| EU’s response to critics of Epas | Send to a friend |
| Tuesday, 06 April 2010 22:18 |
 Following is the EU’s response to questions by The Citizen on criticisms levelled against Economic Partnership Agreements (EPAs)The European Commission has followed with great interest the recent media debate on EPAs. We are pleased to read that the topic is gaining renewed attention and further to the e-mail from the Citizen newspaper to the EU Delegation on Tuesday 23 March, we are pleased to be invited to add our voice to the discussion. In our view EPAs have nothing to do with colonialism. Indeed, quite the reverse – they are concerned with promoting the regional integration process, and notably supporting measures taken by regional groupings themselves to open up trade with their neighbours and the wider international community. While they may have been born out of necessity – driven by the need for any preferential measures given by the EU to be WTO compatible – they are also an integral part of the comprehensive partnership between the European Union and the African, Caribbean and Pacific (ACP) Group of countries. We genuinely believe that the interim EPA, as negotiated between the East African Community and the European Union in November 2007, is to the mutual benefit of both parties. By the virtue of being negotiated and open ended Agreement, the EPA provides predictability and stability to all business operators – local and foreign. The often made allegations that EAC markets would be flooded with EU products from day one of implementation of the Agreement are simply untrue. The carefully drafted EAC list of exclusions continues to provide tariff protection to sensitive areas of the EAC economies – agricultural products in particular - while intermediary goods and a number of consumer goods will be liberalised over a long period of time. This can yield major benefits to both EAC producers as well as consumers. Producers will have access to cheaper and better quality inputs into the production processes in the EAC - this can be turned into a competitive advantage vis-à-vis other regions and can become an incentive for increased productive inward investment into EAC countries. From a consumer point of view, EAC citizens will have access to a greater variety of goods, at a lower cost. At the same time – the safeguard clauses and the list of exclusions, together with the long transition period for liberalisation of a number of final products on the EAC side will ensure that Tanzanian producers of agricultural and other sensitive products will not be facing additional competition from EU producers. We have experienced delays on both sides in bringing the Framework EPA in the EAC region to a conclusion. Having said that, the EU will have a major challenge in maintaining for much longer the current situation, where we have already unilaterally applied the preferential provisions of the FEPA without having a fully signed Agreement in place. We are very keen to sign the FEPA as initialled back in November 2007 and move forward in strengthening our partnership with the EAC even further. We are seeking for an opportunity to discuss the way forward with the EAC leadership in the coming months. Background: The commitment to negotiate Economic Partnership Agreements between the EU and a number of regional configurations determined by the African, Caribbean and Pacific (ACP) Group members themselves dates back to June 2000 and is recorded in the signed “Cotonou Agreement”. At that time the parties agreed to finalise negotiations for Economic Partnership Agreements in time to allow for entry into force of the new trade regime between the EU and the ACP countries in January 2008 when the World Trade Organisation (WTO) waiver obtained for the so-called “Lomé Trade Regime” expired. Reasons to move away from the “Lomé arrangements” were numerous, key among which was the new legal reality faced by the parties due to the WTO multilateral trading rules and the resulting “illegality” of the unilaterally granted Lomé preferential trade regime. Equally importantly, external assessments demonstrated that during the decades of preferential access to the EU markets, the share of ACP economies in world trade reduced extensively and over a half of all ACP exports to the EU was represented by only four products – all of them raw materials. The unilaterally granted preferences created limited economic incentives to add value and to diversify economies, and furthermore failed in delivering on their overall objective of integrating ACP economies further into the world economy. The jointly agreed deadline of end 2007 was only met between the EU and the Caribbean region, while with other regions – including the EAC – an interim solution was found. This interim solution entailed conclusion of negotiations on the chapters of the EPA agreement that had direct implications for securing continued preferential access for ACP products to the EU market in a WTO compatible manner. In the EAC region this resulted in initialling of the Framework Economic Partnership Agreement (FEPA) which included, among other things, a chapter on trade in goods – with the EU committing to provide duty-free-quota-free access to all EAC imports into the EU with transitional periods only for sugar and rice while the EAC committed to open up markets up to 82% of EU imports over a 25 year period. Given that already 65 percentage of this is already entering into the EAC free of duty rate given the EAC Common External Tariff for capital goods being set at zero, the effective liberalisation counts to only 17.2%, of which and further 15 percentage points are intermediate goods (inputs into manufacturing processes within EAC) and hence when liberalised, can positively contribute to the competitiveness of the EAC manufacturing sector. It is this interim solution – the Framework EPA which was initialled in November 2007 and has been already implemented by the EU through an internal EU market regulation - that is waiting to be signed. In the current situation, the EU is implementing an International Agreement without having the required international legal base in place to justify it. This is a situation we find difficult to sustain for very much longer. While often referred to as the “trade pact”, EPA is in fact a complementary tool for development, an addition to the development co-operation and political co-operation pillars of the Cotonou Agreement. The EPA is by construct an asymmetric, developmental trade agreement where the EU liberalises all trade from the start while EAC only liberalises partially, and over a very long transitional period. The Sensitive List (the list of exclusions) covering almost 20% of the current trade includes most agricultural products as well as the produce of “infant industries”. In the context of the EPA negotiations, the EAC and the EU are also looking at development needs with direct bearing on the prospects of the EAC economies to benefit from the liberalisation provisions provided within the EPA. These needs will be captured into a jointly agreed development matrix. The Cotonou pillar of development co-operation is designed to provide support to assist the EAC economies to address such supply side constraints. Already now the EU is a major donor in the region, both through the European Commission as well as via Member States’ bilateral agencies and development banks. The “development matrix” which will be part of the EPA will become an important guiding document in programming of the already availed and all future development co-operation support from the EU partners. A real strength of the EAC/EU FEPA and the forthcoming comprehensive EPA is that it builds on an ambitious and internally driven integration process of the EAC. The European Union, having built its current prosperity to large extent on principles of regional integration, is a keen supporter of the EAC integration agenda. Add this page to your favorite Social Bookmarking websites           |
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