Directives, discussions, decisions
MetadataShow full item record
CTA. 2002. Directives, discussions, decisions. Agritrade, June 2002. CTA, Wageningen, The Netherlands.
Permanent link to this item: http://hdl.handle.net/10568/52746
In April the European Commission adopted a...
In April the European Commission adopted a recommendation for Council Decision encompassing draft directives for the negotiation of economic partnership agreements with ACP countries. These draft negotiating directives are now under discussion with EU member States, primarily under the auspices of the Article 133 Committee, which deals with external trade relations of the EU. The explanatory memorandum to the recommendation for a Council Decision dealt with: the relationship of economic partnership agreement negotiations to the wider objectives of the Cotonou Agreement; the proposed content of economic partnership agreements; the principles which should guide the establishment of economic partnership agreements; the relationship to WTO rules; the need to support regional market integration amongst ACP countries; how the concept of differentiation is to be applied, particularly with reference to least developed countries; the overall objectives of economic partnership agreements both with reference to trade relations and the wider economic and social development of ACP countries. The draft negotiating directives set out: the relationship to the Cotonou Agreement; the proposed scope of economic partnership agreements; how negotiations on trade in goods are to be dealt with; the scope and how negotiations on trade in services are to be dealt with; the scope of negotiations on trade related areas; how payments and capital movements are to be dealt with; the institutional framework for negotiations; the structure and organisation of negotiations. Overall the most important points are that: EPAs are to be subject to the wider development objectives of the Cotonou Agreement; the various EPAs to be negotiated are to be as similar as possible; the main aim of EPAs is to establish 'a stable, predictable and transparent framework for economic and trade relations between the ACP countries and the EU'; EPAs will involve 'progressively eliminating tariffs and non-tariff barriers'; the European Commission recognised that adjustment costs would be faced but felt that the necessary flanking measures could be financed from existing EDF instruments; the trade in goods provisions of EPAs should by in conformity with Article XXIV of GATT; the trade in services provision of EPAs should conform with the provisions of GATT; the provisions of EPSs on trade related areas (investment, public procurement, standards and data protection) should be consistent with WTO provisions; regional market integration should be supported; the concept of differentiation does not imply LDCs would retain their rights to non-reciprocal trade preferences. LDCs would be expected to waive their right to continued non-reciprocal preferences under any region to region EPAs; regional based EPA negotiations should begin no later than January 2003. Comment: With specific regard to the agricultural sector a number of significant points emerged. The agricultural sector (and associated downstream value added product industries) is the major area where the EU retains market access restrictions. Here the Commission's final draft mandate is less forthcoming on issues of market access than the preliminary draft mandate. Initially the Commission proposed that: 'the Community should grant duty free access to its markets to all products originating in the ACP countries, as from entry into force of EPAs.' In the final Commission-approved draft, the commitment on market access for ACP countries is restricted to an expression of belief that: 'The Community should further improve current access to its markets for products originating in the ACP countries'. This is believed to be the result of pressure from DG Agriculture which is fearful that the process of CAP reform will not be completed by 2008 and that, as a consequence, opening up the agricultural sector to all ACP exports by 2008 could create problems for EU agriculture. Significantly, in section 3.2 of the actual Directives annexed to the recommendation for a Council Decision, while talking about how: 'EPAs shall build upon and further enhance the market access conditions currently provided under the Cotonou Agreement' for ACP countries this is only to be 'fixed in the course of the negotiations'. Overall the Commission's final mandate appears to take a much harder line on market access than the initial draft, with the view being expressed that: 'trade liberalisation in favour of developing countries should be part of a new North-South partnership according to which these countries apply the appropriate policies'. Clearly, within this Commission approach, further opening up of the EU market is to be made conditional on ACP countries applying these 'appropriate policies'. There would appear to be an urgent need for the EU Council of Ministers to reinstate the Commission's initially proposed commitment to 'grant duty free access to its markets to all products originating in the ACP countries, as from entry into force of EPAs.' This would provide a more solid basis for investment in the value added food product industries of ACP countries. This could bring real benefits to ACP countries in the context of their participation in the larger integrated economic area centred on the EU which EPAs are designed to bring about. From an agricultural perspective a further important area of the EU's negotiating instructions is the requirement for ACP countries to open up their economies to duty free imports from the EU. This needs to be seen in the context of the reform of the CAP which, on the basis of increased levels of direct aid payments to EU farmers, is making EU exports of basic agricultural products and value added food products more price competitive on overseas markets. Significantly the Commission draft negotiating directives make no provision for discussion of the external effects of CAP reform on ACP countries. This is a major shortcoming in the negotiating instructions from an ACP perspective. The only provision made is for 'appropriate flexibility . . . in the product coverage and the calendar rhythm of liberalisation commitments'. This being said, provision is made for safeguard provisions building on Article 8 of Annex V of the Cotonou Agreement. Anti-dumping measures are also to be allowed in accordance with GATT/WTO rules. Currently the only reference made to CAP distortions is in section 3.2 of the negotiating directives which states: 'In this context the parties will examine on a case by case basis, the potential impact of export refund mechanisms on the process of trade liberalisation.' Given the importance of agricultural trade (36% ACP exports to the EU) to the ACP group, and the significance of agriculture within the production structures of many ACP economies, this oversight is potentially disastrous. The common agricultural policy is being reformed to enhance the competitiveness of EU agricultural and value added food product industries on national and international markets. This will undoubtedly have an impact on the market conditions facing ACP producers of similar or competing products. ACP and EU parliamentarians (see next item) have called for a comprehensive assessment of the likely implications for ACP countries of CAP reform. They say that future trade arrangements should be designed to: 'fully take into account the impact of the internal process of reform of the common agricultural policy on ACP countries and seek to minimise adverse effects on the development of agro-based value added processing activities in ACP countries.' Clearly the importance of the external effects of a reformed CAP on the development of ACP-EU trade relations and ACP economies, needs to be recognised. Provision should be made within the European Commission's directives for these issues to be addressed during economic partnership agreement negotiations.