1. Bilateral Graduation: The Impact of EPAs on LDC Trade Space A. DiCaprio 16 January 2010 GDN Annual Conference

2. Research Question • What role do EPAs play in the continuing evolution of the relationship LDCs have with the international trading system?

3. Outline • Motivation • Background • Actors • EPAs • LDC Trends • EPA impacts • Flexibility • Vulnerability • Policy Implications

4. 1. Motivation EPA literature LDCs Strong GDP growth since 1990 De-industrialization in 50% LDCs Little forward movement in structural weakness Difficulty capturing gains from liberalization • Differentiates impacts among: regions, sectors, individual countries • Clear that LDCs impacted differently • No studies treat LDCs as a cohesive group Question remains: How will LDCs as discrete group be affected by their participation, given historical lack of cohesion and spread across ACP regions?

5. 2. Background: Actors • EC • African Pacific and Caribbean Group of States (ACP countries) • 79 countries • 6 geographic regions • Least Developed Countries • 49 countries • UN criteria: low income, human resource weakness, economic vulnerability

6. Descriptive Statistics

7. 2. Background: EPAs Lomé Preferences Cotonou Agreement Economic Partnership Agreements CARIFORUM Unilateral reciprocal

8. REGIONAL CONFIGURATIONS AND STATUS

9. 3. LDC Trends: Differentiation

10. 3. LDC Trends: Preferential Access SELECTED EC AVERAGE TARIFF RATES BY DEVELOPMENT LEVEL

11. 4a. Flexibility: Non-reciprocity EPA CHANGES TO RECIPROCITY FOR LDCS

12. ENABLING CLAUSE VERSUS ARTICLE XXIV NOTIFICATION REQUIREMENTS

13. 4a. Flexibility: Modulated Compliance

14. 4b. Vulnerability: tools incorp’d into FTAs

15. How EPAs innovate on Aid-for-trade

16. 5. Conclusions • EPAs follow global trend of to re-aggregate developing and LDC preferences • Binding commitments innovate on tools available to address vulnerability • Precedent set in: • interpretation of the relationship between Enabling Clause and Article XXIV • future treatment of North-LDC FTA format

17. Policy Implications • Non-ACP LDCs have a stake in the EPA outcome, could assist in advocacy • Room for innovation in addressing vulnerability • Would benefit both EC and LDCs • But commitments need to be binding • LDCs face the choice: continue under SDT system, or participate in design of trade policy institutions