EPA Review Annex Documents - DFID

among rival RTAs have contributed to a lack of any meaningful progress in many areas. As
some of these arrangements are in various stages of forming customs unions, it has become
clear that there is urgent need that Africa must resolve and work towards the eventual
rationalisation and conflicts of overlapping memberships.
Apart from policy and institution barriers to intra-African trade, it is the small size of their
economies (apart from South Africa), low production and trade complementarities, high
transaction costs due to inadequate infrastructures in transport, information and
communications that all contribute to low intra-Africa trade. The very low complementary
production profiles in many African economies provide limited scope for intra-regional trade,
artificially stimulating trade through regional tariff preferences would seem pointless, and
even if effective, very costly. For example, intra-regional imports within the COMESA
accounted for only 3.6% of the total imports of the region in 1996-2000, 4.1% in 2001-2003,
while for SADC, they are 9.7% and 10.4% respectively. 151 Product complementarities
between countries are an important indicator of the potential for expansion of intra-regional
trade. Various studies such as Yeats (1998) find that African countries tend to have exports
concentrated in a few products, reducing the possibilities of intra-regional trade; Chauvin and
Gaulier (2002) conclude that SADC countries have similar disadvantages in manufactured
goods (except South Africa), while having similar advantages in primary goods and the
potential to expand trade within SADC is small. Khandelwal (2004) draws similar conclusions
as the other two - more developed economies like Kenya and South Africa are in a better
position to market their exports in COMESA/SADC and less developed economies are
unable to find significant markets in COMESA/SADC.
2. The Rationale of EPA Negotiation Configurations in Africa
One of the objectives of EPAs is to promote ACP countries regional integration, which has
been an important political and economic aspiration and objective for many African countries
for several decades. The EU has placed strong emphasis on South-South integration
through reinforcing the existing regional integration initiatives, harmonising the rules of
governing trade and creation of customs union. Given the existing conditions in African
regional integration, weak productive capacity, lack of production and trade
complementarities, geographical asymmetries, divergences in trade interests and trade
policy regimes, and maintaining disparate tariff and non-tariff barriers, the simultaneous
membership of different regional trade arrangements that have conflicting objectives, there is
no simple solution nor the best configuration of regional grouping in EPA negotiations.
However, the EPAs may create an opportunity to correct and rationalise the overlapping
memberships in various African RTAs by acting as a mechanism of locking-in trade and
other structure and institution reform and enhancing credibility of reforms. The EU’s original
plan was to push for the formation of various customs unions in Africa, conducting
negotiations with each of the customs unions before reaching EAP agreements. Geographic
configurations are originally identified to organise the negotiations with six ACP groups –
Caribbean, Pacific, West Africa, Central Africa, Eastern and Southern African and Southern
Africa.
Despite much of the rhetoric about the importance of regional integration in the EPA context,
substantive discussions about it made little progress in Africa. The original four large and
diverse regional groups in Africa turned out to have little coherence and hardly anything in
common in their trade policies and interests and could not agree on common external tariffs
which EU intended to have before reaching agreement on EPA. There are many differences
and disputes including the geographic configuration of EPA-groups in eastern and southern
Africa, conflicting trade interests between LDCs and non-LDCs and between oil-exporting
151
Given the size of South Africa, it is not surprising that the share of intra-SADC trade is higher than
the one of intra-COMESA trade.
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