Islands Business | November 2007
Trade: EU GIVES PACIFIC BREATHING SPACE
Interim deal in place before EPA’s signed in 2008
Pacific Islands countries have been given a breathing space after the European Commission (EC) decided to extend the deadline for the signing of the Economic Partnership Agreement (EPA) between the two parties to December next year.
However, negotiations will be held this month on an interim agreement on the trading of goods and possibly services between the Pacific trade ministers and the EC.
This agreement, a stepping-stone to a more comprehensive EPA, should be signed by December or otherwise we will have to trade under the European’s General Preference System (GSP). Such a move could prove very costly for some ACP (see box), a possibility emphasised by the EC and feared by the ACP.
At the moment, only Fiji, Vanuatu, Papua New Guinea and Solomon Islands are exporting to the EU countries.
The exports are mainly sugar, fish and coffee-goods that would be included in the interim agreement.
Late last month, Pacific Trade officials were having “internal” meetings in Brussels focusing on those PACP Member States that had produced a ‘Goods’ offer to the Europeans.
The PACP-EC Joint Technical Working Group is expected to meet in the first week of this month to draw up the interim agreement.
It is understood the agreement, to be effective early 2008, needs to be signed and agreed to by later this month or early next month due to EC processes since it would need to be translated it into the different languages.
The joint declaration issued by the Pacific-EC Ministers following their meeting last month said the agreement would include “goods schedule, rules of origin, safeguards and other necessary elements”.
It further adds that depending on negotiations, fisheries, competition, development cooperation provisions and any other text that could be agreed to at this stage would also be included.
“It was agreed the interim agreement would enter into force on January 1, 2008 and would remain in force until succeeded by a comprehensive EPA.
“It was also agreed that those PACP States not becoming party to the interim agreement at its inception could join at any future date on comparable terms and conditions,” the statement said.
Attending the Brussels meeting were Honourable Hans Joachim Keil, who is Samoa’s Trade Minister and also the lead spokesperson for the Pacific Regional Negotiating Team, Taito Waradi (Fiji), Martin Puta Tofinga (Kiribati), Bill Vakaafi Motufoou (Niue), Sam Abal (PNG), John M Silk (Marshall Islands), Lisiate Akolo (Tonga), Lotoala Metia (Tuvalu) and James Bule of Vanuatu.
The EU was represented by the Commissioner of Trade Peter Mandelson and the Commissioner for Development Louis Michel.
According to the declaration, the PACP states welcomed the EC’s recent rules of origin proposal, including provisions relating to agro-processing, textiles and fisheries.
The EC also took note of the PACP request to extend global sourcing to further fishery products and also the revision of rules of origin to allow more PACP products to the EU market.
Since EU’s imports from the Pacific Islands is less than one percent of their total exports, the meeting also agreed to include trade defence instruments in the interim agreement.
At the recent Pacific Islands Forum Leaders Meeting in Tonga, the Pacific Civil Society Organisations (CSO) urged the leaders to insist on the EU to deliver its “legal obligation to provide an alternative to the EPAs that maintains current levels of market access provided in the Cotonou Agreement”.
The Pacific CSOs also urged the PACP leaders to unite in their negotiations and must not let bilateral agreements divide the PACP negotiating position.
Pacific Network on Globalisation coordinator Roshni Sami claims the EPA will only cause more poverty in the Pacific than reduce it, as the EC claims.
EC head of delegation in the Pacific, Roberto Ridolfi told this magazine before his departure for his new posting in Brussels, that the Pacific Islands leaders were being ill-advised by certain non-governmental organisations, consultants and academics.
Ridolfi said the EU was trying to help the Pacific Islands and really had nothing to lose if the islands decided not sign the agreement or the EPA.
“We will not lose a breath because there is not much imports from your countries,” he said. But we have to comply with the WTO and do away with our preferential treatments.
“However, we have offered to help you prepare for the changes.
“The EPA might result in some European companies moving into the Pacific but not now, may be later.
“There is not much the Pacific can offer to the EU countries and your geographical position does not help you either. However, we are still willing to give you aid to improve the quality of your goods so they could be exported to the EU, unlike Australia and USA?
“Why didn’t Australia or USA help Fiji when their garment agreement expired.
“Did they give money years before this happened to help Fiji prepare for the change?”
“Yet, Fiji imports almost everything from Australia,” Ridolfi told ISLANDS BUSINESS.
COST OF GSP INSTEAD OF AN EPA FROM 2008
• The EC estimates that if an EPA is not signed by January 2008, the potential cost of alling back to GSP for West Africa would exceed more than one billion Euros, while this would amount to 360 million Euros for Central Africa.
• The overseas development institute estimates that exports facing a new tariff of 10% or less under GSP would result in a transfer from the ACP to the EU of equivalent to 2.6 times European Development Fund (EDF) commitments on health projects in 2005. This could be as high as four times the annual EDF support for a country like Namibia.