Ethiopia and EPA Negotiation 2008 - FES Ethiopia

Unilateral preference programs not falling within these two categories require a
waiver to be consistent with WTO rules. Preference under Cotonou Partnership
Agreement did not fall under either category. They were not generalized and
non-discriminatory since beneficiary status was closed to all countries that were
not former European dependencies and /or were not located within Africa, the
Caribbean or the Pacific. As such it didn’t qualify under GSP. Beneficiaries status
went beyond least developed countries since many of the beneficiaries were
non-LDCs. Thus, when the Cotonou Partnership Agreement was signed in 2000,
an understanding was reached the Lome - Cotonou Preference would be
replaced by December 31, 2007 with EPAs, consistent with GATT Article XXIV.
Article XXIV allows countries to maintain reciprocal “preferential” access for
members of a Free Trade Agreement (FTA) provided that duties are eliminated
on substantially all products traded among the members of the FTA within a
reasonable period of time.
1.2 Weakness of Unilateral Preferences
Another reason why the Cotonou Partnership Agreement needed to be
replaced, at least according to the European Union, was the failure of the
Lome- Cotonou preferential schemes to prompt diversification, competitiveness
and growth in ACP countries although the schemes made it possible for 97% of
exports from these countries to enter the EU free of customs duty. The European
Commission argues that unilateral preferences did not tackle the main
development problems in ACP countries. This is reflected in the share 2 and the
composition of EU imports from ACP countries: in 2002, only 3% of EU imports
originated from ACP against 6.7% in 1976. 65% of these imports consisted of raw
materials. Also, only ten products made up for nearly 60% of EU imports from
ACP. 3 On the other hand, some Asian countries, like China and South Korea,
have shown spectacular growth over this period, due partly to the dynamism of
their exports to the EU, without benefitting from a similarly advantageous trading
regime. The declared objective of economic and trade cooperation is,
therefore, “fostering the smooth and gradual integration of the ACP States into
the world economy, with due regard for their political choices and
development priorities, thereby promoting their sustainable development and
contributing to poverty eradication in the ACP countries”. 4
2 Critics rightly argue that although the share of ACP exports to EU might decline, the volume
has actually increased. Contrary to the common perception, recent studies showed that the
trade effect of Lome – Cotonou Preference was positive. The share of ACP exports has declined
not because the ACP’s export declined but because Asian exporters have done much better.
3 European Commission: Economic Partnership Agreements: Means and Objective(2005)
4 Article 34 of the Cotonou Partnership Agreement
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