Economic Partnerships Agreements (EPAs) – will a new broom sweep cleaner?

29 October 2008
Chris Stevens and Mareike Meyn
Comment

By Chris Stevens and Mareike Meyn

The appointment of Baroness Ashton as the new European Trade Commissioner could provide the opportunity to apply balm to the fraught trade relationship between Europe and the African, Caribbean and Pacific (ACP) countries and bring the negotiations to a development-friendly conclusion. ODI research indicates that the emphasis should be on supporting an informed debate, dealing proactively with legitimate criticism, and ensuring stakeholder buy-in.

The story so far

Readers not immersed in the minutiae of Economic Partnership Agreements (EPAs) may have supposed that the ‘negotiations’ ended last December. By then the 76 countries negotiating with the EU countries had to either initial an EPA or face the removal of their pre-existing export preferences. Faced with this threat, 35 countries had initialed EPAs by the end of 2007 and another (Zambia) has done so since. All except the 15 CARIFORUM states initialed ‘interim’ EPAs covering only trade in goods and are continuing negotiations on trade in services, investment and other trade-related issues.

The Commission pushed for signature to follow hard on the heels of initialing – but only on 15 October did the first group do so: CARIFORUM, which signed a ‘full’ EPA. But two initialing countries were absent: Guyana (which after a stormy two months – see below - has said it will do so by the end of the month) and Haiti (which wants more time).

Why the delay? Three reasons. The December texts had been finalised in a rush – and it showed. There were gaps, omissions and inconsistencies between the accords that needed to be tidied up. Moreover, most regions were unhappy with parts of the hurriedly concluded pacts and wanted them re-opened. Third, popular opinion remains steadfastly and vocally opposed to EPAs in many countries.

Support informed debate

In May the European Council recognised these problems and told the Commission to be flexible in dealing with legitimate ACP concerns. But this begs the question as to whether all legitimate concerns are yet known.

Three features of the EPAs stand out above all the others:

  1. the treaties involve complex and wide ranging commitments;
  2. the country and regional impact of these could be very substantial; yet
  3. there has been almost no informed discussion of these details based on independent analysis of their likely impact.

Having undertaken most of the independent analysis that does exist (with more shortly to reach our web site) ODI understands the negotiators’ frustration with those EPA criticisms that are wild and inaccurate. But it simply underlines the problem: wild attacks are not effectively silenced because only a tiny group of people realise that they are exaggerated – this is not known by the majority which includes many opinion formers, private sector groups and activists.

Deal proactively with legitimate criticisms

Some criticisms are fully justified – and our work (soon to be publicised) is throwing up others that have not yet registered on local radars. The potential adverse impact on regional integration is a particular case. The EU is behaving like the proverbial bull in a china shop, destabilising a delicate balancing of national interests. For example, in one region a small country with a fragile arable sector has a ban on cereal imports from its large neighbor in the harvest months; although it is accepted by both countries, this will be illegal under the EPA. There are also questions over whether the EPA institutions will take legal precedence over existing regional bodies, with divisive consequences.

Until now the Commission has simply responded (mostly negatively) to changes proposed by unhappy states. It needs instead proactively to propose amendments that guarantee the supremacy of existing regional policies and institutions. Simply including the phrase ‘except where permitted by the [relevant regional] treaty’ after potentially troublesome provisions would go a long way. The blanket bans on restrictions to intra-regional trade found in the current texts, whilst possibly justifiable on paper, are likely either to bring major economic disruption and political acrimony or – perhaps more likely – to be ignored.

Ensure stakeholder buy-in

And that is the rub: there are so many ways in which reluctant ACP governments can ignore both the spirit and the letter of the EPAs – often with impunity. There is substantial evidence that policy reform has the desired impact only in cases when it is accompanied by a genuine ‘conversion’ of government and stakeholders; when they internalise the ‘new approach’. The EPAs have been advanced as reforms needed to support ACP development. But if signatures are extracted under duress, simply to avoid the consequences for exports of not signing, the casualties will include not only the EU’s image but also development. Guyana has experienced starkly the duress. Responding to strong domestic opposition, President Jagdeo expressed a willingness to sign a goods only EPA but not a full one. The EU response was to put in motion measures that would have removed all the country’s export preferences before the end of this month, which would have devastated its economy; Guyana blinked.

Those who counsel delay risk being branded ‘academic’ or ‘unrealistic’ by negotiators. It is true that negotiations are like the proverbial bicycle and need to move at a minimum pace to avoid collapse. But too fast will probably mean that the EPA impact is either zero or negative.

Watch this space

We are now entering the end-game of this part of the EPA negotiations. For most regions the December texts covered only trade in goods. Only CARIFORUM reached agreement on services, investment and other issues on the agenda. For the rest, a second round begins after the December texts have been sufficiently revised and signed.

News on the EPAs will be coming in at erratic intervals and in varying forms for the foreseeable future. Here at ODI, we will continue to monitor the scene and subject to rigorous analysis every new text and schedule that we receive.

If you would like to stay up to date with the results of our research on EPAs, please sign up to create an account with ODI, ensuring you tick 'Trade' in the thematic updates section (or edit your existing account, and click 'Trade' if you have not selected it already).