to ensure their involvement. Each o the ACP countries has been advisedthe EU to set up a National Development and rade Policy Forum (NDPF), which would consistrepresentatives rom governmental bodies and rom a wide range o NSAs, including CSOs, whose rolto draw up a national position on EPAs. Te NDPF is supposed to provide the structure through whthe national position can be developed through a thorough process o consultation.

Representatives rom the NDPF together with a number o other ofcials, then present these positioto the Regional Negotiating Forums (RNF) at which negotiations relating to regional integration adiscussions with the EU take place. At each RNF meeting, NDPF representatives are mandatedpresent reports detailing the progress o the NDPF consultation process. Cotonou states that it is collective responsibility o both the EU and the ACP countries to ensure eective NSA involvemin Cotonou cooperation activities, such as EPA negotiations. Be that as it may be, the EU is keenplay mainly a nancing, consultative and monitoring role with regard to NSA involvement, with Acountries playing the main role in deciding which NSAs to include in the process. Tis responsibility been mandated to the National Authorizing Ofcer (NAO) o each ACP country, a senior governmofcial appointed to represent it in all the operations nanced by European Development Fund. TNAO works in close collaboration with the head o the EC delegation on preparing and appraisprojects and programmes. Te NAO is also responsible or the tendering o contracts, authoriziexpenses and making the necessary adaptations to ensure proper execution o programmes. With muo the resources or NSA involvement in EPA negotiations coming rom the EU, the NAO is eectiv

in charge o deciding which NSAs are involved in the process.

EPA negotiations oten take place behind closed doors and those who do not have access to thnegotiations have ound it difcult to gather detailed inormation on its progress. Tis lack o transparenhas been displayed not only by ACP negotiators and regional secretariat ofcials, but also by EU ofcas well. EU NGOs have also ound it very difcult to monitor negotiations with the EU, displayingalarming lack o transparency in their mute responses to requests or inormation rom EU NGOs. Tpoint is rather important because at the end o the day, the national parliament will have to adopt agreement. I the parliament is not really involved, this could delay the process o ratications i any.

In addition, among all the actors in the negotiations, there was an expression o lack o preparednessthe level o implementation o the EPAs agreement. Tus, private sector appeared hesitant to embrace EPAs due to uncertainties given the lack o preparations at the domestic level. It was elt not much hbeen done or is being done to strengthen the capacities o their economies to ace the new competitiregimes arising rom EPAs implementation.


11/101

Tere are also divergences among countries within the same region that slow down the negotiationsprocess. Tese divergences have dierent causes such as culture or the membership o countries withinthe same negotiating sub-region to other RECs. Tis is is the case with EAC in ESA and SADC, and the

UEMOA within ECOWAS. Te dierent levels o development within a given sub-region also tend tolimit the progress o negotiations. Tere is also a dichotomy between LDCs and non-LDCs. LDCs maysometimes eel less hard pressed to commit to EPA negotiations as they already benet rom nearly duty-ree quota-ree market access to the EU under the Everything But Arms (EBA) initiative. Consequently,the question o developing versus least developed countries appeared to aect the speed o consensusbuilding on some negotiating positions. It did however emerge rom talking to the respondents thatthere is an agreed principle that equal treatment should be overriding everything else when it comes toassessing EU oers. In the spirit o consolidating the regional integration gains, countries negotiatingtogether expected equal treatment in the nal EPA agreement. For some countries that are in post-conict situations, the negotiations o EPA appeared not to be a top priority.

Tere is also a great amount o rustration in every region, over the act that the EPA negotiations donot directly involve talks on the issue o the nancing o development. Tus, ailure to make progresson the trade-related development cooperation ramework and unding mechanisms emerged as a majorunresolved issue at the continental level. Tis concern is compounded by the worries o tari revenuelosses while tari revenue collected on imports rom the EU still constitutes a signicant amount ogovernment budgetary resources in Arican countries among other adjustment concerns. Te expertsinterviewed were also the more worried that the EDF resources have a record o being hard to tap dueamong other things to the administrative burden associated with their use.

Te degree o progress in negotiations seems to vary according to the region. In every region there are

delays within specic clusters. Sometimes, negotiations have barely begun in specic clusters, or exampleunder the capacity building cluster in Central Arica. In other RECs there may seem to have been progressin some clusters, or example in the market access clusters in SADC, but is hard to guess how much timeit might take to conclude the negotiations under this cluster as the thorny issue o sensitive products hasnot been tackled yet. Sufce to mention that impact studies conducted at the country (though only someo them), regional and continental level especially by the ECA highlight a lot o the challenges that haveto be surmounted as part o preparations to conclude and implement the EPAs.

Some trends have started to emerge with regards to the market access conguration that Arican countriesexpect under EPAs. Arican countries expect the EU to grant them total duty-ree and quota-ree access

to its market. On the over hand, Arican countries expressed their concern that they should benet romlong transition or liberalising their own market, and they should be able to retain a signicant amounto exibility in doing so.


12/101

An important element that is contributing to the slow progress in all regions it was elt was the delaythe EU to respond to issues and proposals raised/prepared by the Arican countries. Several exampwere cited at the sub-regional level, leading to the generalisation o this as a crosscutting issue. Te

example given was the eleven months that SADC countries had to wait in relation to their proposal the SADC EPA ramework. Te ESA countries on their part noted that the EU took a lot o timerespond with regards to the issues relating to sheries, rules o origin, development and agriculture. Ain the case o ECOWAS, the sidelining o the priorities in the sub-regions roadmap in the negotiatiowith the EU was elt to be contributing to the delay as there were pre-conditions in the roadmap that now not likely to be met.

1.5 Main challenges

Te main challenge to conclude the negotiation may well be the lack o capacity. Tis is both the capacto conclude the negotiations and also to implement the agreed EPAs. Te negotiating capacities o Aricountries are stretched thin by the concomitance o WO negotiations, EPA processes and pararegional integration talks, not to mention other bilateral trade negotiations with third parties. It is hato ollow these processes at the same time. Te difculties created by the lack o negotiating capacitare compounded by the lack o involvement o non-state actors. All the regions have expressed importconcerns with regard to the lack o impact analysis in individual sectors or sub-sector (e.g.: agricultutourism). Te regions and their Member States usually lack the capacity to conduct this type o analyIt is elt that such research would have been very helpul or the selection o sensitive products.

Te lack o deep sectoral impact analysis appear to also make it hard to be specic on the capacity buildmeasures that should start to be undertaken immediately. Tis signicantly inuences the preparedn

required or implementation o the EPAs. Tat the development matrices have taken so long to be draat the national and regional level is a clear indication o the lack o depth o sector level understandinTe additional time or negotiations and the long transition periods o implementation o commitmeseemed to be directly related to the question o preparedness to implement the EPAs when concluded

Te slow progress o the Doha Development Round (DDR) is also creating challenges or the negotiatioAmong other topics, the DDR negotiations cover the clarication o the rather blurred provisionsArticle XXIV and its Understanding. More specically, these negotiations could provide a new denitor substantially all the trade, which is the proportion o trade that a ree trade agreement such as EPhas to liberalise. Hence, with lack o dynamism in the DDR, it was elt like the EPA negotiations n

have to continue in a vacuum as regard to the extent o liberalisation that Arican countries will haveundergo. Tis does not acilitate the negotiations o EPAs as it leaves a high degree o uncertainty on exibility available to the Arican parties.


13/101

As highlighted above the negotiations structure in the West Arican region is complicated by theparticipation o both ECOWAS and UEMOA. In the East Arican region on the other hand, the absenceo a legal entity or the ESA is also complicating issues. Moreover, the Common External ari (CE)

negotiated by ESA, including the sensitive products, will have to take account o the Common Externalari o COMESA. Egypt and Libya are also members o ESA and are thereore concerned by the CE.In the South Arican region, the issue o overlapping make things even more complicated. Te SADCregion is negotiating a CE, while Botswana, Lesotho, Namibia and Swaziland (the so called BNLSgroup) are already bound in the SACU customs union with South Arica. However, the rade andDevelopment Cooperation Agreement (DCA) between South Arica and the EU already determine theSACU external tari towards EU imports. On the other hand, another member o SADC, anzania, isalso involved in another customs union, the East Arican Community alongside Kenya and Uganda, whoare negotiating their EPA under a dierent grouping: ESA. anzania thereore applies EAC duties to EUgoods and it will be very difcult to coordinate a CE both with SADC and EAC. Moreover, most othe operators met in anzania expressed their attachment to the EAC, which is perceived as unctioningrather eectively. In such circumstances one may wonder whether it would not be easier or this countryto negotiate its EPA under ESA rather than SADC.

1.6 Outstanding issues

At the continental level, the most difcult outstanding issue appears to be the lack o coherence betweenregional integration and EPA conguration. Te actors at the national and sub-regional levels werevery emphatic that while development (including aid) was a critical issue o concern, the pressures oEPAs on current regional integration conguration was the most difcult. Analyses o the statisticaldata at the sub-regions clearly show that regional integration in the context o the EPAs impacts on the

congurations have not been dealt with. In addition, it was also claried that even the development othe regional markets under the ramework o the current regional integration has not been addressed.Te ocus o the development o regional markets was seen to have been on market access rather thanthe development o the production capacities or the regional integration spaces covered by the EPAsnegotiations congurations. Te ocus o approach on market access vis--vis regional integrationprocesses emerged as unresolved issue particularly in the ESA and SADC regions. Putting the view thatregional integration in the context o conguration and building regional production capacities is themain outstanding issue that the EPAs negotiations have ailed to address so ar and the importance o aidas a critical issue as well, then development comes out to be the key concern that is yet to be addressedin the negotiations.

Te negotiations are also getting delayed due to a lack o sectoral analysis, which make it difcult toidentiy sensitive products, or example. Tere are also outstanding issues and indeed very signicantdelays in other clusters such as rules o Origins, standards, services and the regional development matrix.Failure to conclude work on the rules o origin was seen also to be delaying progress, even though it is


14/101

something that the EU could quickly provide a solution to. Arican countries were keen to have a quresolution o the issue and it was pointed out that the asymmetric rules o origin (allowing or both valaddition and change o tari headings) had been an outcome at the all ACP level and or that reason th

is rm starting point. Another important outstanding issue relates to the question o reciprocity. Tailure by the EU to concretise its oer o an EBA-equivalent or clariy whether the political statemthat it has no market access interest is synonymous to non-reciprocity has made the issue o reciprocto remain outstanding.

Tere are also divergences between countries on the so-called Singapore issues (investment ramewocompetition, and government procurement). On the one hand, there are those who are opposedthe EU insistence on rules. In their mind, the Cotonou Agreement ocus on the Singapore issues is cooperation. Even then, the cooperation ramework on the Singapore issues or these countries in thunderstanding were to be dependent on the outcome o the multilateral process and the capacities at national and regional level. On the other hand, the Singapore issues discussions are to be inormed by positions taken by Arican countries in the Doha Round.

Te question on alternatives also came out strongly at each o the sub-regions and the majority ethe need or their ull exploration. o a large extent, the EBA and GSP+ were elt not to be suitaalternatives in the context o Cotonou. Tis was the clear message in the review meeting in NairobiFebruary 2007. wo options were broached that would address the question o what happens to currtrade come January 1, 2008. Te rst option is the temporary continuation o the Cotonou regimFor this option, two things need to be done. Tere has to be a commitment rom the EU that it wcontinue with the Cotonou regime. And in order to orestall a challenge at the WO, the EU shomake a notication to the WO on the state o progress in the EPA negotiations. Te second option w

to sign agreed areas o the EPA with a provision or continuation o negotiations on outstanding issuHowever, it was pointed out that both these options are actually permissible in the Cotonou Agreemethereore alternatives to EPAs still need more denition.

Last but not least and as highlighted previously, the capacity issue must be addressed seriouslyorder to accelerate the conclusion o the negotiations and also help prepare the domestic and regioeconomies to implement the agreements. Te Secretariats o RECs appear to have capacity issues, butdo government and non-state actors to help speed up the negotiations and also implement programm

that would prepare the economies or the implementation stage.

1.7 Measures or timely completion o the negotiations

In the light o the above, the main messages on what needs to done appear to be:


15/101

Enhance the capacities o negotiators, including RECs Secretariat, but also state and non-state actors.Inormation and awareness with regards to EPA, what opportunities and challenges they representmust also be enhanced. More impact studies such as those by the ECA need to be undertaken

especially in those countries where they lack. In addition, more sectoral impact studies should bethe ocus even in those countries that have previously carried out impact studies but at the generallevel.

Start addressing the preparedness o national and regional economies to implement the agreements.Tis will give reassurance especially to the private sector that the EPAs are committed to developingcompetitive and diversied regional markets.

Address the issue o regional integration / EPA conguration. Tis may entail critical decisions romthe top government level. However it has to be noted that the current EPA conguration is not set instone, as highlighted by the shit o Congo Democratic Republic rom the ESA group to the CEMACone. Arican countries ought to start thinking o the trade relations among the dierent RECs andhow to acilitate trade ows among RECs. On its part, the EUs eorts to deepen integration shouldbe guided by Article 35.2 o Cotonou Agreement, which oresees building regional integration, andby extension the building o regional markets as a pre-requisite to markets opening.

Most o the experts interviewed also expressed the wish that EPA oer their country ull marketaccess to the EU (duty-ree, quota-ree), while they should be able to exclude a signicant proportiono their imports rom liberalisation. Tey would also want to be allowed long transition periods.

Due to the slow progress o the Doha Round and the uncertainties with regard to Article XXIVclarication, some actors are recommending that EPA negotiations should not be rushed. Tey donot perceive the expiration o the waiver as a major issue and doubt that a delay o 2-3 years beyondJanuary 2008 would be a major issue. More time on the other hand may be useul to build a betterunderstanding o sectoral issues and hence a better negotiating platorm. But as indicated above,Arican countries themselves expressed the need or any additional time to be clearly linked withactions that will be undertaken during the extension. Tere is urgency in the need or the EU andthe sub-regions to commit themselves to completing the outstanding work. Negotiations shouldhowever remain time-constrained in order to avoid loosing momentum.

Tere is need or political will to resolve outstanding issues on both sides. Te engagement with EUmember states could also contribute in the negotiations speed.

Due to lack o coordination at the continental level, it was elt that correct and timely inormationacquisition and dissemination or both sides would acilitate aster completion o the negotiations.Specically or the EU, more coordination with the EC between the DG rade and DG Developmentwould also help in accelerating the pace o negotiations.

Given the experience o ESA, especially in the text-based negotiations phase, it was elt that jointdrating sessions with the EC on contentious issues would help in avoiding delays.

Immediate operationalisation o the aid or trade by the EU was also indicated as a measure thatwould contribute positively to the timely completion o the negotiations.


16/101

0

Finally, alternatives to EPA should be ully explored. Te possibility to make EBA contractubinding or LDCs, it was indicated would not deal with the concerns o LDCs, especially given limitations o the rules o origin governing EBA. Te proposal that GSP could also be improved

other developing countries, even though this would contain a risk o preerence erosion as compato the current Cotonou provisions was indicated to be also unsuitable or the non-LDCs. In trespect, an oer rom the EU o what would constitute an alternative or the countries not ablesign the EPAs was elt to be overdue and its unveiling could aid in the negotiations speed.


17/101

Chapter II: Regional Review: CEMAC-EU EPA

Negotiations

2.1 Introduction

On 27 September 2002, the ACP countries (Arica, Caribbean, Pacic) and the EU ofcially launched thenegotiations on Economic Partnership Agreements (EPAs). Ater almost three decades o non-reciprocalpreerential access to the EU market, EPAs are meant to replace the existing trade regime by reciprocalagreements that are ully WO-compatible, while providing or dierential and asymmetric treatment.Te Cotonou Agreement provides or the legal basis o the negotiations, which are expected to end inDecember 2007 with the new agreement coming into orce by 1 January 2008.

Te countries negotiating an EPA with the EC under the central Arica (CA) conguration (CommunautEconomique et Montaire de lArique Centrale or CEMAC + So om and Principe), are Cameroon,Central Arican Republic (CAR), Chad, Congo, Equatorial Guinea and Sao om and Principe (SP).Tese countries were joined lately by Democratic Republic o Congo (DRC), though it is a member othe SADC and COMESA regional economic communities. On 4 October 2003 the EPA negotiationswere ormally launched. Te roadmap or the negotiations o the Economic Partnership Agreement(EPA) between Central Arica and the EU was signed on 16 July 2004.

In Central Arica, CEMAC rather than ECCAS is the negotiating group. Te Banjul Summit Decisionon RECs designated ECCAS as the regional economic community or Central Arica. In this regard,and in terms o ull utilisation o capacities, there is an obvious interest to strengthen and rationalise theworking relations between CEMAC and ECCAS in the context o regional integration in Arica and theEPAs. Te CEMAC group is entering a ree trade area with Sao ome and Principe in order to includethis country in the CEMAC negotiating group.

Tis chapter contributes to the review o the CEMAC+SP+DRC negotiations as mentioned in thearticle 37.4 and in line with the agreed terms o reerence jointly between the ACP and EU. It summarizesmain concerns and issues that CA countries currently have to ace. Tis summary is the results o bilateraldiscussions ECA held with CA countries delegations/respondents and RECs.

2.2 Assessment o the negotiations

According to the discussions during review missions, it appears that the dierent countries in CentralArica have the same kind o priorities, with a slight specicity or landlocked countries (Chad and CAR)and Small Island and vulnerable economy like Sao ome and Principe. Globally there is a huge concern


18/101

2

about the deadline o end 2007. All the stakeholders interviewed agreed that this deadline couldnt met or concluding the agreement under the current position. Tis appeared to be reinorced by eeling that there is still no condence yet on the ability o EPAs to be pro-development.

Te second great issue is the capacity building and more generally the development aspect o agreement. Te Central Arican countries are experiencing signicant capacity constraints, which imptheir ability both to negotiate the agreement with the European Union and to be ready to adequatimplement an EPA.

A. Outstanding issues in the current negotiations

According to the discussions with the dierent stakeholders, capacity building is clearly the key isin these negotiations. For them, capacity building can take various orms including reinorcing expcapacities, tackling supply side constraint, strengthening human resources; improving the level

inrastructures, industry upgrade and other measures aimed at improving the competitiveness o CenArican economies. Its in this context that regional integration appears, with 89% o the responses (Fig1), as the major outstanding issue, ollowed by trade related issues and aid. For 56% o the stakeholdethe current conguration is not very coherent with regional integration (Figure 2). It is important tthe concern with regional integration as an outstanding issue be taken in the right context. In the CenArican region, the lack o commitments to build a regional market is the key reason why it is stillissue, in spite o one o the key principle guiding the EPAs negotiations being the deepening regiointegration. Te respondents, rom the point o departure that one o EPAs key principle is to deepregional integration, elt that the issue o addressing production capacity constraints in the sub-regihad not been addressed. Te stakeholders underlined the need or more political involvement ro

central Arican countries on the regional integration process to make EPAs benecial or the region. Talso highlighted that some sectoral specic issues or the region, as wood and oil products, are not enouconsidered in these negotiations.


19/101

1. Outstanding Issues in the current EPAs Negotiations

0

20

40

60

80

100

Aid

89%

39%

28%

67%

56%

61%

Instititional

and legal issuesTrade-related

aspects

Trade

in ServicesTrade

in Goods

Regional

Integration

Tere was emphasis that incoherence due to regional integration congurations should not be consideredas a undamental incoherence between the process o regional integration and the EPA. Te stakeholdersconsidered, on the contrary, that the regional integration is a necessary condition that would permit their

countries to take advantage o the EPA and thus making it a real instrument o development. It is whilereinorcing their competitiveness as they learn in the national and regional markets that the countries ocentral Arica could then be able to take advantage o the EPA agreement with a zone where the marketis so competitive. Tey consider that the incoherence due to RECs congurations is noted at the level othe negotiations content and it should not be seen as a major element o the uture agreement. It is notin contradiction with the act that regional integration in the context o building markets is one o thekey EPA principles. So to build capacities, the reinorcement o the regional integration process is clearlythe most important concern or CA countries. In other words, the stakeholders perceived it as the keyoutstanding issue as they indicated to still be concerned with whether the EPA process will help the CAto oster its integration. On the contrary, they were concerned that the EPA process will undermine theregional integration process by reinorcing the economic linkages o the sub-region with the EU to thedetriment o the regional partnership.


20/101

2. Coherence in Regional Integration

0

10

20

30

40

50

60

No ResponsesNoYes

44%

56%

0%

B. Road map and time issues

In the region, the roadmap was established late and a lot o stakeholders indicated to not have beinvolved in its elaboration. Tere was a consistent theme rom the respondents in Central Arica that roadmap wasnt precise on capacity building, which is the crucial issue or these countries within thnegotiations, and the deadlines were quite unrealistic. Te dierent stakeholders were integrated vlate to the National Negotiation Committees. In addition, it seems that the regional structure (RegioForum) has also been to a certain extent a speed bump to the process. Indeed, no evaluation o capacities o the regional institutions was assessed up-ront. Had this been done, it would have berealised that it was necessary to strengthen the REC Secretariat beorehand so that it can coordinatean eective way the negotiations process. Tus, the lack o consideration o the ACP regions specicis one o the reasons o the delay in the negotiations. Te expectation that the speed o negotiatioin the Central Arican region would be in tandem with the other sub-regions was a major oversiin the view o the negotiators. Figure 3 shows that 44% o the interviewed stakeholders consider negotiations slightly delayed, and another 44% consider it very delayed. Also, the stakeholders underlinin a unanimous way, the lack o coordination at the continental level and asked or a much stroninvolvement o the Arican Union.


21/101

3. Evaluation o the pace o the negotiations given the agreed work plan/road map

0

10

20

30

40

50

No responseVery delayedSlightly delayedOn-track

0%

11%

44% 44%

0%

Ahead of schedule

Tereore, it is not surprising that the great majority o the stakeholders (78%) consider that there is aneed or more time to conduct eectively the negotiations. Tey reiterated the necessity o pushing thedeadline or the completion o the negotiations o the agreement to between 2 to 5 years beyond 31December 2007 and this or obvious reasons:

In Central Arica, the negotiations began with 2 years o delay with regard to the oreseen calendar. Te impacts studies were not all realized: besides national studies, there is a real need o ner sector-

based studies, which would allow to assess the nancial needs and to built a real developmentmatrix.

Tere is still a need or EPA popularisation with the civil society and with the inormal sector(or example in many countries, the armer organizations asked to be associated to the nationalcommittees only in 2006). Tere is a real lack o involvement o the grassroots actors.

Te non-consideration o the weakness in terms o human and material resources o the regionalinstitutions (CEMAC and ECCAS) implied an absence o real eective delegation o negotiationsmandate rom the States towards the RECs. Tis problem linked to the negotiation structure has

compounded delays with regard to the agreed roadmap. Certain stakeholders including civil society and private sectors joined the negotiation instruments

at the national level late. Tis was mainly because o the lack o communication, popularisation,scattering o the piece o inormation and also the absence o nancing o the participation o thesestakeholders in the regional structure.


22/101

Te creation o the 5th group (capacity building) took a lot o time. Te terms o reerence o group were still not agreed as o November 2006, one year to the end o the negotiations, whilethe stakeholders considers it as the most important.

4. ime to prepare or and Eectively conduct the Negotiations

0

10

20

30

40

50

60

70

80

No ResponseNo

17%

6%

Yes

It is also clear orm the discussions with those involved with the negotiations at the national and regiolevel that there is a clear lack o resources. At the national level, at the regional level but also at the E

level, the resources set aside to support these negotiations are not enough, or have not been disbursin an eective manner. Hence due to limitations associated with the resources, there has not bereasonable opportunity to conduct the negotiations adequately and optimally. Tereore, this issue hasbe eectively addressed i the CA countries are to nalize the negotiations (Figure 5).


23/101

5. Measures and Resources provided to conduct the Negotiations have been satisactory

0

0

0

0

0

0

No responsesNoYes

94%

6%

0%

11%

83%

6%

11%

83%

6%

22%

78%

0%

From other external sourcesFrom the EUAt the regional levelAt the national level

For these reasons it appears that the region will not be able to nalize the negotiations at the due time. Almost 83% o thoseinterviewed highlighted the difculty o the CA region to nalize the negotiations beore December 2007 (Figure 6). Consideringthe structural and undamental problems underlined by the CA negotiators, the signing o an EPA agreement by end 2007 isseriously not oreseeable, irrespective o whatever eorts which could be made in the next 12 months (without considering thenecessary time or ratication). Considering the lack o preparation o the region even to implement, let alone to negotiate, aconclusion imposed by the need or the EU to respect commitments with the WO would be very risky and totally incompatible

with the Cotonou spirit.


24/101

6. Whether Region has the capacity and is prepared to timely conclude EPA agreement

0

20

40

60

80

100

NoYes

17%

83%

Others kind o measures necessary to implement the agreements reached are a reinorcement o tracapacity building, a drastic increase o human and nancial resources but also regional and natiomeasures to accompany this trade reorm (Figure 7).


25/101

7. Measures necessary to implement the agreement reached

0

20

40

60

80

100

120

No No response

89% 67%

6%

28% 22%

0%

78% 83%

6%

11%6%

6%

Yes

Funding and financing assistanceNational measuresRegional measuresTrade capacity building

In Central Arica it emerged that 20 or at least 15 years were expected to implement this economicpartnership agreement. Tis urther strengthens the notion that clearly a review o Article XXIV oGA is indispensable. And while there could be arguments that it might be admissible on the basis opast experiences, to avoid challenge at the WO, the rules (or at least their interpretation) must providethe legal certainty required i the EPAs are to attract investments in the regional markets oreseen. Indeed,the current understanding o this article could allow a longer period than 10 years only in particular

circumstances, but this transitional period seems shorter in order to limit the oreseen adjustments costsCA countries will ace. Dierent stakeholders highlighted the act that Arican countries were very activein the Doha negotiations on this particular issue. However the suspension o the WO negotiations hasa direct impact on the EPA negotiations, as many countries were waiting or signicant improvement inarticle XXIV and other rules, beore negotiating and even concluding the EPA transitional period.


26/101

20

8. ransition Period satisactory to a Country

0

5

10

15

20

25

30

35

40

Less than

8 years

8 years10 years12 years15 years20 years

17%

39%

22%

0%

11%

0%

11%

More than

20 years

At the centre o these negotiations is the principle o reciprocity among other principles. Te optimlevel o reciprocity according to CA countries should be to have less than 50% o the volume o imporom EU according to one-third o the respondents. And an almost similar proportion o respondeat 28% indicated that reciprocity o 60% would be more in line with their development objectives (

Figure 9).


27/101

9. Level o Reciprocity satisactory to a Country

0

5

10

15

20

25

30

35

40

Less than 50%

0%

6%

17%

0%

28%

17%

33%

50% of the

volume of imports

from the EU

in to Countries

60% of the

volume of imports

from the EU

in to Countries

70% of the

volume of imports

from the EU

in to Countries

80% of the

volume of imports

from the EU

in to Countries

90% of the

volume of imports

from the EU

in to Countries

Full

reciprocity

C. Te EPA development component and capacity building:

Tere was a unanimous voice among those who participated in the review that the development part(article 37.3 o the Cotonou agreement) was not sufciently taken into account. Although constraints

are well acknowledged in Europe, the stakeholders elt that the European Commission has been veryreluctant to take the approach o discussing and concluding development issues, or at least agreeingto development benchmarks despite numerous ormal requests rom the ACP to include developmentsupport as part o the EPA negotiations. Tere was also a common stance on the need or exibility;adjustment mechanism, and sequencing o trade liberalization with regional integration process in thatorder.

Enhancing capacities o regional organizationsthe CEMAC secretariat includes less than 60 persons,while in comparison, the ECOWAS secretariat comprises more than 300the level o inrastructures, orms and other measures that allow or enhancement o the competitiveness, remain a priority with regardto the market access issues. Te crosscutting message rom the dierent actors in the negotiations wasthat no agreement could be envisaged without massive intensication o capacities. Tis is in particular,i the development dimension remains the way it is with little ambition and also very remote rom thespirit o the Cotonou agreement. In term o concessions, according to the majority o the stakeholders,


28/101

22

it is important that the EU grants a total ree market access without any limitation (100%), notably agricultural products (Figure 10).

10. Concession that a Country expects rom the EU in terms o Market Access

0

10

20

30

40

50

60

No ResponseImprovements in the

Cotonou scheme

Continuation of Cotonou

concessions

Duty free access to

the European markets for ACP

products

56%

28%

22%

6%

Te incapacities in terms o preparation, underlined previously, beg or an adjournment o the agreemsignature. But beyond this, strong constraints press on the economic actors and unless they are dewith as part o the preparations, the countries cannot benet rom the EPA. Te dierent stakeholdrepeatedly underlined the necessity o improving the level o the enterprises, as inspired by the experieno the North Arican countries that have already signed bilateral agreements with the EU under Barcelona process. Industry upgrade is crucial to demonstrate a strong commitment rom the EU

helping the Central Arican countries prepare or the EPAs implementation. In the same way, enhanchuman capacities is necessary or the implementation o the agreement. Tose interviewed rom the Ccountries deplored the lack o consideration granted to these clusters related with preparations o national economic production abrics. o most, i EPAs were really to be pro-development, they wo


29/101

need to address really the capacity building issue in the region. CA countries consider that this issue hasstill not enough been taken into account.

Moreover, most o CA countries are quite worried about the adjustment cost issue. Tey are also unclearo how the EU will partner with them in order to limit the adjustments costs. And more importantlyhow the partnership will acilitate the economic and social reorms CA countries will have to implement.Tereore, CA region considers that EU should ensure that the costs o liberalization would be compensatedby nancial assistance but also by a better development package devoted to the agreement. Tis nancialassistance would be needed to make up or shortalls in the loss o government revenues (in CA, thegovernment revenues are highly related to tari revenues), and the costs o labour market adjustments asa result o producers displaced by cheaper inputs. Te nancial assistance should also be de-linked romthe market access negotiations and should be unconditional (Figure 11). Te Central Arican countriesrecognize that there will be economic and social reorms to accompany EPAs implementation. However,these reorms require support.

11. Ranking o the Development acilitating trade relating measures

0

10

20

30

40

50

Sequencing of trade liberalization

with regional integration processAdjustment mechanismsAsymetryFlexibility

0%

17%

33% 33%

28%

6%

22%

28%

39%

22% 22%

11%

22%

44%

11%

17%

Te stakeholders concerned by the EPA negotiations are concerned with the inexibility o the EU inits positions, especially the DG trade that seems to ignore what the Central Arican countries considerimportant and necessary. Te DG Development has also not demonstrated a real willingness to makethe EPA a real instrument o development. For the region, it is considered important to address the


30/101

2

specic supply side constraints that aect CA economic productivity and competitiveness in trade. Tstakeholders consider that treatment o capacity building (72%), inrastructures (72%), competitivenenhancing measures (61%) have not been taken into account during the process o negotiation so

(see Figure 12).

12. Whether Points have been taken into account during the process o the negotiations

0

20

40

60

80

100

No responsesNoYes

Competiveness

enhansing measures

Infrastructure

upgrading

Strengthening of

regional organizations

Continuation of

Cotonou concessions

Treatment of

capacity building

11%

11%

11%

11% 11%

11%

11% 11%

11%

11% 11%

11%

11%

11%

11%

Beyond the issues raised so ar, in the region, the delay to conclude a regional development matcontinues to be a problem. And while development is seen as crucial to making EPAs a success, the sregion has been unable to conclude its regional matrix. At the national level more than two-thirds o respondents indicated that their countries have not completed their development matrix needs (Fig13).


31/101

13. Countrys assessment o its Development Matrix Needs

0

10

20

30

40

50

60

70

80

No ResponsesNoYes

22%

67%

11%

D. Alternatives

In the region, two-thirds o those who responded consider that alternatives to EPAs need to be ullyexplored (Figure 14). Tey consider that the de-acto alternatives dont appear credible. Tus the GSPplus would only increase conditionalities to the countries. Non-LDC countries could not benet romthe EBA regime and could not either sign a bilateral agreement, and this or political reasons linked tothe regional integration process o in Arica. Many interviewed stakeholders consider that the absenceo alternative, except the GSP regime, underline in act the non-respect o the Cotonou agreement, thatoresees the exploration in depth o all the alternatives. In their view the European partner has always

reused to seriously engage on the issue o alternatives.


32/101

2

14. Whether alternatives to EPA be ully Explored

0

10

20

30

40

50

60

70

80

No commentNo

67%

22%

11%

Yes

2.3 Concluding remarks

From this regional review it appears that the current state o negotiations has not adequately addressedthe difculties and concerns o Central Arican countries. Tese concerns are clearly set in quantitatterms. Te concerns include: ailure o the negotiations to have a development ocus; the imbalancethe negotiations towards a ocus on trade liberalization; and lack o appreciation o the major adjustmchallenges that these countries would ace in implementing EPAs. In addition, the pace o negotiatiohas been greatly slowed by the time it takes or the EU to respond to issues that are ormally presentedit. As a result, this negotiating group is alling behind the timerames or the negotiations. Te EU shorespond more quickly and should not be as inexible as it has been, in order to hasten progress in tnegotiations. Te European Commission should positively respond to the key concerns o CA countrand should have regard to the pronouncements o European Parliamentarians and some member stacalling upon the negotiators to ully take into account and positively respond to the concerns o dierent ACP negotiating groups.


33/101

Chapter III: Regional Review: SADC-EU EPA Negotiations

3.1 SADC EU EPA Review: Background inormation

Negotiations on an Economic Partnership Agreement (EPA) between the European Community andthe ACP (Arica, Caribbean, and Pacic) countries were launched in Brussels on 27 September 2002.Te Cotonou Agreement provides or the legal basis o the negotiations, which are expected to end inDecember 2007 with the new agreement coming into orce by 1 January 2008.

Te countries, which have decided to negotiate an EPA with the EC under the Southern AricanDevelopment Community (SADC) conguration, are Angola, Botswana, Lesotho, Mozambique,Namibia, Swaziland and anzania. South Arica has been participating in an observatory and supportive

capacity but there is a possibility o it being enjoined ormally as a substantive member and negotiatorwithin the SADC EPA group. SADC-EC EPA negotiations were ofcially launched on 8th July 2004 inWindhoek, Namibia.

Te SADC-EC EPA is based on regional integration initiatives o the SADC countries. Te negotiationsare sequenced so as to complement and support the regional integration process and programmes, theharmonization o regional rules and the consolidation o the SADC regional market. Botswanas Ministero rade and Industry has been designated to lead the negotiations or SADC at Ministerial level. A chieNegotiator is leading the negotiations at Senior Ofcial level and the EPA Unit o the SADC Secretariatat the technical level.

Te European Commission is negotiating on behal o the EC, represented by the Commissioner orrade at Ministerial level, and a Senior Ofcial o DG rade at senior ofcial level and by the DG radeUnit responsible or SADC-EC EPA coordination at the technical level. Te EU Council o Ministers,meeting in Brussels on 12 February, accepted to include South Arica in the SADC EPA negotiations,and at the time writing, the SADC countries were still discussing the reply by the EU on South Aricasinclusion.

Tis present report contributes to the review o the SADC EU EPA negotiations as mentioned in thearticle 37.4. It summarizes the mains concerns and issues that SADC countries currently have to ace.Ater a general overview o the SADC EU EPA, the second section summarises the results o interviewsthat beneted rom SADC delegations during the last RNF organized rom 04 to 09 November inMaputo, Mozambique. Te third section proposes a quantitative review o questionnaire responses onthe appreciation o the negotiations process o this partnership agreement. And lastly, some proposals onrecommendations and way orwards are presented.


34/101

2

3.2 A qualitative review- Te view o the actors

A. Inadequacy o the negotiation process

Both parties agree to establish a SADC-EC Regional Preparatory ask Force (RPF) in order to enothe strategic link between EPA negotiations and development cooperation. Te RPF supports implementation o the provisions o the Cotonou Agreement on the complementary o trade aeconomic cooperation and development support. Te RPF does not constitute an element o negotiating structure but is supposed to contribute to the efcient delivery o support to the SADregion in its preparation, negotiation and implementation o the SADC-EC EPA.

At their meeting on 5 July 2005, SADC rade Ministers agreed on the issues to be included in the Edevelopment dimensions and regional integration; Sanitary and Phytosanitary measures and echniBarriers to rade; Market Access (Agriculture, Fisheries and nonagricultural goods); Rules o Orig

rade Facilitation and Customs Cooperation; rade Remedies including Saeguards, Anti-dumpand Countervailing Measures; rade Related Intellectual Property Rights; rade in Services; other leProvisions including national security clause and dispute settlement; and institutional arrangements aimplementation modalities.

Te ocus o the SADC-EC EPA negotiations has been to identiy means o cooperation between SADand the EC to address SPS and B problems aecting both intra and extra SADC trade (3). echnassistance and eective inormation exchange particularly on the changes relating to the EU legislatiaecting key SADC exports, are seen as important to addressing SADC needs in relation to SPS aB. SADC is also calling or longer implementation timerames to adjust and develop their capacity

meet the constantly changing, complex and costly EC regulations. Te need to reinorce eorts towaSADC regional integration is also highlighted as one o the critical areas or the EPA negotiations.

B. Lack o preparation o the SADC member states

Te SADC-EC EPA negotiations is sequenced in three stages:

Stages 1: Setting o Priorities and Preparations or Negotiations Stage 2: Substantive negotiations Stage 3: Finalization

SADC countries have been able to agree on the main modalities o the negotiation issues. However,market access cluster there is still some difculties. Tese difculties come essentially because 4 countrBotswana, Lesotho, Namibia and Swaziland have to nalize the sensitive lists o products. Indeed tSACU countries are linked with South Arica and this sub regional grouping within SADC provosome difculties in the market access pillar (BLNS countries).


35/101

It is also important to highlight that some countries in the grouping didnt make any independenteconomic and welare assessment o the likely impact o the EPA on their economies. Tereore, countriesare still identiying their sensitive products lists to be excluded partially or totally rom any commitments

and any tari reductions. For example, no sectoral impact assessment has been done or anzania. Tegovernment lacks resources to do this work and expects the EU to provide some answers to the mainchallenges. However, more general studies have been done and suggest that anzania has little to gainrom an EPA.

SADC members mentioned that the ministers did not have an opportunity to meet with the EU sincethe launch o the negotiations and this point could clearly explained the slow progress o the negotiations.Furthermore, SADC members expressed their rustration concerning the act that SADC had to wait ora written answer, since March 2006, or their proposed SADC EPA ramework. Te SADC secretariatalso mentioned the persistence o the EU to include the Singapore Issues within the ramework o theEPA negotiations. SADC countries are not ready technically and politically speaking ready to includethese issues in the drat text o the negotiations. Tereore, SADC countries have proposed so ar thatdiscussions on these issues should be on cooperative basis and not binding.

Te region has beneted rom the more general studies such as one by Imani Development InternationalLtd Mauritius, which did a study, but at the regional level. Tere was also an ECA study presented duringan expert group meeting organized in Maputo by UNECA last year.

C. A Sub-optimal negotiation conguration

During discussions at the last SADC-EPA-RNF held in Maputo-Mozambique, many delegations

highlighted the act that SADC grouping is still under the rst phase o the road-map and needs to identiythe main priorities. Tis situation is in act partially explained by the conguration o the grouping andthe overlapping membership among SADC countries. As many delegations rom SADC countries havementioned during the last RNF, within each grouping, there are separate regional groups in operationcreating problems o overlapping membership e.g. Southern Arican Customs Union (SACU) withinSADC and East Arican Community (EAC) within the Eastern and Southern Arica (ESA) group.Indeed, since 2000, the SADC countries have been involved in a double process o integration. On theone hand, SADC member states are cutting their taris and non-tari barriers on their sub-regionalimports, in order to create a ree trade area (FA) by 2008. By 2010, a common external tari should beimplemented and a single currency created by 2016. On the other hand, they are negotiating through

the SADC an Economic Partnership Agreement (EPA) with the European Union (EU), which shouldlead to a quasi ree trade area between SADC and EU in the years ollowing 2008 . Te SADC secretariatexpressed the act that EU wants to see the custom union implemented in 2008 and not 2010.


36/101

0

Te need or the EPAs to reinorce the regional integration process is the most important concern SADC countries. Tis notwithstanding, it is important to recognize that the actors in the SADC Enegotiations are concerned with the lack o progress in the negotiations to address the regional integrat

challenges both rom a conguration standpoint and also rom a developmental point o view. Tquestion o resources came out clearly as an integral part o the status o regional integration as the moutstanding issue.

D. Te weakness o the developmental dimension in the EPA

According to the SADC EPA negotiators, the EC has so ar provided little inormation about how development assistance and trade aspects o EPAs will be integrated, who will carry out the monitoriwhat benchmarks the monitoring will be measured against and how the monitoring will be linkedthe implementation process. Te answers to these questions could be crucial to the impact o EPon development and as usual the devil may be in the details as the development ramework becom

clearer. Te SADC negotiators also mentioned that the benets that SADC region expects rom three main pillars o EPAs (regionalism, market access and integrated trade and development supporthe third pillar o the development agenda) are not guaranteed to be substantial enough to outweigh potential costs. Tereore, SADC proposes that EC should engage more actively in discussions with grouping but also with the ACP secretariat in relation to the volume o development assistance that waccompany EPAs.

Te next section analyzes some statistics obtained rom the questionnaires that were disseminated amoSADC countries. Based on a quantitative assessment and using the results o the questionnaires, ollowing have been identied as the main concerns that SADC EPA countries currently ace: (1)

question o overlapping membership and the act that South Arica has signed the DCA with EU whimplies some constraints or some SADC countries which are also linked with South Arica through SACU, (2) the diversity o economic structure in the region, (3) the lack o diversication o the regand why EPA is not today tackling properly this issue, (4) the lack o involvement rom Non States Act(NSA) but also and this point is quite worrying or the parliamentarians and (5) the lack o capacitiesthe SADC Secretariat on this issue.

3.3 EPA Review- A quantitative assessment

A. SADC versus SACU, SADC versus ESA, SACU versus DCA: How to optimise the overlapp

membership the trade liberalisation schemes?

Te question o overlapping membership is indeed a serious issue or the SADC grouping negotiatiEPA. As can be seen rom Figure 15, more than 96% o the respondents highlighted the importancestrengthening regional integration and EPA should be an instrument that avors regional integrati


37/101

process. However, it appears that the current conguration is not very coherent or roughly 50% o thedelegates interviewed (Figure 16). It was elt that this duality o the processes raises many questions. First,what will be the eect o each o these integration processes? Concerning EPA, the issue concerns not

only the trade creation and diversion in the SADC region and in the partners o the SADC countries,but also the change in welare o the consumers, as well as in the government revenues. Second, one maywonder whether the EPA process will help the SADC to oster its integration, as claimed by the EuropeanUnion, or whether, on the contrary, it will compete the regional integration process by reinorcing theeconomic linkages o the sub-region with the EU, to the detriment o the local partnership.

Very recently, the EU agreed to include South Arica in the SADC EPA Framework. Te EU considers thatthe incorporation o South Arica into the SADC EPA negotiations creates a more consistent rameworkor the economic integration o the region. However, this is subject to certain conditions regardingMozambique, Angola and anzania, the scope o the uture agreement and the denition o tari oers.Tis matter is still unresolved emphasising why more time might be needed in this sub-region. Moreover,

the response by the EU raises important issues in relation to the question o rules o origin and thesensitive lists that the SADC EPA countries will ace should its proposal to have dierentiation betweenSouth Arica, BNLS, and MA countries be part o nal EPA.

Figure 15: Outstanding issues in the current EPA negotiations

0

20

40

60

80

100

AidInstititional and

legal issues

Trade-related

aspects

Trade in

Services

Trade in

GoodsRegional

Integration

96%

57%

43%

48%

70%

57%

Tereore, harmonization o objectives or abolition o the multiple memberships by SADC in conictingeconomic integration or regional blocks such as ESA-EPA, SADC-EPA, DCA, and SACU will becrucial. Policy choices might have to be made by the SADC countries (anzania or instance) given itsmembership to EAC whose other partners are part o the ESA EPA.


38/101

2

Furthermore, respondents mentioned that the SADC integration process also aces difculties. Tera concern that the eective pace o liberalization has been slow. Another important issue raised by trespondents is that the rules o origin in SADC have gradually become restrictive and product-spec

under pressure rom member states. On that issue, negotiations are still ongoing, which is probaindicative o a lack o political commitment to liberalization. Unortunately, restrictive rules o origare likely to increase administrative costs and will limit the benets o the SADC preerences. Ticompounded by the serious concern that the EU is pushing regional integration too quickly throuEPAs, by asking or a Common External ari (CE) when the SADC countries are not ready or th

In addition, within SADC, members have a very similar production structure, which makes bringdown intra-regional taris a very sensitive process especially or the economically weaker members.

Figure 16.Coherence in Regional Integration processes and EPA Commitments

0

10

20

30

40

50

60

No CommentNoYes

35%

52%

13%

B. Lack o economic diversication and supply side constraints

In development terms, the SADC is a very diverse region consisting o three least developed countr(LDCs) and our non-LDCs. Tis diversity poses a major challenge to the EPA negotiations becauLDCs can benet rom the Everything but Arms (EBA) initiative, which provides non-reciprocal ta

ree and quota-ree access to EU markets or all products rom LDCs. Te non-LDCs stand to lose thcurrent Lome preerences by 2008. Despite the act that SADC region is probably one o the regionArica (below the Sahara) that is most developed, many SADC countries are still suering rom a wrange o supply constraints which include transport, electricity and telecommunications inrastructuinstitutional capacity and a shortage o human resources.


39/101

On the question o what countries expect rom the EU that it is clear rom the response that one way toachieve improvements in the diversity o economic structures could be to grant a ull duty-ree quota reemarket access or the SADC countries to the EU market (Figure 17). Indeed, it appears rom the review

that this concession is tremendously important or SADC countries. Te SADC EPA countries haverequested that they grant a non-reciprocal duty ree quota ree access to the EU market to Mozambique,Angola and anzania in a contractual orm. Te EU wishes to keep these countries on board o the EPAnegotiation and is willing to explore all possible options compatible with WO standards, taking intoconsideration the legitimate concerns o these countries, and o least developed countries in general.Furthermore, it seems to be important to address the specic supply side constraints that aect SADCseconomic productivity and competitiveness in trade, namely: price volatility, lack o marketing acilities,market access inormation, processing o agricultural oods and all orms o non tari barriers. It is worthrecalling that like in other Arican countries, non-tari barriers are an issue or SADC countries, which aredependent on one or two primary commodities or the bulk o their export earnings. For such countries,the potential loss o trade through the imposition o higher standards in the export market can run intomillions o dollars. It is thus not surprising that product standards are highlighted as one o the two majorconcerns by Arican leaders in the NEPAD Market Access Initiative document (2002) (the other beingOECD arm subsidies) (Millennium Project, 2005). NB are applied in a selective way, on particularproducts rather than across-the-board. Tat increases the potentially damaging nature o these restraintson trade, or it suggests that they are applied in an arbitrary way to protect particular industries. SADCproducers are very much aected by the prevalence o the NBs, providing an important disincentive todiversication. Tat is another reason why, many SADC actors strongly believe that EU should give toACP countries a ull market entry (duty ree quota ree market access) without any commitments romtheir part.


40/101

Figure 17.Concessions that a Country expect rom the EU in terms o Market Access

0

10

20

30

40

50

60

70

80

No Response

74%

22%

17%

0%

Improvements inthe Cotonou scheme

Continuation ofCotonou concessions

Duty free access to theEuropean markets for

ACP products

C. Lack o involvement rom the Civil Society Organization (CSOs) and parliamentarians

CSOs are nding it quite difcult to procure the inormation they require to eectively monitor EPA negotiating process. In the case o the Parliamentarians, regular briengs are not undertaken, the ratication process will ultimately have to go to Parliament in most o the countries in SADC lelsewhere. Te ailure to brie Parliamentarians carries a risk o the EPAs agreement ratication procbeing protracted, delaying their implementation.

Another problem that CSOs have been acing is in relation to the act that Cotonou is a multi-acecooperation agreement incorporating trade, aid and political issues. Tis means that there are otenmultitude o government ministries involved in EPA negotiations and it is difcult or CSOs to keetrack o who is making the decisions. Tis has made it difcult or them to target their lobbying activiin an eective way. Te act that NSA are not really involved in the negotiations could explain the deo the negotiations that is envisaged (Figure 18).

CSOs have a very important role to play in helping to identiy the strengths and weaknesses o the SADeconomies, so that decisions can be made as to which sectors are to be opened to greater competitiwith the EU and what period o time they need to prepare or theses reorms. However, CSOs

struggling to play this role due to their lack o awareness on the issues surrounding EPAs and mimportantly on a severe scarcity o the necessary resources and human capacity required in order to pan active role in the negotiations. Furthermore, the monitoring processes that are meant to ensure thinvolvement are not unctioning properly due to insufcient resources and also political will rom SADstates in making CSOs active partners. For example, it was noted at the SADC RNF meeting in 20


41/101


42/101

Box 1: Cotonou Agreement- Article IV

The ACP states shall determine the development principles, strategies and models of their economies and societies

in all sovereignty. They shall establish, with the community, the cooperation programmes provided for under this

Agreement. However, the parties recognize the complementary role of and potential for contributions by Non StateActors (NSAs) to the development process. To this end, under the conditions laid down in this Agreement, NSAs shall,

wherever appropriate:

Be informed and involved in consultation on cooperation policies and strategies, on priorities for cooperation,

especially in areas that concern or directly affect them, and on the political dialogue;

Be provided with nancial resources, under the conditions laid down in this Agreement in order to support local

development processes;

Be involved in the implementation of cooperation projects and programmes in areas that concern them or where

these actors have a comparative advantage; and

Be provided with capacity-building support in critical areas, in order to reinforce the capabilities of these actors,

particularly as regards organization and representation, and the establishment of consultation mechanisms

including channels of communication and dialogue, and to promote strategic alliances.

Tanzania: The main concern

Lack of capacity to negotiate from a position of strength and improve the capacity of all stakeholders Increase the level of collaboration between State actors and Non-State Actors in order to derive better gains from

having research/think tanks.

No appropriate platform for a national consensus to be built. CSOs, private sector and also regional authorities are

not consultated sufciently and their awareness of the EPA negotiations and what challenges it may represent is

very shallow.

Little feedback is provided back to other entities not directly involved in the negotiations, after progress in

discussions with the EU.

CSOs have to participate widely in the negotiations

Necessity to carry out resource mobilization initiatives including nancial, human resources, for the benets of

more stakeholders in the negotiation process.

Harmonize the RTA processes and address the conict of interest.

Carry out lobbying and advocacy roles in the negotiation processes.

Conduct comprehensive sectoral studies on the capacity of manufacturing sectors and the support they need to

benet from an EPA. Identify the gains and loses to Tanzania from EPA negotiations relating to agriculture.

rade unions as well as national parliament are not really involved adequately in the EPAs cruciaimportant decision-making processes. Tis makes it extremely hard to monitor the social implicatioo trade agreements, such as the way they aect workers rights, impact on gender or any interactiobetween the current legislations in orce. Concerning the gender issue, it seems that this importaquestion is missing in relation to the core areas o negotiations especially trade and trade related areas

D. Lack o capacities and resources o the SADC secretariat

Limited capacity on the side o SADC secretariat is another limitation towards the success o negotiatioClearly, the capacity constraints are not only in-terms o taking advantages o preerences (supply sconstraints) but also capacity to negotiate, both nancial and human capacity.


43/101


44/101

Figure 18. Evaluation o the pace o the negotiations given the agreed work plan/ road map

0

10

20

30

40

50

60

70

80

No responseVery delayedSlightly delayedOn-trackAhead of schedule

0%

9%

17%

74%

0%

Figure 19.Whether more time is needed or and eectively to conduct the negotiations

0

20

40

60

96%

0%4%

80

100

No CommentNoYes

One may question why there is some important delay in the negotiations. From the review, it appethat there is a clear lack o resources. At the national level, at the regional level but also at the EU level, resources allocated to conduct these negotiations are clearly not enough and do not give the opportunto conduct the negotiations adequately and optimally. Tereore, this point should be drastically reviewin order or the SADC secretariat to nalize the negotiations (Figure 20).


45/101

Figure 20. Measures and Resources provided to conduct the negotiations have been satisactory

0

20

40

60

80

100

From other external sourcesFrom the EUAt the regional levelAt the national level

Yes

26%

70% 70%

22%

61%

30%

65%

13%

9%

9%

22%

No No Response

In the same vein, i no major changes are eected in this important issue o human and nancial resources,it appears that SADC will not be able to nalize the negotiations at the due time. Almost 75% o therespondents highlighted the difculty o SADC to nalize the negotiations beore December2007 (seeFigure 21).

Figure 21. Whether the Region h

Documents

UN-ATPC - EPA Negotiations - African Countries Continental Review