EPAs: The Latest (Unspoken) Facts

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By Wallie Roux

DURING November last year four countries of the SADC (Southern African Development Community) configuration initialled an IEPA (Interim Economic Partnership Agreement) with the EU (European Union), namely Mozambique, Botswana, Lesotho and Swaziland – the latter three are also members of SACU (Southern African Customs Union).

At that time Namibia, South Africa (both SACU members) and Angola had decided against the initialling of an IEPA. The remaining member of the original SADC configuration, Tanzania, opted to initial an IEPA as part of the EAC (East African Community).

Namibia’s decision not to initial the IEPA came after the last round of EPA negotiations in Brussels when the country was faced with a list of unresolved issues that could have a detrimental effect on its long-term economic development.

An IEPA represents a goods-only agreement only addressing market access to the EU markets, development cooperation and revised RoO (rules of origin), but with a commitment to negotiate liberalisation of services and other trade related issues (investment, government procurement, competition, etc).

During the EU-Africa Summit in Lisbon in December last year, African governments complained about the contentious issues in the IEPAs and the immense pressure by the EC (European Commission) to have these interim arrangements initialled before the end of 2007. (Despite this, only 18 African and two Pacific countries eventually initialled an IEPA, while the 15 countries of the Caribbean signed a full EPA.) This prompted the EC President, Manuel Barroso, to assure the African governments that the unsolved issues in the IEPAs would be revisited during 2008.

On condition of the Barroso promise, Namibia initialled an IEPA on December 12, last year, together with an accompanying statement with a prerequisite that the initialling is contingent on the assurance that the unresolved issues encountered in 2007 be reopened for negotiations in 2008. Furthermore, Namibia did not sign onto the services agreement.

On February 26, the Director of ACP (African, Caribbean and Pacific) relations in the EC, Klaus Rudischhauser, conceded that the commission’s handling of the trade negotiations that lead up to the proposed IEPAs, was a public relations “disaster” and a “huge communications failure”. This was re-iterated by an official from Swaziland’s Trade Promotion Unit, who said that the country “messed up” by initialling an IEPA, but that it was faced with a choice of rather benefiting from aid under the 10th EDF (European Development Fund).

At the end of last year the EC pressured the ACP countries to initial IEPAs under the auspices to notify it to the WTO (World Trade Organisation) in order to avoid a challenge from other developing countries. It should be noted that to date the EC has not yet notified any of the IEPAs to the WTO, thus only extending the uncertainty for the ACP.

According to the latest information received, the ACP countries should be under pressure again this year to sign and provisionally implement EPAs before notification to the WTO could take place in order to avoid a challenge by other developing countries – this despite a legal opinion by a renowned WTO legal expert, Dr Lorand, that initialled IEPAs could be notified to the WTO.

In addition, the European Trade Commissioner, Peter Mandelson, is trying to downplay the assurance given by Barroso during the EU-African Summit in Lisbon in December last year. At the end of January this year he said, “I don’t believe Barroso gave such a commitment to re-negotiate”. The latest information received from meetings with EU officials has it that the contentious issues in the IEPAs could be revised, but only within the context of a full EPA! – Another EC tactic to have full EPAs signed during 2008.

Mandelson also said: “I certainly do not want to wait for years before ratification”, because, “It would re-introduce the threat of a WTO challenge…”
Legally speaking, the goods-only agreement between the ACP and the EU (IEPAs) could be signed by the EC alone. However, if the agreement (full EPA) includes investment – one of the new generation issues that the EC wants to negotiate in 2008 – such an agreement should be ratified by all EU member states! Why the discrepancy by Mandelson of not informing the ACP about this, while threatening them with a WTO challenge?

While the IEPAs include provisions of market access for goods only, (some) development cooperation and revised RoO – note the latter – under the current RoO for IEPAs, ACP countries that have initialled the IEPAs cannot cumulate with ACP countries that did not initial IEPAs! Another tactic of the EC to pressure countries dependent on an accumulation to initial/sign these trade arrangements (this is of particular importance to Lesotho and Swaziland dependent on cumulation with South Africa for some of their export products).

The current IEPA texts allow for the EU to use safeguards more easily than under the Cotonou trade dispensation – and the texts do not include any review mechanism in terms of IEPAs. This in turn inter alia exposes the export agricultural sectors in the ACP. Also, the current IEPA arrangements do not leave any room for the introduction of SSM (special safeguard measures) if and when agreed in the WTO. In addition, no protection is guaranteed in terms of ACP food security.

The EC is quick to hold out the promised carrot of development aid under EPAs. However, this promised development aid to the ACP is a “recycled development envelope”. The so-called two billion euros for development, according to calculations by Oxfam International, was originally earmarked for Aid For Trade in the WTO for all developing countries – only about half of which is earmarked for the ACP. Most importantly, these funds still have to be solicited from somewhere, i.e. it does not exist at the moment! In addition, the EU’s 10th EDF is already allocated, with only a small percentage earmarked for a contingency fund. In this regard it should be noted that EPAs are essentially FTA’s (free trade agreements) and not development agreements!

On April 4, last year the EU announced that it would offer DFQF (duty free quota free) market access to all the ACP countries – excluding rice and sugar – in exchange for a signature on the proposed agreements before the end of last year. Despite being hailed as a noble gesture, just take note that duty free market access to the EU included 97 percent of all ACP originated products under Cotonou vis-??????’??

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