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EU-Africa experts to meet amid hot critics on EPAs

TOMRIC News Agency, Dar es Salaam

EU-Africa Experts to Meet Amid Hot Critics On EPAs

11 June 2007

European Union (EU) and African experts are scheduled to meet in Addis Ababa, Ethiopia this week to discuss key issues on the EU-Africa cooperation. Agendas for the meeting might include EU-ACP cooperation-related issues, progress on the Economic Partnership Agreements (EPAs) negotiations and African Union matters.

The African Union has become a major player on the continent in the areas of politics, economics and trade, and in regional crisis management, mainly in Sudan, the Democratic Republic of Congo, Burundi and Somalia. This has led numerous states to strengthen their presence in Addis Ababa. The new representation will be specifically for the African Union, and will be distinct from the Ethiopia delegation, although reports indicate that there will be many synergies.
Africa 2007

The meeting comes just a few days after concluding a ministerial meeting held in Brussels recently in which discussion focused on EPAs negotiations and trade between EU and ACP group in commodities such as sugar, bananas and cotton.

The Council of Ministers, which is composed of representatives from all signatories to the Cotonou Agreement, endorsed the findings of a comprehensive progress review of EPAs carried out under Article 37.4 of this Agreement. The review is set out in a joint ACP-EC progress report that reviews the state of negotiations in each EPA region and sets out the steps needed to conclude EPAs before the end 2007 deadline.

The European Commission was represented by the Commissioner for Trade, Peter Mandelson and the acting Commissioner for Development, Olli Rehn. Peter Mandelson noted that the comprehensive approach of EPAs is part of the essential nature of the Cotonou Agreement and said that the EC was fully committed to do its part in turning the recommendations of the joint progress review into reality.

In the press conference following the Ministerial, the ACP Presidency, Foreign Minister Tsekoa of Lesotho, noted that ongoing negotiations were tough but there was no doubt that EPAs would improve ACP access to European markets and both sides had a strong interest in finding solutions. All six EPA regions reconfirmed their intention to conclude negotiations within the deadline.

But in a series of declarations, ACP ministers noted the outstanding issues and challenge of concluding but welcomed the steps taken to address their concerns and make progress, including the recent generous EU market access offer.

The meeting in Ethiopia comes at the time when NGOs continue to criticize EPAs on the grounds that it is unlikely to address problems of Least Developing Countries (LDCs). A recent report by a group of European Non-State Actors (NSA) criticizes the EU for failing to come-up with a comprehensive development package for ACP and the Africa in particular. On their recent report, "Devil in the Detail": Getting to Grips with the Final Stages of the ACP-EU EPA Negotiations, they have listed pending issues which needs special focus for effective cooperation.

They say in many ACP countries, particularly in Africa, governments depend on tariffs levied on imports from the EU to generate a substantial percentage of Government revenue. In this context, unless alternative sources of revenue collection can be set in place, eliminating tariffs on imports from the EU could profoundly impact on total Government revenues. The United National Economic Commission for Africa (UNECA) has estimated total revenue losses for Sub-Saharan African countries at -1,516 million per annum, amount more than total annual EC aid disbursements in Africa under the 9th EDF.

Addressing this level of revenue loss is by no means a simple task. The IMF has found that in less developed countries, new forms of non-trade taxes yield on average only 30 cents for every trade tax dollar lost, as a result of tariff elimination. As a consequence ACP governments, particularly in least developed countries, are seeking to exclude ’revenue sensitive’ products from the tariff elimination offers made at the regional level to the EU. This is leading to extensive lists of products excluded from regional tariff elimination offers to the EU. In the coming months the EC needs to show greater sensitivity to these government revenue concerns.

The EC’s April 4th 2007 market access offer proposed upon entry into force of an EPA duty free - quota free for all originating ACP exports except rice and sugar (for which transitional arrangements have been proposed). There are however a number of concerns about this offer. First the EC offer has back-tracked from the October 2003 version tabled before the Article 133 Committee, which covered all products and contained no exceptions.

Secondly, the offer is still a proposal with at least 10 EU member states objecting to elements of the EC proposal. These objections relate not to the treatment of sugar and rice, but also the implications of the duty free quota free treatment of bananas. It is feared that duty free and quota free access for ACP banana could undermine banana prices on the EU market and inflame the ongoing WTO banana dispute. This is a matter of concern not only to EU banana producers (where expanded direct aid payments, for which budgetary allocations have already been made, are likely to provide adequate relief), but also traditional Caribbean banana suppliers who fear losing market share still further to African suppliers as price competition between ACP suppliers intensifies.

Thirdly, is the failure to date of the EC to accompany its market access offer with any substantive concessions on rules of origin issues. For the ACP a simple change of tariff sub-heading (CTSH) approach to rules of origin should be applied. This is administratively simple to apply and imposes minimal administrative costs on ACP exporters. For the EC the more complex value addition approach is favoured. This fundamental difference is central to the actual real value of the trade preferences granted ACP countries. For the EU to put forward a market access offer to the ACP, without clarifications and concessions on the rules of origin to be applied, greatly undermines the value of the offer, since its impact on the real economy of ACP countries simply cannot be evaluated.

Least developed countries (LDCS) have a recognized right under WTO rules to non-reciprocal trade preferences and have enjoyed since 2001 full duty free-quota free access to the EU market under the Everything But Arms (EBA) initiative. There are two principal constraints on producers in LDCs exploiting these comprehensive trade preferences: namely supply side constraints on competitive production and the rules of origin applied.

According to them, to date the EC’s approach to EPAs fails to comprehensively address either of these constraints. Met recently, consultation of Churches from Eastern and Southern Africa on Economic Partnership Agreement (EPAs) expressed fears over the agreement saying if implemented it would contradict national development goals and policies.

Leaders, representatives and members of churches from Southern and Eastern Africa and the Catholic Church through the Association of Member Episcopal Conferences in Eastern Africa (AMECEA), met in Dar es Salaam, Tanzania recently to deliberate and discuss the EPAs between the EU and ACP. In their statement, they affirmed and supported the protection of livelihoods, the respect of human rights and upholding human dignity of the people in their countries. "Any kind of economic policy including international trade policies should be first and foremost geared towards sustainable development and equitable growth, which benefits the people", the stated. According to them, international trade must serve the people rather than the profit.