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Spin or reality? The state of play on EPAs

Is the breakthrough in the negotiations on Economic Partnership Agreements (EPAs) being claimed by the Commission an example of spin or has the chasm that existed only a couple of weeks ago really been bridged? Mandelson labelled the initialling of an 'Interim EPA' by four out of seven members of the SADC EPA as a "historic step forward in the relationship between the EU and southern Africa" - just two weeks before the EU-Africa Summit in Lisbon.

Much remains unknown (and events are moving fast), but ODI research points to 'spin' not 'bridge building' as the answer. This is very important for the African, Caribbean and Pacific (ACP) countries. It means that much remains to be negotiated in 2008.
ODI analysed all the most recent texts from the six EPA negotiating regions as of early November. It shows a huge gulf.1 And the analysis of texts a couple of days ago confirms that this gulf has not yet been bridged.

In view of the fast-approaching deadline, the Commission claimed to be flexible, announcing that a 'trade in goods EPA only' (including 'rendez-vous' clauses to continue negotiations on outstanding chapters in 2008) could be completed in all regions, thus meeting the December deadline.

An analysis of the joint SADC EPA text that was initialled by four of its seven members on 25 November 2007 reveals, however, that:

  1. all key chapters ruling future SADC EPA-EU trade relations are still empty; and
  2. major parts of the EPA remain highly disputed – which bears the risk that even the ‘reached’ interim agreement fails.
The SADC EPA does not show any liberalisation schedule, either for South Africa’s future market access to the EU, or for the EU’s future market access to the Southern African Customs Union (SACU) and Mozambique. Though it is conceivable that such offers exist, they are obviously still disputed – which mirrors the ongoing battle between the EU and South Africa about how to build the EU-South Africa free trade agreement into an EPA. Whether the breakthrough can be reached by 6 December – the deadline for submitting the full market access offer – remains unclear. If not, South Africa might well blow the ‘historic step forward’ – by referring to Art. 31.3 of the SACU Agreement, according to which Botswana, Lesotho and Swaziland (which are in a customs union with South Africa) need its consensus when entering into external trade relations. This risk is apparent because the scope of the SADC EPA remains disputed: while the EU is insistent upon continuing negotiations towards a comprehensive EPA (which has been agreed by Botswana, Lesotho, Swaziland and Mozambique), South Africa and Namibia want to exclude services and trade-related issues from EPA negotiations.

The Eastern African Community (EAC) EPA text – which is the second ‘Interim EPA’ signed on 27 November – has even more gaps. While it would be technically easy for SACU to submit a joint liberalisation offer based on the EU-South Africa liberalisation schedule, EAC (which has just emerged out of the Eastern Southern Africa (ESA) EPA a couple of weeks ago) cannot refer to such a template. Though EAC has a common external tariff, it does not yet have a common liberalisation offer. What a press release published by the Kenyan Ministry of Trade and Industry referred to as ‘EAC exclusion offer under negotiation’, still comprises 30% of the entire nomenclature. To develop joint annexes in a couple of weeks from this basis is technically impossible, which confirms what ODI predicted  in July this year – EPA negotiations on trade in goods will continue in 2008.

The battle is not lost – but also not over
The Commission is under great pressure from its member states to finalise EPA negotiations in the next two weeks, thus avoiding the EU-Africa Summit becoming an ‘EPA Summit’. Time is running out and since the Commission has vehemently excluded the option to ‘stop the clock’, it has manoeuvred itself into a position where ‘first stage agreements’ appear to be the only solution to save face. Now, two of these ‘first stage agreements’ have just been signed – though neither of them are genuinely negotiated trade agreements that could be described as complete – and this might also offer a chance:
  • Firstly, it offers the opportunity for the other ACP countries to ‘initial’ only what SADC and EAC did – and thus, to continue negotiations on detailed tariff liberalisation as well as on all other outstanding chapters;
  • Secondly, it offers ACP countries the chance to buy time and to confirm their defensive and offensive positions on a regional basis.
Hopefully, the additional time will also offer an opportunity for EU member states to become more involved in EPA negotiations, and to ensure that the Commission is not merely spinning when it says it will ‘put development first’.

The author gratefully acknowledges the helpful comments from Christopher Stevens (ODI). All errors remain of course in my responsibility.

1. Only for one region (Cariforum) a joint text existed – with many gaps and disagreement. And the Jamaican Ministry of Foreign Affairs has since declared an agreement by the end of 2007 to be impossible (according to an Open Letter posted by the Jamaican Ministry of Foreign Affairs and Foreign Trade on 14 November 2007).