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Explanatory statement
The aim of this report has been to be constructive, realistic and balanced. Your rapporteur has tried to focus on the reality that Economic Partnership Agreements (EPAs) between the EU and the ACP countries are going to be concluded, WTO-compatibility is important and "poverty reduction, sustainable development and the gradual integration of ACP countries into the world economy"1 must be the goal of any EPA.
Much of the debate concerning trade and development is polarised. Years of argument about the merits of liberalisation and free trade have not helped negotiations advance. While these debates are interesting it is important to focus attention on how the fine words of Cotonou will be implemented in EPAs. In trade and development the devil is in the detail.
Negotiations of EPAs have been characterised by mistrust and disagreement about how trade should be made a "development tool". Mistakes have been made in approaches to, and the undertaking of, negotiations which are wide ranging and ambitious in their scope. The voices of those who will be affected by EPAs have not always been adequately heard nor the impacts of EPAs on ACP countries fully quantified.
Difficulties
The difficulties in negotiating a "partnership" agreement between such unequal partners, on controversial and complex issues, are obvious. The paucity of detailed economic information and capacity constraints in the ACP, combined with EU institutional rigidity - where in the European Commission DG Development is in charge of the funds but DG Trade is in charge of negotiations - have contributed to a negotiating environment very different from that of a conventional Free Trade Agreement. The inability of the Commission to make the "development dimension" sufficiently central to EPA negotiations has been a significant barrier to progress in EPA talks. The inability of the ACP to be detailed in what exactly it wants in the "development dimension" beyond uncosted requests for additional financial support has made it difficult for interested stakeholders to hold the Commission to account when calling for "pro-development EPAs". Particularly as the instruments set up to ensure that EPA negotiations are "pro-development" have either not worked or lacked credibility.
If the Commission protesting that the ACP only ever asks for more funds, while the ACP complains that the Commission doesn't understand its needs, sounds like a dysfunctional marriage it is possibly because this is a partnership with communication problems. The EU already spends a great deal on development assistance in the ACP and the amounts are increasing but the Commission's development friendly rhetoric on EPAs has not been believed. The impression remains that the EU is forcing through free trade agreements which will harm ACP countries by saying one thing in public and demanding another in private.
Past experience in many ACP countries has led to scepticism that doing what donor countries want will reduce poverty.2 Any EPA signed by a regional group must be politically desirable in both the short and long term.. The promise of economic benefits in the distant future will not be enough if the perception remains that an EPA requires liberalisation with no benefits that are not already available to LDCs under EBA.
Positive Suggestions
Simplified, liberalised and more flexible rules of origin; workable safeguard, dispute settlement and monitoring mechanisms with transparent provisions and real power to act in the event of changes caused by EPAs having a harmful effect on sectors of ACP economies: these are the positive aspects that need to be correctly framed in negotiations. Trade talks generally move slowly until just before the deadline when things suddenly move. In this instance such tactics will not be helpful as benefits need to be clear before EPAs are signed to dispel fears that ACP countries are being out-manoeuvred in exchange for a big cheque of recycled money.
The ACP is right to question whether the Commission's proposals will contribute to their development in the manner that they want it to and whether promises of additional financial assistance really are additional. However, if EPAs are to be successfully concluded there must be more engagement and ownership of the result of EPA negotiations than there has been of the process.
Your rapporteur believes a Parliamentary Oversight Committee on EPAs would help with this goal and the EU-ACP Joint Parliamentary Assembly (JPA) is the appropriate setting for such oversight. It is a forum in need of a purpose while EPAs are a partnership with a democratic accountability and credibility problem. The fact that the JPA is linked to Cotonou which will expire in 2020 - but parliamentary oversight of EPAs would not be - might suggest that an additional institution should be created. This would not be an effective use of resources. Your rapporteur will ask for the Parliament's backing for specific language on Parliamentary Oversight in EPA texts to ensure that it actually happens but consider that details of how to coordinate EPA oversight with the JPA are for EU and ACP officials to establish with JPA representatives.
Greater input from non-state actors and other concerned stakeholders, as well as more systematic analysis of the social effects of EPAs, will help build the genuine partnership that is needed in monitoring of EPAs, and has been lacking hitherto.
Additional Resources
It is clear that additional resources will be needed to cope with the effects of changes ushered in by EPAs. Scaling up of trade facilitation, technical assistance and support to help ACP producers meet EU standards must be sufficiently extensive to off-set losses from tariff revenues and help ACP countries take advantage of market access. In the first instance this requires greater efforts to ensure that funds already promised are spent in a timely and effective manner. Improvements to European Development Fund (EDF) procedures should be prioritised along with requests for additional money. The EU must be accountable for all of its development assistance and cannot promise unsubstantiated amounts over unspecified time periods without clear goals. However, the EU must work to ensure that more support is given to projects which will boost ACP competitiveness and growth without reducing spending on health and education. Suspected re-labelling of existing money as "Aid for Trade" and the failure of Member States to clarify how bilateral support, which is where funds additional to the EDF must come from, will be coordinated with EPA-support has exacerbated ACP suspicions that there won't be as much money available in practice as there appears on paper.
Conclusions
This report provides a timely reminder to the Commission that the deadline of 1st January 2008 is fast approaching and a worrying amount remains to be done. Serious questions about the capacity, and willingness, of many ACP countries to implement the ambitious proposals made by the Commission are unlikely to be answered before the end of 2007.
The Article 37(4) Review, required by Cotonou, was intended to assess whether or not enough time remained for negotiations to be completed by the deadline. The failure of the Review to be "inclusive and consultative with all stakeholders including non-state actors and parliamentarians"3 makes a second resolution of the European Parliament expressing concern at the slow progress in talks all the more urgent, particularly with regard to the deadline. In all regions this target is considered extremely ambitious at best. While it is in no one's interests to have a forced agreement, focussing on another WTO waiver will not solve the underlying problems that have made progress in EPA negotiations so difficult from the beginning. With regard to the question of the deadline, like in case of the phasing of liberalisation, a balance is needed. The impetus to make difficult decisions is lost without a deadline or liberalisation schedule but if partners are forced to move too quickly the development impact is likely to be negative.
At the WTO level no one knows what will happen if on 1st January 2008 six shiny new EPAs do not march forth into the world of international trade. In the event that some regions need more time, your rapporteur believes that ACP exports to the EU should not be harmed pending a final settlement. Negotiators must press on with negotiating to reach a mutually beneficial settlement on EPAs which will help ACP countries' development. Observed by and in greater consultation with Parliamentarians and other interested parties, we must get EPAs which are part of a coordinated strategy for the ACP's development, but this cannot be imposed. EPAs must be a genuine partnership if they are going to work.
Footnotes:
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Article 1 (2) of the Cotonou Agreement.
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Trade liberalisation programmes in the 1980s and 1990s in many ACP countries were not perceived by those countries to be the roaring successes international organisations and donor Governments had led them to believe they would be. The fact that ACP share of world trade has dropped from 8% in 1980 to 3% in 2005 make this scepticism understandable although it is difficult to pinpoint to what extent trade policy has been responsible for this decline.
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Called for in Port Moresby by the ACP Council.
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