Division of Technology, Industry, and Economics Economics and Trade Branch SESSION 2: TRADE AND TRADE-RELATED POLICIES Capacity Building Workshop on Integrated Assessment of Trade-related Policies and Biological Diversity in the Agricultural Sector October 2006 Geneva, Switzerland

PRESENTATION OUTLINE 1Overview of different types of trade policies 1.1Multilateral level 1.2Regional level 1.3National level 2EU-ACP Economic Partnership Agreements (EPAs) 2.1Negotiation process 2.2Agriculture in EPA negotiations 2.3What is at stake? 3Trade-related policies in country project proposals Discussion

1 Overview of different trade policies Trade policies are negotiated & implemented at 3 main levels: Multilateral: e.g. WTO Agreements Regional: e.g. EPA negotiations between EU and ACP countries National: e.g. Tariff Reduction Programme of Papua New Guinea => These levels are inter-connected: in fact, the multilateral framework defines the rules of the games for regional trade agreements, and for national-level trade policy decisions.

1.1 Multilateral trade policies WTO Agreements: Cover trade in goods (GATTS), services (GATS) and intellectual property (TRIPS) Set out principles for trade liberalisation and permitted exceptions Negotiated amongst 149 members through successive rounds WTO Agreement on Agriculture (AOA): Market access: reduction of tariffs and elimination of non-tariff measures Domestic support: subsidies and programmes that raise farmgate prices and farmers income Export subsidies => Complexity and sensitivity of agricultural negotiations: deadlock on agriculture largely responsible for breakdown in WTO talks

1.2 Regional trade policies EXAMPLES: EPAs: EU-ACP negotiations on Economic Partnership Agreements moving away from the previous preferential trade regime under Lomé Convention. NAFTA: North American Free Trade Agreement negotiated between US, Canada and Mexico in SADC: Negotiations on tariff reductions and better market access taking place between the 14 member states of the Southern African Development Community.

1.3 National trade policies A range of trade measures implemented by governments at national level: e.g. tariffs, non-tariff measures, trade- related subsidies, investment measures, etc. The objective is to achieve specific national goals such as to promote a certain sector/commodity, to attract foreign direct investment, or to protect national industries (e.g. Pakistan and automobile). Interesting example from Papua New Guinea: Tariff Reduction Programme initiated in 1999 in order to encourage expansion and production of export cash crops.

2 EPA negotiations between ACP and EU. Current system of non-reciprocal preferential trade relations to be replaced by Economic Partnership Agreements (EPAs) based on Cotonou Agreement signed in Phase I of negotiations was ACP-wide and began in September Phase II began in 2003 and is based on regional negotiations.. Negotiations should ultimately result in new free trade arrangements (FTAs) being put in place by They will provide specific rights and obligations tailored to each ACP region (West Africa, Eastern and Southern Africa, etc).

2.1 Background on negotiation process 1. Tariff reductions over a 10- to 12-year period leading to creation of a free-trade area. ACP countries allowed to exclude certain products provided that all trade is liberalised (around 90%) by the end of transition period. 2. Removal of market segmentation, through the simplification and reduction of administrative obstacles to trade. 3. Trade-related areas such as liberalisation of capital movements; non- discrimination in investment; opening up of public procurement at all levels; mutual recognition agreements for various standards and negotiation on sanitary and phytosanitary (SPS) standards. 4. Trade in services, seeking to build on existing international agreements

WTO and EPA negotiations are closely related:. Both concern trade distortions and related regulatory issues and both claim to be development-oriented.. EPA negotiations launched because of the end-2007 expiry of a WTO waiver that allowed EU to maintain lower tariffs on ACP exports. EPA rules will be largely reciprocal meaning that ACP countries will have to open their markets to EU exports. => The indefinite suspension of the Doha round will have repercussions on the EPA negotiations. 2.1 Background on negotiation process

2.2 Agriculture in EPA negotiations Complex and contentious negotiations on agriculture Disagreement on negotiation process: ACP wants to have a dedicated negotiating group on agriculture. EC rejects establishment of such a group preferring to treat agriculture under market access. Nonetheless, the following issues have been discussed at-all ACP level: Objectives and principles to guide negotiations Processing, marketing, distribution and transport (PMDT) Rules of origin Export subsidies SPS

2.2 Agriculture in EPA negotiations There seems to be agreement on the importance of:. Agricultural issues to poverty eradication and sustainable development in ACP countries. PMDT issues. Building on the existing acquis. Considering the impact of ACP reform on EPA negotiations. Safeguard provisions and the need for:. SPS issues. Discipline on export refunds => However, areas of agreement mask significant divergences on the specific measures which can and should be taken as an integral part for preparing the ground for the negotiation and implementation of EPAs.

2.2. Agriculture in EPA negotiations ACPEU Processing, marketing, distribution and transport Believes that PMDT programmes are essential to the transformation of ACP economies and should be in place before the phasing in of free-trade Argues that PMDT programmes will only work if the right policy framework is in place and so should only be established once the implementation of EPAs is underway SPS issues Argues that the acquis should relate to the value of preferences (including under the commodity protocols) not just the maintenance of specific measures, the value of which are being eroded by the process of CAP reform Maintains a commitment to ensuring that under EPA arrangements no ACP country will be worse off in terms of current market access Taking account of CAP reform Wants to address the distorted production and trade outcomes arising from new forms of CAP support as an integral part of EPA negotiations Expresses willingness to discuss implications of CAP reform for EPA negotiations, within a framework of recognition of the EU’s shift from more to less trade-distorting forms of support Areas of divergence

2.3 What is at stake? Market Access (MA) It is the backbone of the negotiations. For more than 30 years, ACP countries enjoyed trade preferences in EU which is now being eroded. Market access issues increasingly focus on non-tariff-barriers. The two main barriers are (i) rules of origin; (ii) SPS issues. A study commissioned by CTA in 2003 revealed that ‘ some 17 ACP countries accounted for approximately 83% of ACP exports in the product areas most likely to be affected by SPS measures, horticulture and fisheries being the most exposed products.’ Sequencing of Trade Liberalisation For ACP countries to take advantage of the potential benefits of an EPA, they need to engage in complementary reforms and adopt appropriate accompanying measures. Disagreement over development support to EPA continues and risks jeopardizing progress in all other areas of negotiation.

3 Trade policy in country project proposals CountrySectorTrade Policy reviewedNational/regional and international trade policies potentially affecting the sector CameroonCacaoTrade agricultural policies in this export- oriented sector Trade liberalisation policies affected the sector WTO negotiations in AOA EU-ACP negotiations on EPAs Regional trade negotiations MauritiusSugarEU trade policy as defined under ACP-EU Sugar Protocol ACP-EU sugar Protocol Other relevant trade agreements MadagascarShrimpsNational trade policies put in place for this export-oriented sector UgandaHorticultureEU-Uganda EPA negotiationsWTO negotiations on AOA ACP-EU EPA negotiations COMESA and EAC intra-regional negotiations Bilateral agreements (AGOA, EBA) JamaicaSugarEU trade policy as defined under ACP-EU Sugar Protocol New national-level trade policy ACP-EU negotiations on EPAs FTA negotiations PNGStaple crops (potato and Colocasia taro Tariff-reform policies Trade liberalisation policies National-level tariff reduction programme ACP-EU negotiations on EPAs WTO negotiations on AOA

Discussion Is the table a fair representation of the trade policies to be reviewed by the project proposals? What are interesting features of the background trade policy context for the projects? Any other issues you wish to discuss... Merci