Economic Partnership Agreements: A new approach to ACP-EU economic and trade cooperation

1. Economic Partnership Agreements: A new approach to ACP-EU economic and trade cooperation Remco VAHL, DG TRADEBrussels, 13 June 2005

2. EU Trade relations with ACP countries Since Lomé I (1975) Non reciprocal trade preferences All industrial goods enter the EU duty free 80% of agricultural products enter the EU duty free, and the remaining 20% benefit from preferences

3. Why EPAs ?

5. 5 PRODUCTS = 60 % of total Exports (petroleum, diamonds, cocoa, fish, and wood products) Lack of ACP export diversification (2003) 9 AFRICAN COUNTRIES REPRESENT 60 % OF TOTAL ACP EXPORT

7. Lessons learnt Unilateral Preferences Are Not Enough • Preferences do not encourage diversification • Perverse incentive against trade liberalisation • Preference erosion increases as multilateral liberalisation progresses

8. TOWARDS A NEW APPROACH The Cotonou Agreement • Three pillars: • Political dialogue • Development co-operation • Economic and trade co-operation

9. Towards a new approach The Cornerstones of EPAs • Development dimension • Regional integration • WTO compatibility

10. Development dimension • EPAs as process and instruments for development • Integrated approach (Cotonou pillars) • Trade policy as instrument for development (carefully managed reciprocal liberalisation, services and trade-related areas – e.g. SPS) • Mainstream trade into development strategy (RPTF)

11. Regional integration • First step towards gradual integration into world economy • Enlarging markets for attracting investment • Support ACP political choices • Combined South-South-North cooperation (lock-in effects)

12. WTO compatibility • EPAs will be fully compatible with WTO rules • Gradual introduction of reciprocity • Article XXIV • Asymmetry, flexibility, differentiation, variable speed and geometry • Complementarity DDA/WTO and EPAs

13. Timeline • September 2002 – October 2003: First phase at all-ACP level • Clarification phase • Development dimension, Legal issues, Market access, Trade-related areas, Agriculture, Services • Joint Report and Declaration • October 2003 – end 2007: Regional negotiations and Coordination at all ACP level • 2008: Entry into force

14. All-ACP phase (Oct. 2002- Oct. 2003) • convergence • Instruments for development • Support regional integration • Maintain and improve current level of market access • WTO compatibility - with SDT to be provided for all ACPs, in particular LDCs and vulnerable small, landlocked and island countries • divergence • Level of discussion of certain issues (all-ACP vs regional) • Sequencing negotiations and aid • Need for additional funding over and above the EDF

15. Regions • Central Africa – CEMAC + Sao Tomé Brazzaville, 4th October • West Africa – ECOWAS + Mauritania Cotonou, 6th October • Southern and Eastern Africa – 16 Countries Mauritius, 7th February 2004 • Caribbean – Kingston (Jamaica), 16 April 2004 • SADC EPA - 7 SADC States Windhoek, 8 July 2004 • Pacific - ACP members of Pacific Forum Nadi (Fiji)10 September 2004

16. Road map: broad consensus on calendar • Introductory «priority setting» phase (3 months) • Convergence on strategic approach (until + mid 2005) Understanding on regional integration policies and priorities and on level of integration to be achieved when EPA implementation starts • Structuring and consolidation (until + mid 2006) : • Remaining trade related issues to be included in EPA • Prepare liberalisation scenarios • draft outline of EPA • Finalisation of negotiations (until end of 2007) • Negotiation of market access • Finalisation of EPA

17. Challenges • Geographical configuration • South-South vs North-South focus • Capacity constraints • Time • Implementation • Link to development cooperation

18. Conclusion • EPAs are an opportunity • Regional integration as a political, economic and development challenge • ACP development is the objective