Who will benefit from EPAs?
Currently the African, Caribbean and Pacific (ACP) countries are locked in negotiations with the European Union (EU) those Economic Partnership Agreements (EPAs) as part of the implementation of the Cotonou Agreement.
Initially, when the EPA negotiations began in 2001 there was going to be just one agreement. It was to be between the then 15 countries of Europe, and 76 of the ACP countries. Since then the EU has enlarged itself to 27 members still signing as one entity with full powers given to the European Commission (EC) to negotiate for all of them. The ACP countries in the meantime have allowed themselves to be fragmented into three regions (Africa, Caribbean and the Pacific); then, later, into six (Western Africa, Central Africa, Eastern Africa, Southern Africa, the Caribbean and the Pacific); and later still into several -- in the case of Africa, into its almost total fragmentation.
Finally, we now have, in many cases, bilateral agreements between one African country on one side and the European Community on the other – a veritable David and Goliath phenomenon. Yash Tandon, of ACP Ngo South Centre, in an Editorial of their bulletin is tempting to make the comparison with the Berlin Conference of 1884, when European imperial powers sat around a map of Africa and carved it out between them. However, there are two significant differences…
About 25 African least developed countries (LDCs) have not initialed interim EPAs. The widely held view from civil society has been that it is unnecessary for LDCs to enter into EPAs as the Everything But Arms scheme provides them with the necessary preferential trade access to the EU’s markets.
The EPAs have been consistently criticised as being potentially detrimental to development.
In June this year, 61 members of the European Parliament from 16 different countries voted for more flexibility and more time for the EPA talks, a sentiment echoed by many of those involved in the process. The Netherlands and Denmark are recommending renegotiation. However, the European Union (EU) has been pressing ahead. A new Working document from the Committee on Development of the European Parliament point out that while the EU is the most important trading partner for most ACP countries, and virtually for all African ACP states, trade with the ACP countries is rather insignificant for the EU economy. Less than 3% of EU exports are destined to the ACP countries. However, European exporters are expected to gain from reciprocity. In certain products, the abolishment of tariffs may increase EU exports significantly, for instance an increase in meat exports can be expected (although the meat exports from certain ACP countries to the EU will also increase).
The European Commission (EC) has generally downplayed the costs involved in the implementation of Economic Partnership Agreements (EPAs), preferring to focus on the supposed benefits (Working document on the development impact of Economic Partnership Agreements). A short paper written by Liz Dodd from Traidcraft summarizes the potential fiscal costs of EPAs resulting from loss of customs revenue and adjustment costs associated with transition to a new trade regime. It does not attempt to assess the value of trade creation or diversion associated with the trade liberalization aspects of EPAs.
Although it is difficult to accurately forecast what these fiscal costs will be, as negotiations in countries and regions continue, research to date suggests some of the costs are likely to be substantial, front loaded and threaten to divert resources from other government programmes. The pape briefly outlines why it would be unwise for ACP countries to rely on either aid from the EU or tax reform to adequately cover these losses.
For governments whose revenue is heavily dependent on import tariffs, for instance, the reduction of tariffs on as much as up to 80-90% or more of imports from the EU (as in some of the agreements initialled so far) will represent a substantial loss of public revenue. Customs revenues in Sub-Saharan Africa are significant, for example amounting to 27% of public revenues in 1995.
This web site is produced with the financial assistance of the European Union by Amici dei Popoli NGO in cooperation Cestas, CMO, Hegoa and Risc. The contents of this web site are the sole responsability of Amici dei Popoli NGO and can under no circumstances be regarded as reflecting the position of the European Union.