The interim EPAs – some facts

The interim EPAs – some facts

TIPS Workshop, Pretoria 4-5 March

Dr Mareike Meyn

The interim EPAs - some facts. TIPS workshop March 2008 2

Overview

1. Which countries are the EPA signatories?

2. What do the liberalisation schedules say?

3. What else had been agreed? (Export duties, standstill clauses, MFN, SPS/TBT…)

4. Trade defense

5. Infant industry protection

6. The rendez-vous clauses


1. The EPA signatories

35 of 77 ACP countries initialled an EPA

Except CARIFORUM all EPA configurations lost members

Most non-signatories benefit from EBA except six Pacific and three African non-LDCs

Except CARIFORUM ‘interim EPAs’ with ‘sub-regions’ were initialled

In Central Africa only Cameroon initialled In West Africa two countries initialled separate agreements In Southern and Eastern Africa the picture is most complex

Negotiations continue in 2008. Objective: comprehensive, regional EPAs

3

2

1

1. SADC EPA

2. EAC 5

3. ESA EPA


Original EPA configurations and signatory states in southern and eastern Africa

Members Signatory states in December 2007 a

Countries falling into EBA/Standard

GSP

Proportion of

signatory countries

Number of liberalis-

ation schedules

ESA EPA Comoros Djibouti Eritrea Ethiopia Madagascar Malawi Mauritius Seychelles Sudan Zambia Zimbabwe

Comoros Madagascar Mauritius Seychelles Zimbabwe

Djibouti Eritrea Ethiopia Malawi Sudan Zambia

45% 5

EAC EPA Burundi Kenya Rwanda Tanzania Uganda

Burundi Kenya Rwanda Tanzania Uganda

— 100% 1

SADC EPA Angola Botswana Lesotho Mozambique Namibia South Africa Swaziland

Botswana Lesotho Mozambique Namibia Swaziland

Angola 71% 2


2. What do the liberalisation schedules say? East African Community (EAC)

Only region where all countries have identical schedule based on EAC CET

25 years (2 years moratorium)

Regional exclusion basket of about 20% of EU import value

3 tranches; ‘real’ liberalisation only starts in 2015

Revenue impact will be faced in the middle of the implementation period (2015-23) and will be significant

Not all countries have yet applied EAC CET

Most products will be liberalised in this period

Consumer/producer effects will be end loaded


2. What do the liberalisation schedules say? Eastern and Southern Africa (ESA)

5 of 15 Countries have established individual liberalisation schedules in relation to COMESA CET

COMESA CET has not yet been implemented

Liberalisation occurs in 15 years (5 years moratorium)

2008-2013: tariff reduction to meet COMESA three bands tariffs

Countries never agreed a formal definition that allocated the items in the nomenclature according to the groups

Chromium and thallium waste Mauritius and Comoros: raw material Seychelles: intermediate Madagascar and Zimbabwe: final


2. What do the liberalisation schedules say? Eastern and Southern Africa (ESA)

Exclusion basket differs between 2.5 to about 20% of EU import value among the countries

Revenue impact will be faced in the first tranche and will be very different among the countries

Depends to what extent country’s tariff differs from COMESA CET

Whether tariffs can be replaced by sales tax

Consequences for regional integration? Review of EPA commitments in light of COMESA CET becomes

impossible


2. What do the liberalisation schedules say? Southern African Development Community (SADC)

5 of 8 countries established 2 liberalisation schedules

Liberalisation over 10 years, no moratorium

Exclusion baskets

Mozambique: large exclusion basket about 38% of EU import value (2004-2006)

BLNS: nobody knows…

• Theory: TDCA exclusion basket plus small number of BLNS sensitive products should mirror BLNS EPA exclusion basket

• Practice: Impossible to compare TDCA (negative list) with EPA (positive list)

BLNS are de facto implementing TDCA


Summary of liberalisation schedules

SADC ESA EAC

Total time of liberalisation

10 years 15 years 25 years

Liberalisation start

2008 2013 2010

Exclusion list (average value of EU imports 2004-06)

x – 37.8% 2.5 – 20.1% 19.7%

Regional approach

Partly (BLNS) No Yes

Review of tariff concessions for RI

Yes Yes No


3. What else had been agreed?

Export duties no African EPA text foresees their abolition but only that

duties shall not be increased/new duties introduced Exemption from this principle for SADC and EAC in

‘exceptional circumstances’ (such as infant industry protection or to maintain currency stability)

EAC needs consent of the EU; SADC only needs to consult

“Standstill clause” (freezing of applied tariffs level) Found in all EPA texts except CARIFORUM EAC and ESA: agreement not to increase applied customs

duties comprises ‘all trade’ SADC: only for ‘all products subject to liberalisation’



MFN clause (need to extent preferences granted to ‘major trading economies’ to the EU)

Can be found in all texts But: exemptions for CARIFORUM and PACP (Part I, Art.

16)

2. With respect to the subject matter covered by this Chapter, the Pacific States shall accord to the EC Party any more favourable treatment applicable as a result of the Pacific States becoming party to a free trade agreement with any major trading economy after the signature of this Agreement.

3. Where a Pacific State or the Pacific States can demonstrate that they have been offered by a third Party a substantially more favourable treatment in goods, including rules of origin, than that offered by the EC Party, the Parties will consult and may jointly decide how best to implement the provisions of paragraph 2.

What does this mean in practice?



Special provision on administrative cooperation

All texts: Refusal or undue delays of administrative cooperation can result in the temporary suspension of trade preferences.

Non-tariff barriers and subsidies All texts: Prohibition of import or export restrictions other

than customs duties and taxes (notwithstanding anti-dumping/counter-vailing measures and infant industry provisions).

Some texts: agricultural export subsidies shall be abolished; all texts: national subsidies are allowed – value of provisions?

Exemptions in case of infant industry protection in some texts



Customs and trade facilitation Central element in the EPAs SADC: partially regional approach: customs legislation and

procedures shall be harmonised Chapter has not yet been drafted in EAC and ESA

Sanitary and phytosanitary standards/technical barriers to trade

Chapter outlines cooperation areas and technical support SADC: list of ‘priority products’

• A) increasing understanding of and compliance with EU standards

• B) products where regional standards shall be harmonised

Chapters have not yet been drafted in EAC and ESA


African ‘priority products’

Priority products for exports to the EU

Priority products for regional harmonisation

Additional regional approach

SADC Fish and fishery products, meat and meat products, fruits and nuts, vegetables, cut flowers, coffee, sugar

Fish and fishery products, meat and meat products, cereals, vegetables and spices, oilseeds, coconut, copra, cotton seeds, groundnut, cassava, beer, juices, dried and canned fruits

Collaboration between national and regional public and private authorities

CEMAC Coffee, cocoa, spices (vanilla and pepper), fruits and nuts, vegetables, fish and fish products

Live animals (particularly small ruminants), meat and meat products, fish and fish products, tubers and plants (incl. peanuts and cassava), potatoes

Harmonisation of regional standards and other import conditions within 4 years.

Ghana Annex to be developed until the end of March 2008.

No provisions No

Côte d’Ivoire Annex to be developed until the end of March 2008.

No provisions No


4. Trade defence in the EPAs

TDCA and Central and West Africa EPAs: pre-emptive safeguards if ‘availability or access to foodstuff

is endangered’ No link in ESA, EAC, and SADC between safeguards and food

security

Status quo ESA EAC SADC TDCA

ACP exclusion from GATT/AoA safeguards

Yes (limited to 5 years with option of extension).

Yes (limited to 5 years with option of extension).

Yes (limited to 5 years with option of extension for BLNS/Moz but SA is excluded from provisions).

No provisions

Maximum safeguard protection

No time limits No time limits No time limits No time limits

Pre-emptive safeguards Yes (max. 200 days) Yes (max. 200 days). Yes (max. 200 days) Yes, no time limits

Safeguards related to food security

No. Chapter on Agriculture will be negotiated in 2008.

No. Chapter on Agriculture will be negotiated in 2008.

No. Yes, pre-emptive safeguards can be applied


Bilateral safeguard conditions in the ESA EPA (Art. 21)

2. Safeguard … may be taken where a product originating in one Party is being imported into the territory of the other Party insuch increased quantities and under such conditions as to cause or threaten to cause:

(a) serious injury to the domestic industry … or;

(b) disturbances in a sector of the economy, .., or

(c) disturbances in the markets of agricultural like or directly competitive products …

3. Safeguard measures referred to in this Article shall not exceed what is necessary to remedy or prevent the serious injury or disturbances, as defined in paragraph 2 and 5(b).

Those safeguard measures of the importing Party may only consist of one or more of the following:

(a) suspension of the further reduction of the rate of import duty

(b) increase in the customs duty on the product concerned up to a level which does not exceed the customs duty applied to other WTO Members, and

(c) introduction of tariff quotas on the product concerned.


5. Infant industry protection

Provisions to apply safeguard measures in order to protect infant industries are more generous than in TDCA

However: only applicable for 10-15 years; thereafter only safeguards

Is this a problem???

Status quo ESA EAC SADC TDCA

Safeguards to protect infant industries

8 years within the first 10 years (15 years for LDCs).

8 years within the first 10 years

8 years within the first 12 years (extendable by Joint Council)

4 years within the first 12 years (extendable by Joint Council)

No new safeguards for a product that has been previously subject to infant industry protection

For 1 year For 1 year For 1 year For 3 years

Other instruments Treatment of internal taxation and regulation can be discriminatory to protect infant industries (decision from the EPA Committee needed).

List of products for which the application of discriminatory fees and charges will be allowed for a limited period of time shall be created.

Temporary introduction/ increase of export taxes allowed in case of infant industry. EPA Council reviews measures after 2 years.

After consultation with the EC SADC states (except SA) may introduce temporary export on a limited number of additional products. Council reviews measures after 3 years.

No. Quantitative restrictions and export duties shall be abolished immediately.


6. The rendez-vous clause

EAC ESA SADC

Customs and trade facilitation

Outstanding market access issues

Agriculture

TBT/SPS

Services

Investment

Competition

Current payments

Public procurement

Intellectual Property

Environment/ sustainable development

EAC ESA SADC

Social issues

Dispute settlement

Institutions

Personal data protection

Good governance in tax areas

Development cooperation

Integration of other countries

Any other areas

Deadline Not mentioned

Not mentioned

31/12/08 and 31/12/11 for service liberalisation


6. The rendez-vous clause

What are the binding commitments in the IEPA? Parties committed to continue negotiations on the

topics outlined in the rendez-vous clause and any other topic they would like to include

But: African countries did not commit to agree on any of

the provisions that are subject to continued negotiations

The rendez-vous clauses for SADC, EAC and ESA do not mention

Intellectual property rights protection Social issues (such as commitment to respect international labour

standards Provisions for personal data protection


Main messages

Only CARIFORUM has yet completed the EPA negotiations

Except CARIFORUM and EAC only ‘sub-regional’ or country EPAs exist

The implications for economic regional integration:

Offering chances for EAC

Destroy de facto SADC and COMESA

Some clauses (MFN, standstill) are inferior than in CARIFORUM and/or PAC

‘Any other area the parties feel being relevant’ can be subject to ongoing negotiations

What remains disputed:

To what extent can single provisions be renegotiated?

Can a region ‘import’ any superior provision reached within another region?

The interim EPAs – some facts

TIPS Workshop

5-6 March 2008

Documents

The interim EPAs – some facts