No EPA without investment rules and full reciprocity, Falkenberg insists!

Third World Network Africa

No EPA Without Investment Rules and Full Reciprocity, Falkenberg Insists!

29 June 2006

ACCRA, Ghana—(TWN-Af)—29 June, 2006—Karl Falkenberg, Deputy Director-General of Trade at the European Commission, says its is not worth having an Economic Partnership Agreement (EPA) between the EU and ECOWAS if the Agreement did not enshrine Free Trade Agreement-style full reciprocity between the parties and liberalised rules for Investment.

Falkenberg was speaking at a press conference on 21 June, organised by the EU Delegation here in Accra, where he was on a two-day visit to meet stakeholders in the EPAs, and gauge the level of engagement of the Ghanaian government on the EPAs and the WTO negotiations.

He said that size “matters” in terms of the markets to be accessed and the flow of investments within a Free Trade Agreement (FTA). Yet he maintained, without any apparent irony, that size “does not matter” when it comes to the influence of grossly imbalanced economic weight and power politics on Free Trade negotiations between a global trade superpower, such as the EU, and an incomparably weaker region like ECOWAS.

In the Deputy Director-General’s view, the potential market size of ECOWAS was "very important" for investors. He said that the basic concept underlying the EPAs was "to seek to integrate the regions". The anomaly of disintegrating the long-existing and recognised Southern Africa and East Africa regions and inducing the hybrid ESA - which exists solely for the purpose of negotiating the EPA and nothing else - was not commented upon by Falkenberg. Nor did he reply to a question as to why Africa’s autonomous Regional Integration should be tied into an FTA with an unequal partner.

In addition to the issue of the EU’s tinkering with Africa’s regional integration, two other major issues - investment and reciprocity - dominated the encounter.

On investment, Falkenberg claimed that an Investment Agreement that liberalised West Africa’s Investment regime as part of the EPAs, allowing in European investors on a preferential basis will address the current situation in which "ECOWAS countries are exporting capital".

Asked to explain how liberalised rules which actually make capital outflow a lot easier would reverse West Africa’s export of capital, Falkenberg could only repeat the mantra that “the investment will create additional jobs...other than in cocoa.” He stressed that the region needed investors, "know-how and technical people", but before all that, it was critical that there be a "transparent, predictable, and investment-friendly” climate for European investors. As if to suggest why this was necessary, he added that “Europe is the biggest bilateral donor in the region.”

He did not respond to the challenge that “how do you [build our own domestic markets] and build our supply side capacity if you have an investment agreement that allows European businesses to relocate here as if they were in domestic markets, for example?”

Pressed further as to why “the EU was insisting that we should tie it in Investment” to the EPA agreements, he maintained: that the EPA was not only a trade agreement but a development agreement as well, and that development “cannot happen without investment.” He explained that his mission in Ghana and other West African countries he was visiting was to call for “a more predictable set of rules”, as “trading relationships so far [had] not addressed the supply-side constraints.”

Falkenberg reported that he had already had meetings with Ghana’s finance and trade ministers, which had centred on development assistance and the possibility of additional EU aid. He was due to meet the foreign minister after his press conference.

On reciprocity, his tone was at best equivocal - “reciprocity was useful medication...[for developing countries].”, and punctuated with suggestions like : “the whole point with reciprocity is that you need to create a more competitive environment for enterprises to actually upgrade their products, their services, and not satisfy themselves with living off protection rents.”

In his view, the key was “not should there be reciprocity, but “how much, how fast” was the timeline towards full reciprocity. He said the pace of reciprocity had to take the relative level of development into consideration. The ongoing debate in the WTO and around the EPAs on reciprocity is “not in the direction of revising article XXIV on non-reciprocity.”

His comments were in response to an observation that reciprocity “was an ongoing debate”, which was why “the British government which is a member of the EU said in April last year that they would not support an EPA which insisted on full reciprocity”.

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