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San Bilal, ECDPM Conference on Global Europe: The New Generation of EU Preferential Trade Agreements European University Institute (EUI) 14-15 May 2012, Florence
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Promoting Regional Integration and Sustainable Development:
Lessons from EPAs Dr. San Bilal
Head of Programme, Economic Governance, ECDPM
EU PTAs as a Foreign Policy Tool
• Core element of foreign policy
• Means to secure prosperity, jobs and growth in Europe
• Proliferation of FTAs in recent years
• Operational FTAs account for approx 30% of EU trade
• And major trading partners (China, US, Japan, Russia, Australia-NZ) representing approx 50% of trade, not covered by FTAs
Trade in EU Foreign Policy
Page 2 ECDPM
Source: WTO World Trade Report 2011
Increasing number of PTAs
ECDPM Page 3
Source: WTO World Trade Report 2011
Membership in PTAs in force, 2010
ECDPM Page 4
EU FTAs: in force and planned
ECDPM Page 5
EU’s share of world trade on the decline – expected to be cut by half by 2050
2010 2030
Source: Buiter W and Rahbari (2011): Trade Transformed: The Emerging New Corridors of Trade Power, Citi GPS: Global Perspectives & Solutions
Key challenges: Changing geopolitics
ECDPM Page 6
• Priorities – FTA negotiations (with emerging) – India, ASEAN, Mercosur, Andean, Canada, … US?
Focus on economic interests
• For developing countries:
differentiation and asymmetry
GSP reform as a means to focus on most needed
ongoing EPA negotiations
Focus on development (?)
Re-focusing of Trade Policy
ECDPM Page 7
EPA Key Objectives:
• Foster Development
• Building on regional markets
• Stimulating investment
• Locking-in of trade reforms
• Integration into world economy
• Compatible with WTO rules
EPAs and Regional integration
ECDPM Page 8
• EU belief in Regional integration principles
• EU support to RI (EDF RIP, AfT, etc.)
• Challenges:
• Coherence of regional partners (diverging interests)
• Capacity: low absorptive capacity, few bankable projects
• Recently, Commissioner Pielbags announced drastic cuts in regional envelopes for 11th EDF due to low utilisation. This might undermine some regional projects (infrastructure)
Regional Integration (RI): What role for EU trade policy?
ECDPM Page 9
• 09/2002 – 09/2003: All ACP negotiations
• 10/2003 – 2007: Regional negotiations ECOWAS+: West Africa CEMAC+: Central Africa ESA: East and Southern Africa SADC: Southern Africa CARIFORUM: Caribbean Pacific Forum: Pacific
• End 2007: some (interim) agreements concluded (35 countries out of 79)
• 1 January 2008: end of Cotonou preferences; end of WTO waiver; MAR 1528 on EPAs (DFQF)
• Since 2008: Continuation EPA negotiations
• September 2011: Proposal for deadline to 2014 for MAR 1528
EPA negotiation process
ECDPM Page 10
• Little coherence between the interim EPAs concluded and the regional integration processes in Africa: Countries having initialled interim EPAs Liberalisation commitments
Regional integration agenda: problem for CUs
• 4 trade regimes with EU (in one region): IEPAs EBA for LDCs GSP for non-LDCs FTAs (e.g. RSA, Egypt, …)
Impact on regionalism
ECDPM Page 11
Source: www.regionswatch.blogspot.com, 2010
Regional Integration in Africa
• Low level of intra Africa trade
• On average: 13.1% in 2010 compared to more that 60% in Europe or 35% in NAFTA
Page 12 ECDPM
Source: www.regionswatch.blogspot.com, 2010
Key challenges:
Overlapping membership
Overlapping mandates
Competing and conflicting agendas
Level of implementation of commitments vary
Page 13 ECDPM
Stimulate focus on regional integration dynamics
Boomerang effect
• Although negotiations continue, it is increasingly felt that timing and sequencing of trade agreements with third parties should be based on RI agenda and not the reverse
• Priority therefore given to regional agenda by many RECs. For EPA, this is particularly relevant for services and other trade-related issues.
• E.g COMESA services negotiations launched in September 2009 as a way of preparing a common stand for EPA services negotiations; EPA competition clause is based on COMESA competition policy etc.
Increased complexity of RI (spaghetti bowl)
EPAs: what impact for Regional Integration and beyond?
ECDPM Page 14
Page 15 ECDPM
But also broader issues:
• Disillusion between expectations and results
• Lack of interest: Many countries seeking status quo and little appetite beyond market access
• Lack of incentives:
Flaws in EU’s own trade policies: EBA given to all LDCs in 2001 + improved RoO in 2011; LDCs have no interest to sign EPAs and some RECs mainly LDCs
On December 2011, at WTO improved market access in services granted to LDCs. Will have an impact on future services negotiations
• Lack of political traction on both sides and no political will to find mutually acceptable agreement on contentious issues
ECDPM Page 16
• Lack of consensus on shared vision:
Not necessarily a consensus on either side on what a good development policy is or whether EPAs are good for RI and development or not.
Irrespective of economic merits, arguments from the EC side had little convincing effects, given differences in interests and perception of what EPA was and would achieve
• Shifting attention towards emerging players: China, India, Brazil, etc. increasingly perceived as a complement or even alternative to EU (economic interests + win-win rhetoric)
• Political risks: MAR regulation. Deadline is 2014. Might call political tensions. It might antagonise the entire relationship between EU and Africa ECDPM Page 17
• Negotiating at regional level is complex
• Importance of political will, interest, experience and capacity of regional grouping
• Need for regional leadership (and national champion) and cohesive regional agenda
• Timing and sequencing of FTA with RI process(es)
• Adjust ambitions to realities: focused agenda
• FTA not just about trade: political dimension key
" importance of economic diplomacy
• Credibility Gap between rhetoric and effective partnership
• Importance of recognizing mistakes and willingness to adjust: not the case in EPAs so far…
Lessons from EPAs…
ECDPM Page 18
Thank you
San Bilal ([email protected]) and Isabelle Ramdoo ([email protected])
www.ecdpm.org www.slideshare.net/ecdpm
Page 19