1 Economic Partnership Agreements: A new approach to ACP-EU economic and trade cooperation Remco VAHL, DG TRADE Brussels, 13 June 2005

2 EU Trade relations with ACP countries Since Lomé I (1975) Non reciprocal trade preferences All industrial goods enter the EU duty free 80% of agricultural products enter the EU duty free, and the remaining 20% benefit from preferences

3 Why EPAs ?

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5 5 PRODUCTS = 60 % of total Exports (petroleum, diamonds, cocoa, fish, and wood products) Lack of ACP export diversification (2003) 9 AFRICAN COUNTRIES REPRESENT 60 % OF TOTAL ACP EXPORT

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7 Lessons learnt Unilateral Preferences Are Not Enough   Preferences do not encourage diversification   Perverse incentive against trade liberalisation   Preference erosion increases as multilateral liberalisation progresses

8 TOWARDS A NEW APPROACH The Cotonou Agreement   Three pillars:   Political dialogue   Development co-operation   Economic and trade co-operation

9 Towards a new approach The Cornerstones of EPAs   Development dimension   Regional integration   WTO compatibility

10 Development dimension   EPAs as process and instruments for development   Integrated approach (Cotonou pillars)   Trade policy as instrument for development (carefully managed reciprocal liberalisation, services and trade-related areas – e.g. SPS)   Mainstream trade into development strategy (RPTF)

11 Regional integration   First step towards gradual integration into world economy   Enlarging markets for attracting investment   Support ACP political choices   Combined South-South-North cooperation (lock-in effects)

12 WTO compatibility   EPAs will be fully compatible with WTO rules   Gradual introduction of reciprocity   Article XXIV   Asymmetry, flexibility, differentiation, variable speed and geometry   Complementarity DDA/WTO and EPAs

13 Timeline n n September 2002 – October 2003: First phase at all-ACP level   Clarification phase   Development dimension, Legal issues, Market access, Trade- related areas, Agriculture, Services   Joint Report and Declaration n n October 2003 – end 2007: Regional negotiations and Coordination at all ACP level n n 2008: Entry into force

14 All-ACP phase (Oct Oct. 2003) n n convergence Instruments for development Support regional integration Maintain and improve current level of market access WTO compatibility - with SDT to be provided for all ACPs, in particular LDCs and vulnerable small, landlocked and island countries n n divergence Level of discussion of certain issues (all-ACP vs regional) Sequencing negotiations and aid Need for additional funding over and above the EDF

15 Regions n n Central Africa – CEMAC + Sao Tomé Brazzaville, 4 th October n n West Africa – ECOWAS + Mauritania Cotonou, 6 th October n n Southern and Eastern Africa – 16 Countries Mauritius, 7 th February 2004 n n Caribbean – Kingston (Jamaica), 16 April 2004 n n SADC EPA - 7 SADC States Windhoek, 8 July 2004 n n Pacific - ACP members of Pacific Forum Nadi (Fiji) 10 September 2004

16 Road map: broad consensus on calendar n Introductory «priority setting» phase (3 months) n Convergence on strategic approach (until + mid 2005) Understanding on regional integration policies and priorities and on level of integration to be achieved when EPA implementation starts n Structuring and consolidation (until + mid 2006) : Remaining trade related issues to be included in EPARemaining trade related issues to be included in EPA Prepare liberalisation scenariosPrepare liberalisation scenarios draft outline of EPAdraft outline of EPA n Finalisation of negotiations (until end of 2007) Negotiation of market accessNegotiation of market access Finalisation of EPAFinalisation of EPA

17 Challenges n Geographical configuration n South-South vs North-South focus n Capacity constraints n Time n Implementation n Link to development cooperation

18 Conclusion n n EPAs are an opportunity n n Regional integration as a political, economic and development challenge n n ACP development is the objective