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Investment in EPAs and FTAs Eastern and Southern African States. QUESTION:. From your understanding of the issues relating to international investment, should investment be included in the EPA Negotiations? . Economic Partnership Agreements.

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question

QUESTION:

From your understanding of the issues relating to international investment, should investment be included in the EPA Negotiations?

economic partnership agreements
Economic Partnership Agreements
  • EPAs are regional trade agreements to create a Free Trade Area (FTA) between the EU and different developing countries.
  • A Free Trade Area is an arrangement between countries in the FTA to eliminate trade barriers between themselves but with each country maintaining its own external tariffs.
africa eu epa arrangements
Africa – EU EPA Arrangements
  • EAC - The East African Community - (Uganda, Kenya, Tanzania, Rwanda and Burundi).
  • ESA - Eastern and Southern Africa – (Sudan, Eritrea, Djibouti, Ethiopia, Zambia, Zimbabwe, Madagascar, DRC, Malawi, Mauritius, Comoros, and Seychelles. )
  • SADC - The Southern African Development Community (Botswana, Mozambique, Swaziland, Lesotho and Namibia. South Africa preferred TDCA with the EU)
  • CEMAC - La Communaute’ Economique et Mone’taire de l’Afrique Centrale (Cameroon and Gabon. The LDCs Chad, DRC, Central African Republic, Equatorial Guinea, Sao Tome and Principe export under the EBA initiative).
  • UEMOA - L'Union Economique et Monetaire Ouest Africaine (Cote d’Ivoire and Ghana. Nigeria and Cape Verde – GSP scheme. Other LDCs - EBA)
past africa eu trade arrangements
Past Africa - EU Trade Arrangements
  • 1958 -1962 – AAMS - EU preferential trading with Africa in African Association of Malagasy States.
  • 1963 – 1974- Yaounde I and II – non reciprocal and discriminatory trade.
  • 1975 - 2000- Lome I, II, III and IV – equal trading relationship created. Reciprocity established.
  • 2000 – 2020 – Cotonou – poverty reduction through increased economic and trade cooperation.
  • EPAs under Cotonou Agreement. Negotiations started in 2002
why epas now
Why EPAs now?
  • To enhance Africa’s integration into the world economy.
    • Lomeand Cotonousystems of preferences had increased Africa’s marginalization in world trade. EU sought to create EPAs as an instrument for development, that would allow African countries the liberty to shape agreements that would enable them achieve this goal, to enable them build ability to compete in the world markets.
  • To address Singapore Issues.
    • (Investment, Competition, Government Procurement and Trade Facilitation) and other issues eg Services etc that were not directly dealt with by Lome and Cotonou.
international investment rules brief background
International Investment Rules– Brief Background
  • Prevalent international debate on investment rules.
  • Debate relevant to inform key issues and provide draft instruments for investment negotiations.
  • Uruguay Round – 1947 -1994 -Inclusion of limited Agreement on Investment – TRIMS
  • 1990 – Failure of attempted Multilateral Investment Agreement within OECD framework.
  • July 2004 Singapore issues (investment) that had been introduced in 1996 Singapore Ministerial Conference dropped from WTO negotiations.
  • 2002 – EPA negotiations commenced and by 2004 EPA negotiations taking off. EC makes Singapore Issues priority in EPAs.
investment context
Investment - Context
  • Preceding unsuccessful attempts to conclude international investment Agreements- clear indication of need to exercise caution and careful analysis before any investment clauses are agreed to in EPA negotiations.
  • Known interests of developed countries eg EU and developing countries eg EAC, ESA
eu investment interests in epas
EU Investment Interests in EPAs
  • Market Access for EU investors at least, on terms comparable to other developed country competitors.
  • To lock in advantageous position in event of conclusion of future agreements with other developed nations.
  • The EU is divided into 3 main camps:
    • Advocates for liberalization for EU investors to same degree as Canada/USA investors.
    • Opponents to negotiations to avoid overtaxing for implementation.
    • Proponents for negotiations for sake of regional integration.
investment and the cotonou agreement
Investment and the Cotonou Agreement
  • Cotonou concluded in June 2000 inmidst debate of whether to negotiate investment rules at the WTO.
  • EU and other developed countries in favor of international investment rules, developing countries against it.
  • Cotonou agreed that negotiations on investment in EPAs follow the outcome at the multilateral level.
  • Investment, a Singapore issue, dropped at the multilateral level by General Council Decision of August 2004.
  • EU however continues to pursue investment in EPAs
epa negotiating directives to the ec june 2002
EPA Negotiating Directives to the EC - June 2002 -
  • In accordance with the objective of reducing and eventually eradicating poverty parties agree to establish a regulatory framework to enhance and stimulate mutually beneficial sustainable investment between them.
  • Framework to be based on principles of non discrimination, openness, transparency, stability, and general principles of protection, which will endorse the best results agreed in the competent international fora or bilaterally.
africa s position on investment and epas background
Africa’s Position on Investment and EPAs - Background
  • Cairo Declaration of June 2005- African Union trade ministers agreed that Singapore Issues should be kept out of EPA negotiations.
  • April 2006 Nairobi Declaration of EPAs, African Union trade ministers re-affirmed position BUT added that African regional economic communities may adopt regional frameworks and instruments on the Singapore issues within the context of the regional integration processes.
    • regional instruments eg SADC Finance and Investment Protocol, or COMESA Agreement on a Common Investment Area.
eventual approach to investment in epas
Eventual Approach to Investment in EPAs
  • ACP approach in Papa New Guinea in June 2006 - countries unwilling to negotiate Investment in EPAs should not be pressed to do so.
  • Position finally adopted by EU General Affairs and External Relations Council- May 2007:

Council recognized the various levels of development and integration within the different EPA regions, recalled the ACP right to regulate investment and thus supported a phased and flexible approach in trade related areas. That the EU is not to pursue any particular market access interests.

current approach to investment in epas
Current Approach to Investment in EPAs
  • CARIFORUM endorsed a chapter on investment.
  • SADC agreed to negotiate a chapter on investment drawing on the SADC Finance and Investment Protocol.
  • ESA – has an extensive chapter on development in which investment provisions and private sector development are areas of cooperation.
  • EAChas expressed interest in dealing with Investment.
africa s key investment interests in epas
Africa’s Key Investment Interests in EPAs
  • Effect social economic development objectives.
  • Eradicate poverty.
  • Promote rural modernization by channeling investment to decided priority sectors and industries.
  • Emphasis to be on prioritizing development cooperation in investment as opposed to investment rules.
investment in sadc eu epa
Investment in SADC - EU EPA
  • To meet to discuss the chapter on Investment in detail in April 2010.
  • Draft chapter existing with about 16 Articles
  • Draft generally covering transparency, optimal use of resources, commercial presence, market access, promotion and facilitation of FDI, promotion of local and regional investments, public private partnerships, SDT, Investment finance facilitation, capacity building, areas of cooperation, etc
investment in eac eu epa
Investment in EAC – EU EPA
  • Framework Agreement to be signed end of March 2010.
  • Framework stepping stone to full EPA.
  • Investment Policy and Private Sector Development to be dealt with in full EPA.
  • EAC is currently developing a text on Investment that will be included in the Economic and Development Cooperation chapter.
  • What is clear is EAC wants capacity building in this area and no binding commitments.
some lessons from the cariforum eu epa
Some Lessons from the CARIFORUM – EU EPA
  • EPA provisions go beyond current EU levels of liberalization in BITs and now beyond US and Canada BITs and beyond domestic laws.
  • Restrictions on Performance Requirement.
  • Requiring commitments in EU areas of interest eg natural resources.
  • Automatic extension of best available treatment given to major economies in the future.
question19
QUESTION

As an African, what would be your key investment concerns in the negotiation of EPAs?

development cooperation proposals on investment in epas
Development Cooperation Proposals on Investment in EPAs

March 2007 in Bonn, ACP Ministers proposed the

following approach to investment:

  • Adoption of Regional Investment Codes.
  • Reduction of transaction costs eg company registration costs.
  • Building strong infrastructure.
  • Supporting Macro economic stability eg through debt relief.
  • Promoting full market access to EU markets including removal of NTBs.
  • Strengthening ACP institutions like the Centre for Development of Enterprises.
  • Expanding the mandate of the European Investment Bank to extend credit facilities to SMEs.
checklist of concerns
Checklist of Concerns
  • Refer to handout
conclusion
Conclusion
  • Investment is a very important issue.
  • Investment chapters have not been concluded in the EPA Negotiations.
  • Emphasis should be on development cooperation in investment and not investment rules.
  • Special attention should be made to the substance and language of the EPA.
  • Transparency of the negotiation process is key.