7 February 2014

 

Negotiations on Economic Partnership Agreements between EU and ACP countries : a breakthrough unfavourable to the poorest West African countries

After a virtual deadlock of 10 years, negotiations on Economic Partnership Agreements (EPA) between the European Union (EU) and the African, Caribbean, and Pacific Group of States (ACP) have made a breakthrough end January.

The deal was struck on the opening over 20 years of the market of the Economic Community of West African States (ECOWAS) to 75% of EU products against the 80% that had initially been demanded by the EU. Furthermore, the Most Favoured Nation Treatment clause, which would have ensured the EU that ECOWAS countries would not be conceding more favourable trade agreements to other developed countries, is not specifically included any more in the agreement. These meager gains had to be compensated by the cancellation of the €15 billion additional funds that should have been allocated by the EU to economic development and that ECOWAS had demanded as compensation for the expected negative impact of the EPA. EU will now only contribute €6.5 billion for the period 2015-19 without promising any supplementary funding.

This agreement therefore abolishes the totally free and non-reciprocal access to the European market that the least developed countries (LDC) who constitute the three quarters of ECOWAS countries, had. These countries, which are among the poorest in the world, will now have to open up their markets to European products without getting any compensation. This measure of liberalisation goes further than what is demanded by WTO: thus, the EU cannot justify this requirement by any kind of commitment it would have taken at the WTO.

The implications will be of two types:

1. •A substantial reduction in customs revenues that are traditionally a major part of government income in ECOWAS countries. This will further weaken states that are already fragile and will limit their possibilities of funding development and social protection programmes, now that the agreement no more includes the €15 billion additional development funds. The EU claims that this decrease in customs incomes will be compensated by the GDP increase that should result from the implementation of the agreement and that should generate more tax revenue. Unfortunately, lessons from other trade agreements between rich and poor countries show that this increase in GDP might well be illusory
   

2. •A reduced competitiveness of most of the local production on domestic markets, as the opening up of markets will bring a reduction in the price of most goods imported from the EU. This loss of competitiveness will dampen industrial development possibilities of concerned countries and strongly penalise agricultural and agroindustrial products (for more details read the report by the South Center - in French).
   

As can be seen, this agreement will have negative effects in the short as well as in medium and long term, and it will cause a degradation of the social and food condition in ECOWAS countries: there will be less employment in the industry and agriculture will be less dynamic, including in poorest countries that will not benefit from any special support measures. It will also most likely affect negatively the image of the UE among the local population, to the benefit of emerging countries like Brazil and China.

Kalilou Sylla, the Secretary-General of ROPPA (Réseau des Organisations Paysannes et de Producteurs Agricoles de l’Afrique de l’Ouest - the West African regional farmer organisation) believes that this agreement is the result of political horsetrading by some leaders (Sénégal, Côte d’Ivoire and Niger) who need EU support to strengthen their legitimacy. The agreement will preserve some interests in countries such as Ghana and Côte d’Ivoire who export large volumes of goods towards the EU, as they will continue to benefit from preferential access to the European market. But it will mean a net loss for those countries who experience a high trade deficit with EU countries and export only limited quantities towards the Union.

It must be recalled here that the EPA must absolutely replace by 1st October 2014 the non-reciprocal preferential access granted by the EU to ACP countries in the framework of the Cotonou Agreement of June 2000. This is a consequence of compliance with WTO rules. Beyond this date, countries who will not have concluded their negotiations with EU will loose access facilities granted by the EU and be subject to the less favourable general regime of developing countries or of least developed countries, depending on the country.

It is highly probable that other regional organisations of ACP countries will be obliged to accept similar agreements, pressed as they are by the deadline of October 2014.

The ECOWAS/EU agreement will now have to be officially confirmed, first by the Chief Negotiators and then by the Heads of State and Governments, most likely by the end of this month in the case of ECOWAS countries. Beyond that, many months will be needed before the agreement really gets implemented, mainly because of the inertia of EU bureaucracy: this will further postpone the effective implementation of the agreement well beyond 2014.

For more details:

I.Ramdoo, Economic Partnership Agreements: West Africa seals a deal at the 11th hour, European Centre for Development Policy Management, 27 janvier 2014

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Last update:    February 2014

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