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Concluding the Economic Partnership Agreements: prospects and challenges for the Central Africa (CEMAC) regional negotiating group

By Durrel N. Halleson, International Trade and Investment Policy Analyst, Yaoundé Cameroon

With just less than six months to the dateline for the conclusion and signing of the Economic Partnership Agreements between the European Union and the six negotiating regions of the African Caribbean Countries (ACP), much uncertainty still looms. The question now in every lip is how realistic could the agreement be concluded by December 2007 and ACP countries are still to be convinced that the EPAs would enhance their external trade with the EU. The EPA negotiations come under the Cotonou Agreement of June 2002 that replaced the last Lome Convention. The EPAs, should they be signed would bring to an end the more that forty years of non-reciprocal trade relationships that have existed between the EU and countries of the ACP in which exports from these countries entered the EU market duty and quota free. While these non-reciprocal arrangements have had their pluses and minus for the ACP countries such as the Banana case in the WTO, ACP countries have had to struggle to optimize these advantages. It is unclear how liberalization could help ACP countries offset the supply-side constraints they currently face under other preferential arrangements like AGOA? While not trying to be pessimistic on whether EPAs hold any benefits for the ACP countries, it is however, right to look at what the current negotiation dynamics could offer for the ACP and particularly the Central Africa region. The EU had brought new offers in an effort to advance the negotiations. The EU recently issued a press release in which it offered to extend to all ACP countries except South Africa as from the date the EPAs come into force duty-and quota-free access for all products except transition period for rice and sugar, a preference enjoyed hitherto only by the LDCs under the Cotonou Agreement Everything but Arms (EBA) Arrangement. To concretize its offer, the EU would not be requiring the equivalent market access and would be allowing the ACP countries a longer period to phase in their commitments. Though these new offers may inject new blood into the negotiations, how ready are the ACP countries especially those of the CEMAC+DRC+STP negotiating bloc to conclude any such agreement in the next less than six months?

Though the configuration within the Central Africa sub-region may not seem complex as with other negotiating blocs like those of the Southern and Eastern African negotiating regions, the same dynamics are valid; overlapping membership of regional economic communities, lack or insufficient capacity and fear of loss of an important revenue source. Let us consider the following facts - tariffs from external trade form a serious portion of governments’ revenue base in the region though in most cases where well managed this could be offset by revenue from oil and other natural resources in which most of the countries of the region are well endowed with. Further the industries of these countries are still in most cases in their infancy stages as to be real competitive with their EU counterparts especially in their own home markets. One thing we need not forget is that increased export push of African countries may help them to meet up with their MDG objectives but any arrangement that would put them on the same playing field with the more technological and industrial developed countries would only compromise this advantage. According to the Gobind Nankani, World Bank Regional Vice President for Africa, open trade both engenders competition as well as disciplines business and governmental conduct to enhance efficiency and limit discretion. At the same time, greater opportunities for trade, complemented by domestic policies that ensure flexibility in the economy for resource allocation to respond to market signals, lead to more business start-ups and expansion of existing businesses, thus enhancing growth, job creation and in time poverty reduction. This is an ideal situation for which the EU lays its credence in the EPA negotiations but for countries of this region, this situation however, may not change still struggling with problems of trade facilitation, a regional integration agenda grounded with suspicious and a non-vibrant and uncompetitive private sector. These many problems to be resolved require a more-than EPA, they require a proper house re-structuring within the countries of the CEMAC + DRC + Sao Tome & Principe negotiating bloc. Therefore commercial interests which are the real underpins of the EPAs need to find a proper link with the developmental interests of the CEMAC+DRC+STP countries.

Another issue that may undermine the EPAs of which countries of the region remain wary especially at the multilateral level is the fact that EPA may re-introduce the new generation issues such as investment, competition, TRIPS plus provisions, services, trade facilitation, government procurement and intellectual property rights. In the press release mentioning the EU new “fabulous” offers, according to Nkululeko Khumalo of the South African Institute of International Affairs (SAIIA), this is the bite for the ACP countries who have to reciprocate by accepting to liberalize their markets on the above mentioned new generation issues. This is a daunting challenge for the CEMAC countries that may not benefit from the consensual advantage approach enjoyed at the WTO in resisting any negotiation on any of these new generation and Singapore issues. Further, it is still unsure whether the current EPA would enhance regional integration in the region, an issue which the EU sees as a flagship of the EPA negotiations.

Underpinning the conclusion of the EPAs is the fact that the waiver obtained by the EU from the WTO to offer non-reciprocal trade preferences to the ACP expires on 31st December 2007 and there is every interest for both the EU and the ACP countries to conclude their negotiations by December 31st. In the failure of any such conclusion, it would be imperative that the current waiver be extended. However, it is unclear how other developing countries not currently benefiting from the EU trade preferences such as countries of Latin America and Asia would react. The question in the case of this outcome is whether there are other alternatives to the EPAs or any fall-back positions to allow the EU to accommodate the needs and interests of ACP countries. Unfortunate there have been no assessment of any such alternatives apart from the benchmark scenario proposed by the EU which is currently under negotiations. Sanoussi Bilal and Francesco Rampa of the European Centre for Development Policy Management (ECDPM) have proposed a wide range of alternative options which are unlikely to offend WTO rules. To them it may however be difficult as of now to assess the development prospect of all of the options preventing a formal ranking of more desirable options but they suggest the setting of criteria for the consideration of their main characteristics such as the degree of market access opening, compliance with WTO rules, the influence on regional integration, the scope for development-oriented outcomes and political feasibility. With the urge by the European Commission to fast-track the conclusion of the negotiations by the end of 2007, these options remain pipedreams that would be frustrating especially to the civil society of the ACP countries who have questioned the capacity of the benchmark scenario EPA to help the ACP countries achieve their development prospects flowing from international trade.

Foreshadowing the EPAs is the Doha Declaration Agenda at the WTO that is keen in pushing development through trade for developing countries. Conclusively EPAs as currently being negotiated may not be the panacea of development for the CEMAC countries in particular still struggling with institutional and governance insufficiencies but with WTO compatibility being the ultimate for all parties, it maybe difficult to draw any clear-cut conclusion on the outcome.