Economic Partnership Agreements: What’s the best way forward?
12 October 2007
Open Europe today releases new research on the EU’s proposed Economic Partnership Agreements (EPAs), which are due to be agreed by the end of the year.
For the first time developing African, Caribbean and Pacific (ACP) countries will be given a fixed timetable to drop their barriers to imports from the EU. They are being asked to eliminate roughly 80% of their trade barriers against the EU over the next decade.
If ACP countries do not sign up by 31 December the EU will take away their preferential market access. A letter in today’s FT from the EU trade spokesman Peter Power makes clear that “If they [EPAs] are not signed by the end of the year, we will no longer be able to offer our current preferential access, and will have to move to an alternative, which will give less market access in Europe for many ACP countries.”
While reducing barriers to trade is broadly beneficial, asking developing economies to open up rapidly, and according to an externally imposed timetable, could raise problems. The specific design of the proposed EPAs also raises several issues, for example:
- The six regional trade groups which ACP countries are being asked to form often cut across existing attempts at regional integration. Certain countries like the DRC and Tanzania face difficult choices about which group to be in.
- Opening up to products from the EU could also lead to pressure for greater barriers between ACP countries and undermine existing trade agreements – as countries attempt to avoid transhipped imports from the EU entering their markets via another country with which they have a trade agreement.
- There are 30 countries which rely on tariffs for more than a quarter of their total government revenue, and creating new tax systems to fill the gap will not be simple.
Open Europe’s paper looks at the potential problems and risks posed by EPAs for developing countries, and argues that alternatives should be considered before it is too late. It argues that while there is still flexibility in the negotiations the EU should now pursue “EPA light”. It should take the threat of higher tariffs off the table, and it should spell out that aid for trade, and aid more generally, will not be conditional on accepting an EPA.
In a foreword to the paper, Liberal Democrat MEP Fiona Hall argues that:
“EU leaders cannot seriously present themselves as being committed to development if at the same time they are sanctioning coercive trade tactics in order to bounce developing countries into hastily negotiated and badly thought-through agreements.”
“A better way forward for EPAs is still possible, and the outcome is still very much in the EU’s hands. But in order to achieve a deal that works for developing countries, the EU must now take a different approach to the negotiations.”
The paper is available at:
http://www.openeurope.org.uk/research/epas.pdf
Notes for editors:
1) For more information, please contact Neil O’Brien on 0207 197 2333 or 07973 142775.