Ethiopia and EPA Negotiation 2008 - FES Ethiopia

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1.3 Europe’s Attempt to maintain its Influence over ACP countries The Europeans are increasingly worried that they are losing both trade and influence in particular on African continent to competition from resourcehungry, developing countries such as China and India. 5 African trade with China has increased to more than $50 billion over the past five years. China is now the third biggest trading partner on the African continent. Even though Africa remains a minor partner for China, representing only 3% of Chinese global exports and 3.7% of its imports, the Asian giant replaced Germany as the continent’s biggest supplier in 2005. 6 America has also been recruiting new allies in Africa in its fight against Islamist terrorism on the continent. At the beginning of the negotiation, no European officially admitted that one of the objectives behind the Economic Partnership Agreement is the feeling on Europe’s part that it is “missing out”. It is now clear that the Interim Economic Partnership Agreements are an explicit counterpoint to deepening China-Africa and China-India trade relationship. Louis Michel, European Commissioner for Development, has recently stated 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”, he said. 7 This also explains European Union’s determination to include the unprecedented MFN clause in a bilateral free trade agreement, despite African countries resistance saying that the clause is both politically and strategically unacceptable. As we shall see in section 4, the MFN clause in the Interim EPAS requires ACP countries to extend automatically to the EU any preference that they might ‘one day’ grant others. This is a pre-emptive measure on the part of the EU to counter better trade deals between developing countries - particularly India, Brazil, China and the African nations. 2. Legal Basis under Cotonou for EPA Negotiations The legal basis for the Economic Partnership Agreement negotiation is inscribed in the Cotonou Partnership Agreement (CPA) concluded in 2000. It therefore useful to go back and examine the original intent of EPA as demonstrated in the 5 “Africa and Europe: A desperate suitor”, The Economist, December 6,2007 6 Cheikh Tidiane Dièye and Victoria Hanson, MFN provisions in EPAs: a threat to South-South trade? TNI, Volume 7. Number 2 / March 2008 7 www.ipsnews.net/news.asp?idnews=40762 , Quoted in Cheikh Tidiane Dièye and Victoria Hanson, MFN provisions in EPAs: a threat to South-South trade? TNI, Volume 7. Number 2 / March 2008 6 | P a g e
Cotonou Agreement. The Cotonou Agreement did two important things with respect to trade (1) it extended the lifetime of the non-reciprocal preferential trade arrangements of Lomé IV for a transitional period of eight years, ending on 31 December 2007; 8 and (2) it set out an agenda for the negotiation of new trading arrangements, called EPAs, that will replace the Lomé IV trade provisions beginning 1 January 2008. 9 As for the substances of the EPAs, Article 37(7) of the agreement provides that “negotiations of the economic partnership agreements shall aim notably at establishing the timetable for the progressive removal of barriers to trade between the Parties, in accordance with the relevant WTO rules. On the Community side, trade liberalisation shall build on the acquis and shall aim at improving current market access for the ACP countries through inter alia, a review of the rules of origin. Negotiations shall take account of the level of development and the socio-economic impact of trade measures on ACP countries, and their capacity to adapt and adjust their economies to the liberalisation process. Negotiations will therefore be as flexible as possible in establishing the duration of a sufficient transitional period, the final product coverage, taking into account sensitive sectors, and the degree of asymmetry in terms of timetable for tariff dismantlement, while remaining in conformity with WTO rules then prevailing.” ACP countries, however, are under no obligation to conclude an EPA. In addition, the incentives to conclude the negotiations for ACP LDCs are curbed due to the availability of market access through the Everything-But-Arms (EBA) initiative. LDCs benefit from EBA under the EU Generalized System of Preferences (GSP) which gives LDC products duty-free quota-free market access to the EU 8 See Articles 36:3 cum 37:1 of Cotonou Agreement. Article 36:3 provides: “In order to facilitate the transition to the new trading arrangements, the non-reciprocal trade preferences applied under the Fourth ACP-EC Convention shall be maintained during the preparatory period for all ACP countries, under the conditions defined in Annex V to this Agreement.” Article 37:1 provides: “Economic partnership agreements shall be negotiated during the preparatory period which shall end by 31 December 2007 at the latest. Formal negotiations of the new trading arrangements shall start in September 2002 and the new trading arrangements shall enter into force by 1 January 2008, unless earlier dates are agreed between the Parties.” The 4th WTO Ministerial Conference granted a waiver covering this period. See WTO, WT/MIN (01)/15, 14 Dec. 2001, para. 1. 9 Article 37:1 of the Cotonou Agreement 7 | P a g e
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Relations between this Agreement an
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Ethiopia and EPA Negotiation 2008 - FES Ethiopia

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