Endangering Cotonou!
EPAs: Towards Development or
Disempowerment?
Muyatwa Sitali
JCTR/Jubilee-Zambia
ESA EPA Information Seminar
31 May 2007, Lusaka – ZAMBIA
Who’s Afraid of EPAs
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That “EPAs are a threat to progress of
development including the attainment of
MDGs” is a widely expressed concern by
many organisations, associations, groups
and societies.
“... we come to the conclusion that they (EPAs)
are not in line with our principles. On the
contrary, they are a threat to the well-being
of our people and our economic
development. While we appreciate the
development objectives of the Cotonou
Partnership Agreement, we are mindful that in
the current negotiations the European Union
and our governments have lost sight of
these objectives.” 24 Church organisations
meeting in Tanzania, April 2007
EPA process and Concerns
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Concerned that at this advanced stage of the negotiations,
Africa’s priorities have not been positively and adequately
addressed by the European Commission” Ministers
responsible of Trade of the African Union—January
2007.
“There is still no confidence yet in the ability of EPAs to be
pro-development.” UNECA, December 2006
“A major concern is the impact that the trade liberalisation
to be wrought by EPAs would have on fiscal revenue… The
prospect of falling government revenue…imposes a heavy
burden on your countries (ACPs) and threatens to further
hinder your ability to achieve the Millennium Development
Goals.” Former UN Secretary General, Kofi Annan
EPA process and concerns
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“We are not ready to embark on full market
reciprocity arrangements…” Hon. Dora Siliya,
Dep. Minister of MCTI, Zambia, April, 2007.
“I am more convinced that the EPAs stand to
knock us back. EPAs stand to harm us…. They
will only benefit our European partners. The
ACP must sit up and look at this issue
critically.” Kwame Osei-Prempeh, Ghanaian MP
at a Joint EU – ACP Parliamentary Assembly in
Brussels; 2005
Why the concerns?
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EU’s limited view on development
Uncertainties about how much should be
liberalised – EU’s proposals to liberalise 80 per
cent of all trade.
Divergences on Benchmarks and the Review
clause
Differences on Differential Treatment and
commitments
Misunderstanding Art. XXIV on “substantially
all trade”
Ambiguities regarding WTO Compatibility --“Reasonable length of time”
Pressure to meet 2007 deadline rather than
development
Double standards on financial cooperation and
assistance
1. EU’s limited view on development
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The EC favours an approach that would indiscriminately open
ESA markets inline with the EUs Lisbon Strategy of 2000 which
aims at making Europe "the most competitive and dynamic
knowledge-driven economy by 2010“ by:
Reduced Non-tariff barriers to the EU exports and investments:
“We need to look at the whole operating environment in third
countries” says the Commission, and make sure regulation is
transparent, non discriminating and the least restrictive
possible.
Better access to raw material inputs in order to compete on a
“fair basis”; the main goal here is to completely eliminate
export taxes and other export restrictions which trading partners
use to secure their own raw materials supply.
The opening up of public procurement markets! This is an
“enormous untapped potential” for EU exporters says the
Commission however practices in partner countries “impede” the
“fair” participation of EU suppliers and “…shut [them] out from
important exporting opportunities”.
Improvement of the application of trade defence (anti-dumping)
mechanism by third countries, which often cancels out the
obtained market access for EU in ACPs.
2. Uncertainties about how much should be liberalised
– EU’s proposals to liberalise 80 per cent of all
trade is contrary to EU’s development history
3. Different views on Benchmarks
and the Review clause
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ESA group proposed to link regional integration and
development before liberalisation
EC response to this proposal is dismissive and fails
to recognise the need of ACP regions to develop
before opening up “As it is formulated, this review
clause is not acceptable. While we are not against
well defined review clauses, we (EC) think that they
should be limited in their scope and mainly aimed
at accelerating or extending liberalisation…. As it is,
it may void the agreement of its sense.” The EC
forgets that the ‘sense’ of the agreement is to
deliver for development, not market opening
for the sake of it.
EC suggestion is review be based on timeframes
4. Differences on Differential
Treatment and commitments
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ESA region proposed to exempt LDCs from market
opening commitments as part of a full draft text in
August 2006.
EC’s response showed a characteristic intransigence.
• The LDC opt-out is “not acceptable ... Exemption
from commitments for LDCs would impair the
achievement of the regional integration and
development objectives of the agreement.”
EC’s acknowledges its negotiating mandate that LDCs
have the choice to continue the EBA arrangement which
is typical of a differentiation between LDCs and non
LDCs.
On the contrary, the EC has accepted a similar proposal
from the Pacific ACP which is “not based on free a trade
agreement, and would allow each pacific ACP country to
either opt in or opt out.” (Oxfam, January 2007)
5. Misunderstanding Art. XXIV on “substantially
all trade”
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Under WTO, there is no common understanding of what
substantially all trade means, it is subject to
interpretation by means.
Consistent urge to negotiate issues beyond the challenge
at WTO, e.g services, investments, procurement and
competition policy
In WTO negotiations LDCs have been exempt from
having to commit to new services liberalization.
Furthermore, the Cotonou agreement does not require
services liberalization, and suggests it should only
happen “after they have acquired experience in applying
the Most Favoured Nation (MFN) treatment under GATS.”
Outcomes could result in obligations that go beyond
those agreed in the WTO (WTO-plus), and introduce into
the bilateral context, issues that contributed to the
failures of Cancun (investment, competition and
government procurement) and of Seattle (labour and
environment).
6. Ambiguities regarding WTO Compatibility --“Reasonable length of time”
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The EC has interpreted the ‘reasonable length of
time ‘to be 10 years, stating that it may be longer
in exceptional cases. However, longer
implementation periods are the norm not the
exception. For example, even an FTA between
developed countries partners such as Australia and
the US, Includes up to 18-years implementation
periods.
ESA countries need time to develop their domestic
economies before opening up. ESA draft, for
example, proposes longer implementation periods
than the EU has proposed: up to twenty-five years
for finished goods, with a ten year implementation
moratorium (Art. 14), as well as an unknown
number of sensitive products to be exempt from
liberalization commitments (Art. 15).
7. Alternatives, EC putting non-LDCs
in a dilemma
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EC would only begin to consider alternatives if a
particular country stops to negotiate. The EC have
said they are not looking at “Alternatives because all
ACPs have continued to negotiate.” This overthrows
calls by the AU countries to have alternatives.
A country can only make that choice when they know
what other options are available. It makes sense to
have options first then countries can make a choice.
If the EC withdraws Cotonou preferences on 1st
January 2008, the Community would breach the
Cotonou agreement, which prescribes “a new
framework for trade which is equivalent to their
existing situation and conformity with WTO rules.”
The European Commission appears to lack the
political will to comply with that commitment in the
Cotonou Agreement.
8. 2007 deadline and waiver
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There is no agreement yet on a number of items on
the EPA check list either on the trade or
development dimension
ESA negotiators have already quoted many reasons
including capacities and supply side constraints that
necessitate the extension of the negotiation and the
waiver defacto.
Almost a year past following the expiry of the Lome
waiver in January 2000 before it was renewed, and
no WTO members complained.
EPA negotiations were to be finalized three years
after the end of the DOHA negotiations to build on
the expected more pro-development multilateral
trade rules, including further clarity of flexibilities
under WTO/GATT Article XXIV. However, in the
DOHA negotiations, deadlines have been missed by
the day.
Without a clear conclusion from the DOHA Round,
there is no urgency for finalizing EPA negotiations.
9.Double standards on financial
cooperation and assistance
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The EC is interested to fund only those issues which
they prefer rather than those outlined by ESA.
For example, the EC is ready to finance capacity
building for trade-related issues, like trade
facilitation; competition, investment, and
transparency in public procurement but not for
preparatory studies to undertake negotiations on
trade in services.
When west African negotiators asked for an extension
in the negotiations, EC’s response was that failure to
sign EPAs on time would lead to higher tariffs on
more than 1 bio Euro or 9.5 per cent of West Africa
trade to EU
Conclusion
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The areas of divergence are many
Outcries from different countries asking their
governments not to sign EPAs because of
unclarified issues indicate peoples perceptions of
EPAs
Time for deep introspection is now
Poor countries chance to move up the ladder of
development and meet the MDGs is now but
poor countries are kicking away the ladder
Partnership, not patronage is the imperative of
this era, age and generation.
Until the EC and our governments demonstrate
to us how CPA’s commitment to poverty
reduction will be operationalised through an
EPA, CSOs must continue to oppose EPAs.
END
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Thank you for listening in