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Joint statement on the EPA negotiations, Accra

JOINT STATEMENT by The West African Civil Society Platform on the Cotonou Agreement (POSCAO), Economic Justice Network of Ghana (EJN) and the Secretariat of the Africa Trade Network (ATN) ON THE OCCASION OF THE ECOWAS MINISTERIAL MONITORING COMMITTEE (MMC) OF THE EPA NEGOTIATIONS, Accra,

28 - 30 November 2011

In preparation for our participation in the Ecowas MMC meeting on EPAs that is currently underway in Accra, The West Africa CSO Platform on the Cotonou Agreement (POSCAO) and the Economic Justice Network of Ghana (EJN) met on Sunday 27th November 2011 to review the state of affairs in the West Africa – EU EPA negotiations and to update West African CSO positions and contributions to this process. The POSCAO/EJN meeting which was hosted by the Secretariat of the Africa Trade Network, also based in Accra adopted a number of positions which we now share with you.

First of all, we would like to state that POSCAO fully associates itself with the statement issued by our Ghanaian colleagues in the EJN statement issued in Accra on 28th November 2011. In particular we join them to urge the Ghana government to suspend their bilateral IEPA and fully rejoin other ECOWAS members in a single unified regional process.

We also wish to extend our appreciation to ECOWAS officials for the work they are continuing to do to expand the possibilities of maximising West Africa’s benefits and gains from its trade relations. In the specific case of the EPA that is being negotiated with the European Union, we note that the negotiating counterpart continues to create obstacles and apply undue and unfair pressure on ECOWAS.

Just recently, the European Commission issued ‘ threats’ to withdraw the current Cotonou-equivalent acccess that exports from ECOWAS have in the EU market by 2014 unless ECOWAS has completed and ratified an EPA by that date. This is a threat because it departs from the spirit of partnership and the consideration of ECOWAS’ economies relative underdevelopment and vulnerabilty that should characterise the negotiations. Moreover, the scenario posed by the EC has a very tenuous legal basis, if at all, and the Commission itself was either aware of this or has since been made aware.

There is nothing new in this aggressive and bullying stance of the EU in the EPA process. The last Conference of African Ministers of Trade held in Kigali once again officially registered its condemnation of the EU’s approach and methods in the EPA negotiations. It is in this context that we welcome the statements by Ghana’s Minister of Trade as well as the ECOWAS Director of Trade to the effect that member-states will continue to work to reverse the multiple conflicting trade regimes that the EU is imposing in West Africa through the EPA process, and that genuine developmental outcomes rather than arbitrary deadlines are the appropriate and legitimate reference point for ECOWAS in the EPA negotiations.

Going beyond the general context, we wish to state the following about specific issues that are currently in contention in the West Africa-EU EPA negotiations :

1. Market Access Offer : We note that despite ECOWAS concessions on its market access offer – from 60% in 2009, 69.69% in 2010 to 70% in 2011 – the EU remains intransigent in its demands of 80% plus market opening commensurate with what it extracted from Cote d’Ivoire and Ghana respectively in their bilateral Interim EPAs. We reiterate that there has never been any convincing technical basis for the increasing ECOWAS’ MAO from its 2009 basis. Indeed the most comprehensive research to date has just been released under the auspices of POSCAO member organisation which (inter alia) establishes that :

i. Any market access liberalisation for EU imports under the EPAs must be restricted to goods under Groups A and B goods ONLY. Liberalisation of goods currently classified as Group C and due for liberalisation after 10 years will worsen unevenness between economies of West African member-states, deccelerate economic growth and increase poverty throughout the sub-region ;

ii. The pace of liberalisation must be extended to 15 and 25 years respectively for Group A and Group B goods if severe destabilisation of ECOWAS economies is to be minimised ; and,

iii. On no account must ECOWAS’ market access offer exceed 65%

It is worthwhile noting that this conclusion is diametrically opposite to the new demands by the EU to extend liberalisation to include areas such as health and hundreds of products currently scheduled as ‘Sensitive Products’ (group D).

We call on ECOWAS to immediately resolve the dangerous uncertainty by affirming an MAO of no more than 65%, and this as a last option.

2. ECOWAS CET : We note that the EPA liberalisation of Market Access cannot proceed without the completion and adoption of an ECOWAS CET. Here again, the intransigence of the EU is manifest. In response the current ECOWAS working formula to introduce a 5th Band at 35%, the EU has objected that this will contravene commitments made by UEMOA members in the WTO. Meanwhile, national-level discussions in Nigeria has affirmed what is common knowledge to all – that even a fifth upper band of 35% does not afford ECOWAS’ producers an adequate level of protection and adequate basis for competitiveness against an influx of EU imports. Indeed, the Federal Ministry of Finance in Nigeria has just issued a directive for the temporary withdrawal of the 35% upper limit to give the space to consider whether it cannot be raised even higher, perhaps to 50%. We welcome the initiative of the Nigerian and urge that ECOWAS collectively take this as the point of departure for finalising our regional CET.

3. Other Contentious Issues –

• EU Agricultural Subsidies: we note that the matter of unfair competition posed by EU subsidies and supports has not been comprehensively addressed in the EPA. It is imperative that ECOWAS does this.
• Non-Execution Clause : ECOWAS must reject the non-trade conditionality and threat of collective sanctions in the event of inability or failure of an ECOWAS member state to implement aspects of an EPA agreement or where the EU deems such an ECOWAS member to have flouted EU standards in non-EPA areas such as democracy or human rights. The illegitimacy of such a demand in a trade agreement is self-evident.
• MFN : there is no justification to make further and unnecessary concessions to the EU’s demand for automatic accession to MFN terms that ECOWAS and/or member states agree with third parties – especially Emerging Economies from the Global South.

4. EPA Development Programme (PAPED) : The EU’s continued refusal to substantively and specifically commit to meet fiscal adjustment costs that the EPA will impose on ECOWAS economies as well as for ADDITIONAL funding for the PAPED are clear violation of existing understandings and commitments. The attempted recycling of EDF funds as dedicated resources for EPAs means that the EU is unwilling to provide a single euro of the €9.5 billion MINIMUM required for a meaningful PAPED. This is unnacceptable. ECOWAS members have continued to review and encompass strategic needs for upgrading and diversifying regional production capacities. Without this, the purported advantages of enhanced access to EU markets for ECOWAS’ exports is meaningless and i will be impossible to absorb the adjustments that an EPA imposes. As the CARICOM/CARIFORUM Minsiters’ affirmed in their meeting held in the Dominican republic last week, developing and least developing country will be unable to maintain, let alone increase their competitiveness without dedicated programmes for upgrading production capacity. We support the statement made by the ECOWAS’ Director of Trade that a proper and binding PAPED is a PRE-CONDITION for an ECOWAS EPA and hold West African officials to this commitment.

5. ECOWAS SOLIDARITY FUND for Fiscal Adjustment : We call upon ECOWAS to immediately establish its own Solidarity Fund to enable members absorb associated with the EPA in the short-term. In particular we note that this is the sword of Damocles hanging over the non-LDCs in ECOWAS, especially Ghana which is under specific pressure to finalise its IEPA (as well as Cote d’Ivoire, which has already done so). Latest estimates show that Ghana’s extra costs for temporarily trading under the EU GSP (as Nigeria has opted to do instead of entering an IEPA) will be in the region of €37.1million or USD $51.9 million. An ECOWAS Solidarity Fund should be able to absorb this. In the face of the threat to ECOWAS unity and coherence posed by Ghana’s currently delicate position this is absolutely justified and is a necessary first step for ECOWAS to begin to take full responsibility for its own destiny. None of this is to suggest that the EU should be allowed to shirk its primary responsibility to meet adjustment and development costs. On the contrary, it is one way of establishing the fact that meeting those costs is fundamental and non-negotiable for ECOWAS and the EU will not be allowed to hold our sub-region to ransom over this.

6. PROGRAMMING ALTERNATIVES TO EPAs : In any case the matter of adjustment and development costs necessitates that ECOWAS revisits the possibility of alternatives to the kind of EPA that the EU appears hell bent on imposing on the region. The last AU Ministers of Trade conference in Kigali affirmed this as a feasible option. On the eve of the 7th Session of AU Ministers of Trade which will convene here in Accra immediately after the on-going ECOWAS MMC we urge ECOWAS leaders to show the way by putting practical programmes for alternatives to the EPA on the table. It is necessary to remind ourselves that the purported benefits of EPAs to our countries remains unclear, while the evidence of negative costs loom large. Among such costs are :

i) Tariff Revenue Losses : The most recent study (South Centre, November 2011) which updates the 2005 study undertaken by the UN Economic Commission for Africa (UNECA, April 2005) estimates potential revenue losses to ECOWAS of an EPA at €1.8 billion. This is no matched by the potential benefits (i.e. avoidance of extra tariff costs on ECOWAS exports to EU in the absence of an EPA). Ghana offers one case in point. While its costs under the EU GSP will be in the region of $52 million, the South Centre study estimates that her current commensurate loss of tariff revenue from an EPA will be about $374 million. The costs of an EPA far outweigh the benefits even from the narrow and limited criteria of net fiscal balance. The same is true for all ECOWAS non-LDCs and LDCs alike (as the latter will give up their existing right to levy non-reciprocal tariffs on EU imports). When other costs such as loss of competition and production capacity, trade diversion within and beyond West Africa region, etc are all taken into account the costs are much higher.

ii) Long-term Strategic Threats of EPAs : The EPA envisages going beyond trade in goods (whose net costs we have just considered) to trade in services as well as trade rules in areas such as Investment, Procurement and Intellectual property. As our Ghanaian colleagues pointed out in their statement yesterday, the imbalances (for example in competition with EU in services) are immense, and the potential thwarting of developmental space is profound. Since we arrived in Accra we have seen news reports from the National Industry Week which was commemorated here in Ghana last week. The Association of Ghana Industries (AGI) is reported to have raised the alarm about how FDI is crowding out domestic enterprise. One of the reasons for this is the devastating effects of the indiscriminate trade liberalisation that our countries have autonmously pursued for the last 25 years. Another reason advanced by the AGI is the narrowing or abandonment of industrial policy tools such as performance requirements on FDI (for joint ventures, employment targets, local content requirements, technology transfer etc) which has been an inevitable adjunct to the trade liberalisation we have pursued. As of now, these autonomous measures can be reviewed and even strategically reversed. However, a binding free trade agreement like the EPAs, complete wih non-execution clauses and far-reaching sanctions regime, prohibits the positive interventions in support of domestic producers which are the tools of industrial policy. The lamentations of the AGI echo those of domestic producers everywhere in West Africa. We need only recall the urgent warnings issued by industrialists and farmers in West Africa against the IEPAs at the end of 2007. The WTO-plus demands of the EU in all these areas are a massive threat. Any EPA must exclude negotiations on Services or trade rules in the Trade Related areas.

iii) West Africa, the EU and Current developments in the World Economy : Only yesterday the OECD issued its latest projection of deepening recession in the EU from next year. This is only the latest authoritative confirmation of the deep crises engulfing EU economies. Every day we see new evidence of this is the extremely volatile swings in financial and equity markets. Over the last three years, this turbulence ccentred on and emanating from Europe has negatively affected West African economies in a variety of ways. In contrast, resilience and growth have characterised intra-regional activity in dynamic areas such as services and manufactures as well as non-EU export markets resulting from the limited trade diversification that our economic relations have come to assume in recent years, especially with China and Asia, Latin America and other African regions as well. The logic of preferential treatment granted to EU in the EPA contradicts these trends. Even more, specific provisions in the EPA, such as the MFN, directly subvert and reverse these trends. If, at the begining of the 21st century, Africa’s lost decades of the 1980’s and 1990’s may have made an EPA of the current scope and magnitude a reasonable defensive proposition in some quarters, the experience a decade later calls for bold rethinking and a departure from that anachronistic logic. Side by side with a limited goods-only EPA it is time for ECOWAS and all of Africa to concretely advance towards new strategies and alternative trade and development relations and programmes.

Conclusion :
We wish to conclude by calling on citizens organisations to take up and engage with the EPA process with all the historic energy of recent years.

We extend a further call for solidarity of EU citizens who are currently chaffing under the disastrous costs of the kind of liberalisation that the EU is seeking to impose on our far more vulnerable economies through the EPAs. As their struggle under the tender mercies of their pro-corporate governments, banks and the IMF we remind them of our experience and legacy we have been burdened with as Africans, and extend our solidarity to them as well.

Far from behaving as a genuine partner, the EU has acted aggressively and divisively in the EPAs. We urge ECOWAS and member governments to call their negotiation counterpart to order.

Above all, we remind our governments, our regional authorities and ourselves that the current trends in the world economy will devastate us in unprecedented manner, unless we decisively seize the opportunity to re-shape our relations, and re-position ourselves in the global economy on the basis of a genuine and substantive orientation on integrated regional production and developmental transformation.

We must not allow old habits and old ways of thinking that are alive in some aspects of current EPA proposals to imprison us in the past and send us back from the forward steps we have begun to take as the 21st century unfolds.

Issued by POSCAO (in collaboration with EJN and ATN Secretariat)

Accra, 29th November 2011.