Economic Partnership Agreements
Encyclopedia
Economic Partnership Agreements are a scheme to create a free trade area
Free trade area
A free trade area is a trade bloc whose member countries have signed a free trade agreement , which eliminates tariffs, import quotas, and preferences on most goods and services traded between them. If people are also free to move between the countries, in addition to FTA, it would also be...

 (FTA) between the European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...

 and the African, Caribbean and Pacific Group of States (ACP)
ACP countries
The African, Caribbean and Pacific Group of States is a group of countries , created by the Georgetown Agreement in 1975. The group's main objectives are sustainable development and poverty reduction within its member states, as well as their greater integration into the world's economy...

. They are a response to continuing criticism that the non-reciprocal and discriminating preferential trade agreements
Preferential trading area
A Preferential trade area is a trading bloc which gives preferential access to certain products from the participating countries. This is done by reducing tariffs, but not by abolishing them completely. A PTA can be established through a trade pact. It is the first stage of economic integration...

 offered by the EU are incompatible with WTO rules. The EPAs are a key element of the Cotonou Agreement
Cotonou Agreement
The Cotonou Agreement is a treaty between the European Union and the African, Caribbean and Pacific Group of States . It was signed in June 2000 in Cotonou, the largest city in Benin, by 78 ACP countries and the then fifteen Member States of the European Union...

, the latest agreement in the history of ACP-EU Development Cooperation
ACP-EU Development Cooperation
Development cooperation between the European Union and the countries of the African, Caribbean and Pacific Group of States celebrated its 50th anniversary in 2007. Although bilateral relations have always been and still remain one of the main features of modern development cooperation, it was the...

 and are to take effect as of 2008.

Reciprocity

Due to the continuing WTO incompatibility of previous arrangements, the EPAs' key feature is their reciprocity
Reciprocity (international relations)
In international relations and treaties, the principle of reciprocity states that favours, benefits, or penalties that are granted by one state to the citizens or legal entities of another, should be returned in kind....

 and their non-discriminatory nature. They involve the phased out removal of all trade preferences which have been established between the EU and the ACP countries
ACP countries
The African, Caribbean and Pacific Group of States is a group of countries , created by the Georgetown Agreement in 1975. The group's main objectives are sustainable development and poverty reduction within its member states, as well as their greater integration into the world's economy...

 since 1975 as well as the progressive removal of trade barriers between the partners. In order to fulfil the criterion of being a non-discriminatory agreement, the EPAs are open to all developing countries, thereby effectively terminating the ACP group as the main development partner of the EU.

The establishment of a reciprocal trade agreement confronts the EU with the problem of how to reconcile the special status of the ACP group with the EU’s obligations to the WTO. The solution proposed for this dilemma is an agreement which is only as reciprocal as necessary to fulfil WTO criteria. In reality, the ACP countries will have some room to manoeuvre and to maintain some limited protection of their most vital products. The extent to which trade
Trade
Trade is the transfer of ownership of goods and services from one person or entity to another. Trade is sometimes loosely called commerce or financial transaction or barter. A network that allows trade is called a market. The original form of trade was barter, the direct exchange of goods and...

 must be liberalised under the new EPAs is still a widely debated issue and it remains to be seen whether the WTO provisions regulating regional trade agreements will be revised in favour of the EPA scheme at the end of the Doha Round
Doha round
The Doha Development Round or Doha Development Agenda is the current trade-negotiation round of the World Trade Organization which commenced in November 2001. Its objective is to lower trade barriers around the world, which will help facilitate the increase of global trade...

.

Regionalism

True to the Cotonou principle of differentiation and regionalisation the developing countries are encouraged to enter into the EPAs in regional groupings. So far the ACP countries
ACP countries
The African, Caribbean and Pacific Group of States is a group of countries , created by the Georgetown Agreement in 1975. The group's main objectives are sustainable development and poverty reduction within its member states, as well as their greater integration into the world's economy...

 have formed seven regional groupings in which they intend to enter into EPAs with the European Union. These regional groupings are

Special treatment

The new regional grouping established due to the EPA scheme causes the problem of how to reconcile this approach with the previous special treatment of the group of least developed countries
Least Developed Countries
Least developed country is the name given to a country which, according to the United Nations, exhibits the lowest indicators of socioeconomic development, with the lowest Human Development Index ratings of all countries in the world...

 (LDCs) among the ACP countries
ACP countries
The African, Caribbean and Pacific Group of States is a group of countries , created by the Georgetown Agreement in 1975. The group's main objectives are sustainable development and poverty reduction within its member states, as well as their greater integration into the world's economy...

. Currently, 40 of the 79 ACP countries are defined as LDCs by the United Nations
United Nations
The United Nations is an international organization whose stated aims are facilitating cooperation in international law, international security, economic development, social progress, human rights, and achievement of world peace...

. The LDCs constitute a special group among the developing countries and have usually been treated separately.

Therefore, the EPAs will provide special arrangements for this particular group. As opposed to the other ACP countries, the group of LDCs will be invited to reject the EPAs and continue trade relations under the "Everything But Arms
Everything but Arms
Everything but Arms is an initiative of the European Union under which all imports to the EU from the Least Developed Countries are duty free and quota free, with the exception of armaments. EBA entered into force on 5 March 2001. There are transitional arrangements for bananas, sugar and rice...

" (EBA) regulation. Launched in 2001 by the Council of Ministers, this amendment to the EC's Generalized System of Preferences
Generalized System of Preferences
The Generalized System of Preferences, or GSP, is a formal system of exemption from the more general rules of the World Trade Organization ,...

 has since then regulated the trade relations between the EU and the LDCs that have chosen to use this facility, granting duty-free access to all products from LDCs without any quantitative
Quantitative property
A quantitative property is one that exists in a range of magnitudes, and can therefore be measured with a number. Measurements of any particular quantitative property are expressed as a specific quantity, referred to as a unit, multiplied by a number. Examples of physical quantities are distance,...

 restrictions – except to arms
Weapon
A weapon, arm, or armament is a tool or instrument used with the aim of causing damage or harm to living beings or artificial structures or systems...

 and munitions. While this provision facilitates the situation of the LDCs under the new trade scheme, it has also been criticised because the EBA initiative prevents LDCs from opening up their markets for EU products within the context of an EPA. Another weakness of the EBA initiative is that it utilises the rules of origin of the GSP which require double stage transformation for textiles and clothing. The rules of origin of the EPAs on the other hand allows single stage transformation for the exports of these sectors. This is one of the reasons why Mozambique and Lesotho (both LDCs) initialled the SADC EU Interim EPA in November 2007, and then went on to sign this agreement in July 2009. Angola (the other LDC in the SADC EPA configuration) has chosen to continue trading under EBA as their main exports to the EU are oil and diamonds which as 'wholly obtained' originating products enjoy duty and quota free entry under the EBA rules of origin.

Predicted Impact

Researchers at the Overseas Development Institute
Overseas Development Institute
The Overseas Development Institute is one of the leading independent think tanks on international development and humanitarian issues. Based in London, its mission is "to inspire and inform policy and practice which lead to the reduction of poverty, the alleviation of suffering and the achievement...

 predict the impact of the EPAs, however, to be rather minimal. Due to the fact that most African, Caribbean and Pacific (ACP) group states already enjoyed duty and tariff free access of about €1.4 billion Cotonou Agreement
Cotonou Agreement
The Cotonou Agreement is a treaty between the European Union and the African, Caribbean and Pacific Group of States . It was signed in June 2000 in Cotonou, the largest city in Benin, by 78 ACP countries and the then fifteen Member States of the European Union...

 that expired in 2007, there was little new that could be offered. The expected impact described by the ODI:
  • The transfer of the import tax levied by the EU (€12.7 million in 2006) to parts of the ACP export supply chain, making exports more profitable.
  • Accrued revenue transfer could induce ACP members to increase levels of trade between each other and increase their supply of competitive products without substantial new investment.
  • Removing tariff barriers may make it economically feasible to export additional products to the EU that are already exported to other markets.
  • The most significant, but not necessarily most likely effect, is that there could be increases in foreign exchange earning and positive effects for the rest of the economy.

See also

  • Free trade area
    Free trade area
    A free trade area is a trade bloc whose member countries have signed a free trade agreement , which eliminates tariffs, import quotas, and preferences on most goods and services traded between them. If people are also free to move between the countries, in addition to FTA, it would also be...

  • List of free trade agreements
  • List of bilateral free trade agreements
  • ACP-EU Development Cooperation
    ACP-EU Development Cooperation
    Development cooperation between the European Union and the countries of the African, Caribbean and Pacific Group of States celebrated its 50th anniversary in 2007. Although bilateral relations have always been and still remain one of the main features of modern development cooperation, it was the...

  • Cotonou Agreement
    Cotonou Agreement
    The Cotonou Agreement is a treaty between the European Union and the African, Caribbean and Pacific Group of States . It was signed in June 2000 in Cotonou, the largest city in Benin, by 78 ACP countries and the then fifteen Member States of the European Union...

  • Lomé Convention
    Lomé Convention
    The Lomé Convention is a trade and aid agreement between the European Community and 71 African, Caribbean, and Pacific countries, first signed in February 1975 in Lomé, Togo.- History :...

  • ACP-EU Joint Parliamentary Assembly
    ACP-EU Joint Parliamentary Assembly
    The ACP–EU Joint Parliamentary Assembly was created to bring together the elected representatives of the European Union and the elected representatives of the African, Caribbean and Pacific states that have signed the Cotonou Agreement.Since the entry into force of the Treaty on European Union...

  • The Courier (ACP-EU)
    The Courier (ACP-EU)
    The Courier is an ACP-EU development magazine published by the Development Directorate General of the European Commission, focusing on ACP-EU Development Cooperation. Financed by the European Development Fund , it is published every two months...

     : The magazine of Africa-Caribbean-Pacific and European Union cooperation and relations

External links


External links

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