Summary
The commencement of operation of the EC’s new chief-trade-enforcement officer from 1st May 2020, places the EC’s revised negotiating directives on EPAs with ACP countries in a new light. While the emphasis on the removal of both tariff and non-tariff barriers to EU exports to ACP markets has been a long-standing feature of EU trade agreements (since 2008). Many of the provisions on the elimination of non-tariff barriers have not been effectively enforced to date. The fear is this could change from the second half of 2020, with this carrying important implications for the policy space African governments retain for the promotion of integrated national agri-food sector development. This needs to be seen in a context where growth in demand for agri-food products is increasingly concentrated in African not EU markets.
According to the Economist, the EU’s new Trade Commissioner Phil Hogan takes the view the EU needs to ‘stand up for our rights more assertively and aggressively’, with the focus being on ‘defending the EU against unfair trading practices’. According to the Economist ‘the challenges range from concerns about China’s state-led trading system of capitalism to fears the EU’s trading partners are not living up to their commitments’ (1). It is this latter dimension which is a potential source of concern to those ACP governments which have already signed or are considering signing economic partnership agreements with the EU.
According to the Economist, Trade Commission Hogan’s ‘first priority is to add muscle to the EU’s defences.’ In this regard from the 1st May 2020 Trade Commissioner Hogan will oversee the work of the chief-trade-enforcement officer, whose unit will be dedicated to ‘making sure that existing trade deals are implemented properly’ (see companion epamonitoring.net article ‘Implications for ACP Agriculture of the New EC President’s Agenda’, 20 January 2020).
It is against this background the new EU directives for the negotiation of Economic Partnership Agreements with the African, Caribbean and Pacific countries and regions published on 13 December 2019 needs to be seen. This directive not only reiterates long-established core principles which underpin EU trade agreements with ACP countries (including recognition of the link between trade and sustainable development, support for poverty eradication, respect for human rights and core labour standards and support for the integration of ACP countries integration into the world economy), but now also makes reference to the need for all parties to commit to trade and investment cooperation aimed at ‘facilitating the transition of the ACP countries to a liberalised global economy’.
Significantly in this context, the new negotiating directive in setting out the market access concessions to be granted to ACP countries makes it clear these concessions ‘would be available only in the context of these EPAs’.
This is given concrete expression by linking the treatment of ACP imports from the EU in support of the ‘objective of promoting sustainable development through regional economic integration and adequate policies, negotiations’ to the pursuit by the parties of:
‘(1) the elimination of customs duties on imports from the European Union for substantially all
trade over the course of a transitional period,
(2) the abolishing of all charges having equivalent effect to customs duties upon the application of EPAs, and
(3) the removal of quantitative restrictions and measures having equivalent effect upon the application of the EPAs’.
While the directive notes the final product coverage, timetable for tariff liberalisation and transitional arrangements should ‘reflect the economic, social and environmental constraints’ of ACP partners and their ‘capacity to adapt their economies to the liberalisation process’, the removal of non-tariff measures needs to take effect from the date of application of the agreement.
The new EC negotiating directive also reiterates the need for an effective tariff standstill based on the tariffs applied at the date of the signature of the EPAs. This effectively locks ACP countries into tariffs no higher than the tariff applicable at the date of signature of the EPAs. Significantly, in the draft agreement the EU has concluded with Mercosur, this tariff standstill commitment applies to all trade and not just products covered by tariff reduction commitments (see companion epamonitoring.net article, ‘The EU-Mercosur Agreement Part 1: Overview and Lessons for the ACP’, 22 August 2019)
While the EC’s negotiating directives make a variety of provisions for the application of safeguard measures and even the temporary suspension of tariff reduction commitments, to date the interpretation of these provisions under EU trade agreements which are under implementation has proved so restrictive as to be of little value in curbing the rapid increase in imports of particularly sensitive agri-food products from the EU (most notably in regard to the South African governments efforts to use a variety of safeguard provisions to halt the rapid expansion of imports of poultry parts from the EU).
Although not directly related to ACP-EU agri-food sector trade relations, the EC’s new negotiating directive places far greater emphasis on liberalising EU access to ACP service markets. While this represents a long-standing EC aspiration the new directive appears intended to give it new impetus in relations with ACP countries.
| Comment and Analysis
Many of these EC positions are not new. They represent long standing EU aspirations dating back to 2007. This is particularly the case regarding the removal of quantitative restrictions or measures having equivalent effect, on imports from the EU. EU agri-food exporters have long identified the use of non-tariff trade measures as the main obstacle to the ongoing expansion of EU agri-food exports to African markets. The importance of this issue should not be under-estimated. Reaching an accommodation on this issue in ways which took on board national agri-food sector development aspirations was a critical factor behind Namibia’s reluctance between January 208 and August 2016 to sign the SADC-EU EPA. These concerns were only addressed when a compromise wording on the removal of quantitative restrictions was agreed as part of the SADC-EU EPA, which replaced the bilateral EU-South Africa Trade Development and Cooperation Agreement. This compromise wording through its intentional ambiguity was far less demanding and indeed, more permissive, than the conventional wording included in the EU’s other agreements with ACP countries (of which the EAC-EU EPA text is illustrative).
This is an important issue since a multiplicity of African countries make use of non-tariff trade policy tools to restrict imports from the EU, including using positive lists of products given priority access to foreign exchange allocations. Once the EC’s new trade agreement enforcement unit starts work, ACP EPA signatories could find themselves under growing pressure to abandon the use of such non-tariff trade policy tools. While the economic significance of ACP markets is far less than the markets covered by other EU trade agreements (such as those with Canada, Japan and South Korea), ACP country governments are much more vulnerable to pressure from the EU to fully implement trade agreement commitments. In such circumstances taking up cases of the use by ACP governments of non-tariff trade tools which are prohibited under EU EPAs could come to be seen as presenting opportunities for easy wins for the new EC chief-trade-enforcement officer. Given the fact that the growth in demand for agri-food products is increasingly concentrated in African not EU markets, the importance of African governments retaining the policy space to foster integrated national agri-food sector development cannot be over-stated. This is particularly the case as regional trade initiatives are opening opportunities for the development of backward linkages within ACP regions which could support the structural trans formation of African agri-food sectors. There would be a real irony in any new EC pish to limit the ability of ACP governments to use non-tariff trade policy tools, given the extensive use the EU itself makes of such non-tariff trade policy tools; non-tariff trade policy tools which in some sectors systematically support higher levels of domestic EU production and increased levels of exports (e.g. in the dairy and poultry sectors -(see companion epamonitoring.net article ‘The Link Between EU Agri Food Sector Protectionism and the Value of ACP Trade Preferences Highlighted’, 6 March 2020). |
Sources:
(1) Economist, ‘The European Union’s trade policy will involve some tough negotiations’, 27th February 2020
https://www.economist.com/finance-and-economics/2020/02/27/the-european-unions-trade-policy-will-involve-some-tough-negotiations
(2) ‘EU Council decision 2020/13 of 19 December 2019 amending the negotiating directives for the negotiation of Economic Partnership Agreements with the African, Caribbean and Pacific countries and regions, to the extent that they fall within the competence of the Union’, Official Journal of the European Union, 10 January 2020
https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32020D0013&from=GA