Economic Partnership Agreements - updated June 2008

What are EPAs?

Economic Partnership Agreements (EPAs) are trade agreements which the European Commission (on behalf of the EU) is currently negotiating with 76 African, Caribbean and Pacific countries (ACP).

These negotiations were launched in September 2002 and are intended to replace the current trade agreement (Cotonou Agreement) which lapses at the end of 2007.

EPAs are regional trade agreements meaning that ACP countries are negotiating with the European Commission in 6 regional groupings.

Why EPAs?

The trading relationship between the EU and ACP countries has since 1975 given these countries better access to the EU market than other developing countries.

The preferences granted to ACP countries under these conventions are non-reciprocal: ACP countries do not have to extend similar or other preferences to the EU in return.

This is based on the recognition that, because of the vast differences in economic development between the EU and ACP countries, any fair trade arrangement between them had to treat ACP countries differently.

However, this arrangement has become increasingly open to challenge in the WTO as it is seen to discriminate against other developing countries.

A solution to this problem was found in 2000, when the EU and ACP adopted the Cotonou Agreement which stated that by 2008, new WTO compatible trade agreements (EPAs) would be in place.

Although it was agreed that EPAs would be governed by the principle of free trade, the Cotonou Agreement stated that the objective of EPAs is 'to reduce poverty by supporting the sustainable development and the gradual integration of the ACP countries into the world economy'.

Why are EPAs controversial?

The European Commission has received a large amount of criticism from civil society for using EPAs as an excuse to force ACP governments to accept unfavourable free trade agreements which put at risk the long-term development objectives of the ACP countries.

In essence, the Commission is criticised for losing sight of the principle purpose of EPAs, as stated in the 2000 Cotonou Agreement, to bring about sustainable development.

Key points of controversy include:

• The 1st of January 2008 deadline for completion of EPA negotiations put immense pressure on both sides to finalise the agreements. Critics claim the European Commission is using the deadline to force ACP governments to accept unfavourable terms and conditions.
• The European Commission is criticised for not being flexible enough in the EPA negotiations and demanding too much from the ACP governments while giving little in return, ie. it wants the ACP countries to open up their markets for cheap EU products while ACP products will continue to struggle to compete with heavily subsidised EU products in the EU market.
• The European Commission insists that issues about investment, competition policy and government procurement (the so-called 'Singapore issues') must be part of the EPA agreements. However, ACP governments have already successfully lobbied to keep these issues out of WTO negotiations claiming they will benefit the EU at the expense of their development objectives.

  Linda's main concern is to ensure that whatever new agreements emerge, they genuinely benefit, rather than harm, developing countries. So far only the Caribbean region has negotiated a full EPA, while some other regions have made interim agreements, which are WTO compatible goods-only free trade agreements. This allows them duty-free quota-free access to the EU markets and we are currently working hard to make sure that the interests of those in developing countries do not get sidelined in further negotiations.

There is a great deal of concern among ACP States about the agreements. The ACP/EU Joint Parliamentary Assembly (the meeting of MEPs with MPs from the ACP countries) meets regularly to discuss on-going issues.  

Linda was part of a group of MEPs who wrote to President Barroso last week highlighting deep concerns, and asking him to reopen all negotiations. They are currently pursuing the following action:

- Requesting President Barroso to follow up on the commitment he made at the EU-AU summit in December 2007 to re-open negotiations on the contentious clauses.

- Seeking an undertaking from President Barroso that the European Commission will stop pushing aggressive trade interests in negotiations e.g on services and investment, unless ACP countries specifically request it and their needs are paramount.

- To hold a full debate in the European Parliament and closely scrutinise the deals in order to hold the European Commission to account.  

- To commit to vote against the European Commission proposal when it is presented to the European Parliament if the deals have not been revised to address the concerns of poor countries.
 

For further information, the UK government response to EPAs can be found at:

http://www.dfid.gov.uk/aboutdfid/organisation/economic-partnership-agreements-myths.asp

This page makes the following points:

 - EPAs involve gradual liberalisation for periods up to 25 years. They also allow for up to 20% of sectors to be excluded from any liberalisation, so certain sensitive products will always be protected. EPAs further allow for the application of safeguards (short term measures) on EU goods when they cause injury to their local industries. Increased imports can also lead to cheaper products and inputs and more variety for both consumers and producers. 

 - In 2005, EU partners pledged to achieve an annual aid for trade spend of €2bn by 2010. ACPs will receive some 50% of the increase in aid for trade funds. 

 - The Commission has confirmed that 'Aid for trade' is not conditional on EPAs, but it has been agreed that aid provisions should be included in EPAs. The 10th European Development Fund (EDF) offers an opportunity to synchronise trade policy decisions taken in the EPAs and programming of new money. The regional envelope amounts to €1.7 bn for all regions. Initial programme plans indicate a strong focus on aid for trade and infrastructure. 

This is the link the European Commission's document on EPAs:

http://trade.ec.europa.eu/doclib/docs/2003/december/tradoc_115007.pdf