Presentation on theme: "ACP Technical Meeting – Development of Mineral Resources ACP House, Brussels, 13-16 December 2010 Mineral resources: State of play in EPA Negotiations."— Presentation transcript:
ACP Technical Meeting – Development of Mineral Resources ACP House, Brussels, 13-16 December 2010 Mineral resources: State of play in EPA Negotiations and Implications of RMI for ACP countries Isabelle Ramdoo – ECDPM
Structure of Presentation Part 1: EPA negotiations: Whats in it for the mining sector? Part 2: The EU Raw Materials Initiative: Should Africa worry?
Part 1: EPA Negotiations and the mining sector: State of play
Characteristics: non-reciprocal preferential trade regime for all ACP Commodity protocols (sugar, banana, beef, rum) Objective: Promotion of growth and development Disappointing results: Reduced market share of ACP in EU market Erosion of preference Little diversification Subject to challenges under GATT/WTO rules Brief overview prior to EPA: Cotonou Regime:
Negotiations started in 2002- All ACP level 2004 – 07: initially in 6 regions (4 in Africa (+1) + 1 in Caribbean + 1 Pacific) For the first time, ACP had to provide duty free market access to the EU (on at least 80% of its trade) In return EU gave duty free quota free for all products, with a transition for rice and sugar EPA: a major shift in ACP-EU trade relations
What has been achieved? 37 ACP countries have initialled/signed agreements: –Full EPA: 15 Caribbean countries –Interim EPAs: 20 African countries + 2 Pacific Africa and Pacific : –Interim EPAs covering trade in goods only. –Regarding imports of mining pdts: DFQF on both sides –Regarding exports of mining pdts: elimination of export taxes (with some exceptions in Zambia and Guyana) –Final EPA still under negotiations – currently deadlock because of contentious issues, incl the review of export tax clause.
Cariforum: Trade on goods, trade in services, investment, other trade related issues Measures that could affect mining: –Trade in goods : Removal of export taxes (excp: Guyana - precious stones and bauxite) –Investment : commitments to allow EU investment on certain conditions: e.g right of State to grant approval for operations; licencing reqmt, reservations based on citizenship/nationality small and medium scale mining only to citizens/ in partnership with citizens.
Whats next? Negotiations towards final EPA Non signatories – conditional upon resolving contentious issues and more development? All countries – level of readiness on services vary, no rules on investment and other TRI (Investment, competition, IPR, govt procurement etc)
Contentious issues Market access: –EU : 80% lib of their trade over 15 years –A and P: 70% over at least 25 years export taxes: issue of policy space to foster development of industries infant industries: want less stringent rules to trigger safeguards MFN clause: highly political – reduces negotiating power to sign ambitious FTAs with other emerging powers
Part II: EU Raw Materials Initiative – Should ACP Worry?
Main concerns leading to the RMI EUs RMI is part of a broader strategy to improve competitiveness of industries A Strategic document of EU to guide its own domestic and external policies to secure access to RM to ensure jobs and growth Why? Race for RM due to increasing DD from emerging countries
Minerals are key to ACP… Africa: 30% of world reserves of RM and produces > 60 minerals and metals Some are major producers of key raw materials : –DR Congo 41% of world production of cobalt –SA 79% of PGMs Heavy reliance on exports of RM and minerals: –Botswana – 93.5% exports to EU in diamond and nickel; –Guinea: 75.7% exports to EU in aluminium and diamond; –Zambia – 61.5% exports to EU in copper
HOWEVER importance is likely to accrue... Mining - at the forefront of merchandise trade for the decades to come Will put many ACP countries (in particular in Africa) at the centre of attention EU still main trading partner BUT new emerging powers are increasing share of trade with Africa Currently ACP represent 3% of trade to EU – share of mineral resources likely to increase significantly, in partic as EU diversifies away from China
Should ACP worry? RMI – INITIALLY designed to target major EU suppliers based on economic and strategic considerations
BUT – increasing demand from new emerging economies led to race to Africa NOW – political consideration – need to secure access to Africa for all resources THEREFORE - yes Africa should worry, but not only about EU but about all those who have a strategy to access its RM HOWEVER: RMI represents challenges as well as opportunities for ACP mineral rich countries
Challenges… RMI – 3 pillars: First pillar is about EU external actions, including: Trade: EU will use all trade instruments to ensure undistorted access to RM through –bilateral negotiations – EPA –multilateral diplomacy and negotiations (EITI, WTO) Improving coherence between EU devt policy and need for undistorted access to RM
Regarding the EPAs… Elimination of Export Taxes – way for the EU to ensure removal of a barrier to trade - makes RM expensive Elimination of QRs – ensure no quantitative limitation in supply of RM Major challenges - may limit policy space in the future for industrialisation purposes Word of caution: for ET not a magic bullet – needs to be accompanied by reforms to trigger industrialisation and transparent contracts that do not jump the measure
CARIFORUM Commitments taken in goods and investment Implications? Unless clearly specified in their schedules of commitments, any measure regarding investment will have to be extended to the EU (new measures such as numerical limitations on no of investors, licences, quota)
At the WTO EU (+US and Mexico) has lodged a case against China regarding the use of export taxes Has made proposals to strengthen disciplines on export taxes Will push hard to tighten disciples; will lodge cases to create precedence
Opportunities… RMI does not only represent a threat to ACP countries. ACP should use the precepts of the RMI to seek support from EU in areas such as capacity building, institutional building, setting up regulatory framework RMI itself says it needs to improve coherence between development policies and access to RM
For instance, Pillar I is also about strengthening states and good governance. Key element: RM are ownership of the state and exploitation rights are delivered by the state In many cases: obscure and non transparent mining deals signed by governments + contracts are kept secret Also important to ensure that governance is not just a matter for the state but also for the foreign company involved in mining!!
Pillar II is about knowledge base and geological survey in Europe. ACP countries could engage discussions with EU to conduct such surveys to enable them to have a better information about the soil content (do not tie it with investment!!)
What perspectives for ACP? The increasing interest for mineral resources could become a formidable opportunity for ACP countries to lift many out of poverty Should not miss the opportunity ACP is in a position of strength – they are not demandeur, but suppliers of minerals.
However –Weak negotiating capacity – weak institutions and regulatory framework –weak governance – both at state level and firm level Result? –Hold up of raw materials –Poor deals –Little benefit for the economy and the people
Possible policy responses Ensure it has full knowledge of soil content – partner with interested countries to conduct geological surveys Strengthen negotiating skills to get better deals – auction bids for exploration as far as possible to create competition among interested parties.
Ensure benefits from raw materials trickles down to the economy to avoid resource curse: - increase revenue from resources thro taxation: case of Norway -FDI - conditional upon use of local content, transfer of technology and know how -Improve governance at firm and state level -Link infrastructure devt to invt (but not a barter as is currently the case!!) -Improve management of resources (incl through licencing)
Regarding EPAs ET is one of the many revenue instruments that can be used. Important to keep policy space for development, but should be coupled with accompanied reforms and policies to trigger industrialisation Investment – Not necessary to engage in rules-based investment agreement at this stage. First need to consolidate regulatory framework and institutions.
Those that have taken commitments: work with EU to define well structured accompanying measures as part of the development component of EPAs to ensure that investment in mining is not at the detriment of local industries
Your consent to our cookies if you continue to use this website.