Tuesday, November 07, 2006

Note of ACP Secretariat for the European development days

The ACP States' objectives in agreeing to conclude Economic Partnership Agreements are: to promote the structural transformation of their economies, increase production by removing supply restrictions, promote sustainable development and contribute to the eradication of poverty.

The EPAs are also considered a means of promoting the graduai integration of the ACP countries into the global economy.

The negotiations have currently reached a crucial stage since they should be concluded on 31 December 2007. The ACP Group stands ready and willing to do all it can to ensure that the negotiations are concluded on time. Nonetheless, our main concern is to know whether the discussions and the activities conducted so far in the framework of these negotiations are likely to help us attain the goals we have set ourselves. To find an adequate answer to this question, there is need to assess the ongoing process, as provided for in the provisions of Article 37.4 of the Cotonou Agreement.

For the ACP Group, the formai and comprehensive review of the negotiations as provided for by the provisions of this article is very important.

The ACP Group and the Commission do not agree regarding the approach to be adopted for this exercise. It is the view of the ACP Group that the exercise should be as comprehensive as possible by taking account of its development aspects, especially the implementation of the provisions of Article 37.3 of the Cotonou Agreement, according to which the issue of capacity-building measures must be settled before the conclusion of the negotiations.

As for the EU negotiators, the review exercise should be restricted to the issue of respecting the deadline.

Pending the outcome of this exercise, the reports already received from the various negotiating groups can provide us with some indication of things to come.

In this regard, the ACP negotiating reg ions are focusing their attention on the following main issues:
  • consideration of the development dimension in EPAs negotiations;
  • financing of the adjustment costs;
  • strengthening of the regional process;
  • approach to liberalization.

Consideration of the development dimension

For the ACP States, development should form an integral part of ail aspects of the EPA negotiations. It should not be restricted only to liberalization coupled with certain actions related to trade facilitation. The development dimension should aim to re-adjust the production structures of the ACP countries and enhancing the competitiveness of their economic operators. It should address issues linked to supply restrictions (improvement of infrastructures, transfer of technologies, strengthening of human capacities, improvement of the corporate climate, as weil as health and technical standards etc.). In short, it ought to help raise the standard of the ACP economies.

This is one of the reasons why the ACP Group feels that the provisions of Article 37. 3 should be integrated into the formai and comprehensive review of the negotiations.

The assessment of needs has been carried out in most negotiating entities and requests have been addressed to the Commission for the implementation of projects to meet those needs.

According to information received from the regions, the Commission has been slow in reacting to these requests, thereby jeopardizing the negotiating process and creating problems regarding the meeting of deadlines.

Financial Adjustment Costs

The establishment of the EPAs involves important adjustment costs, which may be grouped under the following headings:

- Budget costs arising from the removal of tariff barriers
- Business and employment costs
- Balance of payment costs
- Costs for the small-scale agricultural producers

Reforms should be undertaken to compensate for the loss of customs earnings associated with the removal of tariff barriers, enhance the competitiveness of local enterprises, guarantee the continuity subsistence crop farming and to address the balance of payment problems. It takes time to undertake such reforms successfully. This is why the ACP reg ions are stressing the need for the longest possible transition period (20 to 30 years), with a grace period.

The ACP side has appealed, on several occasions, to the EU conceming the creation of a special facility apart from the EDF envelope to meet the costs linked to the preparation and implementation of the EPAs. The funds for meeting the adjustment costs should be made available to the regions on time. However the current EDF procedures do not allow for a rapid disbursement of these funds. The appeal from the ACP side has not received any satisfactory response from the Commission.

The ACP Group is nonetheless happy with the conclusions reached by the General Affairs and External Relations Council at its meeting in Luxembourg on 16 and 17 October in relation to the EU's commitments regarding Aid for Trade as provided for in the Doha Agenda. The Group is impatiently awaiting information and clarification on the procedures for the implementation of the envisaged funds.

Strengthening the regional integration process

One of the aims of the EPAs is to deepen the regional integration initiatives of the ACP States and construct viable markets capable of attracting investment and benefiting fram economies of scale. According to reports from some of the negotiating regions, this objective risks being doomed to failure.

ln this regard, it is worth noting that the ACP regions had embarked on their own regional integration process before the launching of the EPA negotiations and set precise deadlines for the completion of the processes, taking due account of their specifie realities. The approach adopted by the EU negotiators in relation to the issues of geographical configuration is too ambitious and has a very high risk of jeopardizing the integration processes underway in the regions if nothing is done to remedy the situation.

As far as the ACP side is concerned, the ACP regions should be allowed to pursue their regional integration processes in a manner they consider most adequate and viable politically, economically, and socially. They should not be subjected to any restrictions by the EU as far as their rate of progress is concerned.

Regional integration constitutes an essential element in the negotiations and requires careful planning with due regard for the specifie realities of the various regions.

Approach to liberalization

Apart from the transition period mentioned above, the coverage of products to be liberalized should take account of the level of development of the ACP countries. Everything possible should be done to safeguard the rights acquired under the Cotonou Agreement in the area of trade.

For the sensitive sectors and products, liberalization should not take place before the establishment of income diversification and capacity-building programmes for the efficient, fledgling industries.

A follow-up and control mechanism should be envisaged for re-adjustment in case of need.

Visit the ACP Secretariat web site.

See also Euforic dossier on ACP-EU cooperation.