Economic Partnership Agreements: Development Challenges for Southern Africa
Paul Kalenga
Trade Law Centre for Southern Africa
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INTRODUCTION
ACP/EU towards WTO-compatible EPAs
Unprecedented reciprocal market access
North-South PTAs – a fertile area for analysis
TDCA between EU & South Africa still in its infancy
Development impacts remain ambiguous
Limitations and potential to deliver on development promose
Impact lies in their proper design, sequencing and effective
implementation
Development challenges facing Southern Africa
- Promotion of regional trade integration agenda
- Improve market access: agricultural & non-agricultural
- Deal with adjustment costs
- Address supply-side constraints
- Ensure WTO compatibility/ Doha Development Agenda
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Cotonou Agreement
EPAs are comprehensive FTAs Replacing current non-reciprocal trade preferences with reciprocal
WTO compatible arrangements by 2008 WTO waiver lapses on 31 December 2007 Options to EPAs: EBA GSP for the LDCs, Standard GSP for the non-
LDCs All ACP-EU phase of EPA negotiations: agreed to negotiate regional
EPAs Principles: flexibility, asymmetry and preservation and improvement
of the Cotonou aquis Two-pronged approach: inter-regional integratiobn (EU/ACP regions);
intra-regional integration (trade liberalisation within ACP regional groupings)
Progressive removal of trade towards FTA in accordance with WTO rules (reciprocity, ‘substantial all trade’
Article XXIV of the GATT, 1994 > TDCA
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Regional Trading Arrangements (RTAs) & EPAs
Eastern and Southern Africa (ESA) EPA configuration
SADC configuration
TDCA and the BLNS countries
East African Community
COMESA
Multiple and overlapping membership
EBA for LDCs
Significant challlenges to the potential content and
implementation of the EPAs
Undermine or enhance regional integration
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WHY THE EPA APPROACH?
Trade Preferences have a limited impact amidst supply-side
constraints
Despite non-reciprocal trade preferences that the ACP countries
have enjoyed in the EU market over the years they have not been
able to take full advantage of such market access
Steady decline in the ACP share of total EU imports from 6.7% in
1976 to only 3% in 2002
ACP share in world exports have also declined from 3.4% in 1976 to
1.9% in 2000. Furthermore, ACP share in developing countries
exports has fallen from 13.3% in 1976 to a mere 3.7% in 2000
Trade preferences have not led to the diversification of ACP
economies and have failed to halt their increasingly marginalization
in world trade.
EPAs are intended to redress this by looking closer at the supply
side of the ACP economies
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WHY THE EPA APPROACH?
Preference margins are being eroded
WTO waiver is not likely to be extended after 2007
Importance of South-South integration: dynamic effects such as
economies of scale, the importance of locking-in of intra-regional
trade liberalization
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KEY CHALLENGES FOR SOUTHERN AFRICA
Dealing with adjustment costs: loss of government revenue and competition from EU products amidst weak economic structure and lack of competitiveness
Enhancing Market Access: Higher MFN tariffs in the EU, especially in labour-intensive sectors such as agriculture, textiles and clothing and food processing
Dealing with SPS measures and technical regulations
CAP Reform issues
Rules of Origin
Promoting Regional Trade Agenda
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TDCA Lessons
Fears and concerns on the potential adverse impact of the
TDCA in South Africa – still contained and manageable
The importance of appropriate design & implementation
South Africa was guided by clear strategic economic priorities
and balanced pragmatism
A good national governance process but also commitment
towards global economic integration
What about other SADC countries?
Different governance contexts, diverse economic interests,
diverse external levels of protection
Weaker trade policy & negotiation capacities
Reactive and wait-and-see attitude at national levels
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CONCLUSIONS
EPAs an attempt to use regional integration to assist ACP countries to deal with many of the trade-related and supply-side problems that constrain their access to global markets
Is this a suitable instrument? – far from clear Process appears irreversible The need to focus on effective negotiations towards a desired
outcome There are costs and benefits, the need for proper design and
effective implementation Locking in regional integration initiatives and enhancing trade policy
convergence Challenge to the EU: recognizing adjustment costs, phase-in
reciprocity without causing hardships, sequencing and transitional development assistance
Policy reforms in the EU – especially in agriculture, rules of origin, standards and technical regulations
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