EPA Review Annex Documents - DFID

Given the problems that previous EDF have had for disbursement, some authors have
suggested the creation of a special development finance instrument for EPAs. Silva and
Grynberg (2006) propose the creation of an EPA adjustment facility, separated from the
EDF. This facility would have more flexibility and agility for disbursement, which would be
important for financing adjustment needs.
Another instrument that is being currently considered is the creation of regional funds for the
EPAs (Braun-Munzinger, 2009), which is already included in the Central African IEPA (as
noted previously). While the design of effective instruments for disbursement is important, it
does not guarantee its effectiveness and whether they will improve the identification of
national priorities and plans.
7. Summing Up
Development finance has been perhaps the main objective of ACP countries in the EPA
negotiations. Marginally improved market access and agreements on other trade related
issues are not appealing for most ACP countries, and securing additional funds have been
the main target of the negotiations. This position is exacerbated by different studies that
show substantial adjustment costs for ACPs while implementing EPAs
The reluctance by the EU to include binding commitments on additional funds on the EPAs
has been a major source of tension and lack of agreement during the negotiating process.
While the EU argued that development cooperation with ACPs is regulated by the Cotonou
Agreement, there is evidence that additional funds and specific instruments could have been
included. Development cooperation is becoming an element of Preferential trade
Agreements (PTAs) when developing countries are involved. The TDCA is a clear example,
which shows that not only cooperation priorities are established, but also specific
instruments to finance these priorities (in a Cotonou country).
The final outcome of this negotiation process has been to include development cooperation
chapters but without specific financing commitments, that are left for the traditional
instrument, the EDF, and specific country donor programmes, and the new EU AfT strategy.
An analysis of existing EDF allocations and disbursements show that funds available are
very unlikely to meet the needs, even after the large increases for trade related assistance
pledged at the AfT strategy. However, due to the long period for phasing down tariffs under
the EPAs there is still time to increase funds related to EPAs.
Despite most of the discussion having been focused on additional funds and the creation of
specific instruments for the EPAs, we believe that a more micro approach to development
finance is required. Additional funds are ineffective if problems to establish priorities at the
national level still prevail. In addition, EPAs create specific export opportunities that should
be targeted for assistance. More focus should be established on how to identify these
priorities and how to develop effective programmes to take advantage of these opportunities.
This is also the case not only for goods, but importantly, for taking advantage of SPS
agreements and services liberalisation.
An important lesson of the process is that an early agreement on development finance
during the process should be a priority for any trade agreements with developing countries,
especially in the EPAs case as there are overwhelming substantial adjustment costs and the
EU is a key donor player in these countries. While discussion on the how to design the
instruments to disburse these funds should be an outcome of the negotiation, some initial
agreement and willingness could facilitate negotiations. Keeping this in mind, however, more
attention should be paid by the donor community on the identification of priorities and the
design of successful assistance programmes, rather than focusing mainly on additional
funds and instruments.
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