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What are EPAs ?
1. After 30 years of preferential agreements, the EU and the ACP are now negotiating a free trade agreement
Trade relations between the EU and the ACP countries have been regulated by a system of non-reciprocal preferences established by successive Lomé conventions. The ACP countries have benefited from preferential access to the EU market since 1975. ACP exports towards Europe benefit from favorable tariffs and quotas compared to exports from other countries. Preferences are non-reciprocal, that is, ACP countries are not bound to offer the same favored access to European goods on their own markets.
Preferences applied to farm products are often very limited. Tropical products that do not rival European farm goods are allowed into the EU tariff-free. Other productions are subject to certain restrictions (partial tariff reduction, quotas, seasonal restrictions linked to European crop seasons). Bananas, sugar, rum and beef are the object of special "protocols". Specified quantities (quotas) of bananas and rum can enter the European market freely, while certain amounts of beef and sugar benefit from European domestic prices, which are higher than world prices, as well as from reduced tariffs. The rum protocol ceased to exist after the 1996 agreement on spirits between the EU and the US.
More than 30 years of preferential trade with Europe have not had the positive effect that was expected on the development of ACP countries. One indication is the fact that 39 of the 77 ACP countries figure among the least developed countries (LDCs), with an annual per capita income of less than 900 USD. Furthermore, since 1995 the Lomé agreements are no longer compatible with WTO rules due to their non-reciprocity. The WTO has granted successive dispensations in order to maintain the Lomé regime in effect, the most recent of which will run out on December 31, 2007. Accordingly, the EU is currently negotiating with ACP countries a new set of trade rules – the EPA — that are slated to take effect on January 1, 2008 (although an agreement has not yet been reached). The EPA are free trade agreements (FTA) ; in other words, European goods would have free access to ACP countries and vice-versa. The EPA would fall into the OMC category of bilateral agreements where a "substantial part" of trade is liberalized (GATT Article XXIV). No further specification of the share of trade to be liberalized is provided. According to the EU’s interpretation this means 90% of total trade between two partners, with this figure representing the average share of trade liberalized for each partner. Applying this interpretation means that the share of trade liberalized by the EU could be greater than that by the ACP so long as the average is 90%. In this way the EPA are assymetric. To sum up, the EPA are reciprocal, assymetric FTA between the EU and each of six ACP regions.
2. ACP countries can benefit from the EPA by identifying import-sensitive products to be protected and by creating regional markets
ACP countries can protect their most susceptible industries by leaving certain tariff barriers in place. Such protection will be allowed to cover up to 20% of total EU imports (a percentage that is still subject to negotiation), thus maintaining local production of grain, dairy, meat or poultry. This will help ACP countries achieve food sovereignty while ensuring the future of the agricultural sector, which accounts for 61% of the total population of ACP countries (FAO data, 2005). Furthermore, ACP countries should form tariff unions as provided for in the Cotonou agreements of 2000. The challenge is to turn these tariff unions into full-fledged regional markets. The best way for ACP countries to prepare for EU competition is to develop significant supply capacity, which is currently lacking. Regional markets by their nature trigger supply-side development.
ACP countries can profit from the EPA if they are able to take initiative to formulate effective public policies in trade and agriculture. If a historic opportunity is not to be lost, it is important for ACP countries to take action.
