Ethiopia and EPA Negotiation 2008 - FES Ethiopia

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5. Ethiopia’s Main Concerns with the Interim EPAs Annex one highlights article by article the main areas of difference between the ESA and EAC Interim Agreements. It also tries to indicate Ethiopia’s preferred position if Ethiopia were to accede to either of the Interim EPAs. In this section, we will outline the main concerns of Ethiopia in the Interim Economic Partnership Agreement. 5.1 The MFN Provisions in the Interim EPAs The MFN clause in the Interim Agreements (Article 15 of the EAC EPA and Article 16 of the ESA EPA) requires that any ACP country which has concluded a deal with the European Union must automatically extend to the EU “any more favourable treatment” (for example, deeper market access) that the region or any of its member states grants to any other major trading economy in future free trade agreements (FTA). Under the terms of the regional MFN clause included in the ESA text, a ‘major trading economy’ is defined as any developed country which accounts for more than 1% of world merchandise exports, or groups of countries which collectively account for over 1.5%. This will naturally create a serious impediment to additional negotiations that the EPA signatories might wish to negotiate with other countries. This has been denounced by a number of developing countries such as Brazil 25 who saw it as putting in place a European strategy aimed at maintaining and increasing its market position at the cost of ACP countries and their other trading partners. Indeed it ties the hands of the EPA signatory countries and discourages them in effect not to give other countries such as China, Brazil, India and US any better treatment than what is available to the EU under the Interim EPA. This clause will be a disincentive to South-South trade as other “major trading countries” would be reluctant to make a concession in exchange of concessions that will be extended to the EU. This requirement will also undermine 25 In February 5 of the WTO General Council meeting in Geneva, Brazil has raised serious concerns that a clause in the Economic Partnership Agreements (EPAs) between the European Union (EU) and African, Caribbean and Pacific (ACP) countries could pose a serious threat to improving trade between developing nations. See Cheikh Tidiane Dièye and Victoria Hanson, MFN provisions in EPAs: a threat to South-South trade? TNI, Volume 7. Number 2 / March 2008. The Brazilian Ambassador also informed COMESA Secretariat that his country had, within the framework of the WTO, initiated the process to have these MFN provisions in EPAs removed. See e-COMESA newsletter, Issue #126 - Friday 28 th March 2008 16 | P a g e
the policy space of developing countries and curtail their negotiation rights in the future bilateral negotiations. True, the MFN clause is the cornerstone of the principle of non-discrimination that underlies the multilateral trading system and as such is accepted by WTO members as it makes sense within this context. However, it has no place in the EPAs as the latter are by definition discriminatory in nature. The MFN requirement also contradicts the principal objective of the ‘Enabling Clause’, which is to increase trade between developing countries on a preferential basis. Although it is difficult to say that the requirement is a violation of the letter of the Enabling Clause 26 , the spirit and objective of the Enabling Clause has been significantly undermined. It is now clear that-regardless of its declared objectives- the EU has a clear offensive market access interest and clearly plans to preempt the increasing dominance of big developing countries such as China, India, Brazil and Russia in Africa. 27 South Africa is opposed to the inclusion of the MFN Clause in the Interim EPA although the Commission has already offered some flexibility on this.” 28 Despite the fierce resistance, the EU trade commissioner says he is not going to re-open what has already been negotiated. It is now clear to see that the EU’s claim that its only goal in the EPA is to seek compatibility with the WTO and to encourage integration within ACP regions is at best half-truth and at worst preposterous. 5.2 Regional Integration 26 The EU indeed argues that the Enabling Clause permits trade preferences among developing countries, but it contains nothing that prohibits the extension of such preferences to other WTO members. 27 Dieye and Hanson recently quoted Louis Michel, European Commissioner for Development, as saying that Europe’s generosity in terms of aid for development did not mean that it would allow its partner countries to grant more favourable treatment to its commercial rivals; “we are generous, but not naïve”. 28 www.europeanvoice.com/current/articles.asp?id=30042 So says Rob Davies, South African Deputy Minister for Trade and Industry: “According to this [MFN] clause, tariffs on EU products cannot be higher than the levies imposed on goods from developing countries. EPAs thus prevent other developing countries from having an advantage in bringing their goods on the markets of developing nations…..[T]his would lock us into a primary relationship with the EU for ever more. It would be an unacceptable limit on our sovereignty.” 17 | P a g e
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Page 31 and 32: etween the EU and Ethiopia as these
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