Port Moresby, 02/06/2006 (Agence Europe) - No sooner had the ACP/EU Summit started in Port Moresby (see related article) than wide differences appeared between the two parties over what the development dimension of the economic partnership agreements should involve. Council President Dr Onofre Rojas immediately blamed both parties for the slow progress of negotiations and for the lack of tangible results, resulting from an inadequate response to the concerns expressed by the ACP countries. This was particularly so with regard to the call for a firm commitment from the EU to the granting of resources over and above those of the 10th EDF to fund the costs of adapting to agreements supposed to lead to free-trade between unequal partners. “We note that making ad hoc resources available will allow the ACP countries to take advantage of the EPAs. But we have to move away from dependence on exports of raw materials only, build the industrial human capacity, and develop our infrastructure. We believe this dimension should be dealt with in parallel with trade commitments”, and that a “Lisbon Strategy adapted to the needs of the ACP countries” should be examined. He added, “It is all part of the same thing, discussions on the 10th EDF and this issue”. Speaking about the difficulty of moving to the second stage of negotiations when the first had not been completed, the President said that it was attempting the impossible, with the very tight deadline of agreeing the EPAs by 31 December 2007. “I propose that we delegate the drafting of a joint text to restart the negotiation process to the ACP/EU Ambassadors Committee,” he said.
In response, the President of the EU Council Hans Winkler said the EU was very flexible, that the EU Council reaffirmed its commitment to the negotiations with the six ACP regions for the EPAs to come into effect on 1st January 2008, and confirmed the desire for the agreements to be real instruments for development - a supplementary force to achieve the Millennium development goals. What had not to be forgotten, said Mr Winkler, was the potential of regional integration for trade development, and the support given to EPA priorities in the 10th EDF. Another thing that had to be remembered was the EU's commitment to examine a regional approach as the basis for the EPA negotiations - this examination would be consolidated and debated at the level of all the ACP countries.
Speaking on behalf of the European Commission and Commissioner Louis Michel, who he was representing, Stefano Manservisi, Director of DG Development, took an even tougher line and underlined that the time table had been agreed on by all parties in an effort to avoid a legal loophole when the derogation to WTO rules expired on 1 January 2008. “We are entering the final phase of negotiations. We chose it ten years ago and confirmed it six years ago with the signing of the Cotonou Agreement”. The Commission is listening attentively to the needs of countries and regions concerning market access, caution on reciprocity in opening up the markets, the need to increase competitiveness and diversify demand, he said. “Negotiations are to be done together, there is no unilateral agenda. The first phase goes back to your regional integration processes, which is the main source of added value. This comes from tough and autonomous decision making to create an area for growth and stability. We want to strengthen this process but there are strong centrifugal forces in your group which are modifying this process”. Pointing out that Europe, as well as any other body, was aware of how integration was difficult, the Director General warned, “there won't be any magic moment”. The Lomé lessons had to be learned: the growth strategy based on unilateral tariff preferences had not worked. Market access is good but it is not enough. According to the Commission, integrated markets are sufficiently big as competitiveness of ACP products go via development of regional markets, efficient economic rules of governance are “essential for business”, a regional regulatory framework Moreover, “EPA provide the opportunity for creating a regional regulatory framework”, underlined by Manservisi. He also pointed out that the task force for regional preparation was there for melding demands, as well as for the problems identified and the financial resources. The Director General also provided assurances that liberalisation “is not the devil” given that the most vulnerable sectors can be protected for a very long transition period. 10 or 12 years, much more, as requested by the ACP? Nothing has been set out yet. Although the Cotonou Agreement, concluded in 2000 for 20 years only granted ACP countries 12 years for developing free trade with the EU. The ACP are well aware of this. “Commissioner Louis Michel (Development) and Peter Mandelson (Trade) are convinced that we can conclude in time. But we want a commitment from you on rules for facilitating trade. Let's go beyond sloganeering, we need to agree precisely on what reforms to carry out and on what projects we should intervene”.
The tough response from the Zambian Minister for Trade Mr Dipak K.A. Paten was not long in coming: the ESA region (Eastern and Southern Africa), which is negotiating with the EU has got difficulties in putting on the table (as part of the EPA) what the ACP are not prepared to put on the table as part of the WTO framework. The Minister explained that there was therefore no question of negotiating so-called Singapore questions “to weaken the position of the ACP negotiations”. Zambia also criticised the slowness of the EU in simplifying rules of origin despite “promises over the years”. He sad that “market access has little importance if phytosanitary standards and rules of origin are not examined”. He also attacked the EU for not listening to its partners. On the question of regional integration between ACP Trade Ministers, the Zambian Minister said that it was inappropriate “when Heads of State in Africa are dealing with the question of setting up a single block based on the Treaty of Abuja”.
Betting on the success of regional integrating granting compensation
“Commissioner Louis Michel has always said that the development component is the essential factor” in the EPA. Affirming this in a backdrop to the session, Stefano Manservisi explained to EUROPE that they should not confuse adjustment with compensation. Adjustment costs in the EPA involve indispensable structural reforms involving infrastructure, institutions, capacity, the regulatory framework. “Some people think that compensation is needed. Integration works and creates wealth which compensates losses of custom duties, or it does not work because the markets continued to be partitioned off between the different ACP countries. If compensation is needed, it can only be granted based on a preliminary condition” (on the conclusion of the agreements: Editor's note). In other words, the Commission is betting on the success of integration, which is “the ACP's processes” as a gage of success of the EPA and their effective capacity to facilitate development instruments.
The Commission believes that there are three objectives in the EPA: ensuring the compatibility of agreements with WTO rules, the current system will be illegal as from 1 January 2008, therefore there is a need for a negotiated solution in the knowledge that WTO rules take into account the weak position of developing countries; improving European market access for ACP products with some reciprocity, but the important thing, is asymmetry: “we will much more than they will”, underlined Manservisi - improving the competitiveness of ACP countries, despite the integral preferences they enjoy, ACP counties do not have competitive products compared to countries from South East Asia. “This is the most difficult area of discussion because the ACP want to keep a certain advantage on some products rather than invest”.