publication

Report
Is there a life after
EPAs?
The future of EU-Africa trade
relations
Isabelle Ramdoo
ECDPM
24 July 2014
Structure of the presentation
Part 1 : State of play of the relationship between EU and African
regions/countries
• Who’s in? Who’s out?
• What’s in? What’s out?
• What now?
Part II: EU trade relations with third parties: what implications
for EU-Africa trade ties?
• Mega trade deals
Part III: Conclusion: some suggestions
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PART I
BRIEF OVERVIEW OF EU-AFRICA
RELATIONSHIP
EPAs: WHO’S IN? WHO’S OUT?
WHAT’S IN? WHAT’S OUT?
WHAT NOW?
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Who’s in?
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Who’s out?
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What’s in?
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What’s in?
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What’s out?
The current EPAs are about trade in goods. Services, TRIPs and other
trade-related issues are not included. Most of them are in a RDV clause but
there is no hurry and no specific timeline to conclude on these.
Critical issues – domestic support to EU farmers for instance, have not been
fully captured. Still left to multilateral negotiations but with slow progress
at the WTO, these may not be addressed soon;
Still too many trade arrangements governing trade between EU and Africa:
EPAs, EBA, GSP, DCFTA with North Africa. No mention on how to address
these inconsistencies, that are a serious barrier to building regional
markets and value chains (cumulation does not work well among those
regimes)
Most regions (except for WA) have only an FTA, with no financial package
attached to it to address fiscal challenges EPAs could bring, and a limited
focus on “development”. Remember EPA was supposed to be about
development….
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What implications on the African agenda?
•
•
•
•
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The way EPAs are designed currently:
will maintain the status quo in terms
of trade flows (i.e maintain access to
EU for unprocessed goods)
Implication for BIAT? Some major
concerns as they lock region in their
current configuration – how to you
address overlapping memberships or
enlargement of existing blocks with
EPAs?
Preferences: Countries still give
more preferences to EU (ie DFQF) than
to their sister RECS. Are we now
prepared to extend such preferences
to ourselves?
Enter Mega trade deals: Today EU’s
FTAs account for less than 40% of its
total trade – 60% IS STILL NOT
COVERED
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What now?
•
•
•
•
•
•
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Legally: countries that have “initialed” new EPAs or taking steps to sign
and ratify existing interim EPAs will preserve MA; others will be added to
GSP; Any UMIC might lose GSP after January 2016.
Rendez-vous clauses in EPA texts on services, investment and other
trade-related issues. But no deadline and therefore no hurry. Sequencing
is crucial here
In the mean time, EU is negotiating FTAs (and mega-deals) with its
main partners: important to closely watch them carefully and take
measures at national/regional/continental level to minimise impacts
Use as far as possible the EPAs to get access to more favourable
treatment (including on non-tariff measures) that EU will grant to other
partners (MFN is applicable to EU as well)
On the African side: Regional integration agenda, BIAT, CFTA, AIDA,
CAADP more important than ever to deepen regional/continental
integration and to build solid regional markets and to mitigate potential
negative impacts of EPAs
Need to address lock-in effect of EPAs
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PART II
EU TRADE AGREEMENTS WITH THIRD PARTIES
WHAT IMPLICATIONS FOR AFRICA-EU TIES?
CASE OF MEGA TRADE DEALS
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Why mega-deals?
•
WTO negotiations are in a deadlock; Key issues about agriculture and
industrial products were not addressed in Bali
•
Big players feel need to reshape global trading system as globalisation
deepens and the world become more interconnected. About 60% of
global trade is made of of trade in intermediaries. Multilateral system
does not respond to some challenges linked to that
•
Strategic interest. Geopolitical rise of China – soon to be the leader in
global trade. A way for EU and US to join forces to maintain access to
key markets
•
In case of EU – More than 60% of its trade is not covered by FTA.
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Who are EU’s main trading partners?
EU does not have a
trade agreement yet
in place with countries
representing >60% of
its trade
Source: European Commission, 2014
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EU Mega Trade Deal: The rationale
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But mega-trade deals are becoming strategic for all bog players. Three major ones:
1.Trans-pacific partnership (TTP) – 12 countries incl. US, Japan, Canada, Australia, Singapore,
Mexico, Chile, New Zealand, Brunei, Peru, Vietnam and Malaysia.
2. Transatlantic Trade and Investment Partnership (TTIP) between EU and US
3. Regional Comprehensive Economic Cooperation (RCEP), 16 countries of which 10 ASEAN
countries (Brunei, Myanmar, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore,
Thailand, Vietnam); Australia, China, India, Japan, S. Korea, New Zealand.
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Therefore: new approach to trade diplomacy
1. Trade is not only about tariff, it is about
a. Regulation, standards, norms
b. Licensing practices
c. Domestic taxes
d. Investment
2.
a.
b.
c.
Trade is not only about trade, it is about
Human rights;
Environment;
Labour rights
Need to look at the future trade relationship between Europe
and Africa in a broader context – the inter-connectedness
between Europe and big players will have spill-over effects
on EU-Africa trade relations
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Key elements of the TTIP and the TTP
•
Tariffs (more important for US-Pacific TTP than EU-US TTIP) and
potentially subsidies in agriculture
•
Trade in services, investment (possibly including state-investors
dispute), intellectual property
•
Trade-related issues such as government procurement, competition
policy, e-commerce, environment, state-owned enterprises (for TTP)
•
Regulatory and non-tariff measures such as norms, standards, testing
requirements, procedures, technical regulation, food safety
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In the case of the TTIP between EU and US
•
Regulatory barriers will be the heart of the EU-US negotiations
•
It is estimated that av. Tariff protection on imports in EU and US range
between 2.2 – 3.3% respectively, while ad valorem tariff equivalent
protection form NTMs range between 19% - 73%.
•
It is also estimated that up to 50% of those barriers could potentially be
eliminated (most optimistic scenario)
•
If standards are harmonised, this will imply that non-parties to the
agreement will be requested to meet those standard to remain
competitive on the market
•
Third countries (incl. African countries) will therefore face higher
compliance and trade costs if they want to maintain access to these
markets (despite their existing trade regimes with EU – EPA or not!!)
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Where does that leave us in Africa?
Mega trade deals will NOT be mainly
about tariffs.
They will basically set new
“standards” and “norms” and will
involve far-reaching agreements on
services and investment with major
implications for product quality;
Impact will depend on the level of
dependency on countries’ trade on
EU or US market. Today, 40% of
Africa’s trade is destined to EU or
US.
Higher trade concentration, higher
risk of preference erosion or impact
of standards-taking
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Our RoO are quite flexible – good for us but means that they open the
backdoor for cheap inputs (if standards are lowered) that will impact on the
cost of production in Europe
If change in regulations are anticipated and properly managed to what we
want, flexible RoO could lead to this…
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Impacts:
•
According to some estimates, overall impact of EU-US TTIP is expected
to be lower than the US-Pacific TTP on African countries because trade
structures vary significantly. What we trade with EU and what US trades
with EU is quite different. In Asia, different, there is competition from
developing countries with our exports to US.
•
However complementaries are high because Africa is a major supplier of
inputs and raw materials to EU and US.
•
In the short term, sourcing of these products might increase. Positive for
exports, foreign exchange earning, jobs etc.
•
But in the medium to long term it may have a perverse effect: may have
a lock-in effect and therefore marginalise African countries from
participation in global value chains, affecting industralisation prospects.
Hence the need to be active on our own agenda.
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Conclusion: some suggestions
1. Critical to follow the current mega-deal negotiations, as they will set the
tone for the evolving global trading system
2. African countries should on their side, take unilateral initiatives to
calibrate domestic reforms to be prepared to meet standards. Otherwise the
risk is marginalisation since you will de facto become rules takers.
3. In parallel, since the Africa group is a strong one at the WTO, ensure
that they are at the forefront in negotiations there to ensure big players do
not “multilateralise” their FTAs through WTO. There is a real role to play
there to ensure advanced countries and few large developing countries do
not have the monopoly of setting standards and rules, to impose them on
countries that did not have their say in the negotiations
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4. In regional/continental trade agenda: Ensure regulatory reforms
reflect clearly regional realities and priorities and they have sufficient
safeguards to mitigate undesirable impacts of such agreements. Regional
trade agreement, BIAT and CFTA discussions could consider strengthening
cooperation in NTMs, though possible harmonisation or mutual
recognitions, based on regional highest common denominators
5. EPAs have RDV clauses and US might ask for FTA in the future (beyond
goods): but ensure proper sequencing this time by completing
regional/continental agenda first before opening up on issues where
countries and regions are unprepared and have not measured fully the
consequences. The risk is that as EU and US conclude advanced FTAs, this
will become the standard for their future trade deals and might be difficult
to resist, if unprepared.
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Thank you
for your attention
Visit our website: www.ecdpm.org
Contact: [email protected]
Follow me on twitter: @ir_ramdoo
The powerpoint can be downloaded on
www.slideshare.net/ecdpm
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