The flaws of the ESA interim EPA

Interim EPAs were initialled in haste at the end of 2007. They are incomplete and contain several provisions that ACP countries and the ESA countries themselves consider inadequate. As interim agreements they were meant to be provisional and not to be consolidated. ACP countries as a whole, including the ESA countries, have identified several contentious issues in the interim EPAs and have called for their revision. Unfortunately, the Commission has always refused to amend the interim agreements. Instead the Commission insisted that they should be replaced by more comprehensive EPAs, in which improved versions of the contentious issues were to be incorporated. Hence ACP countries, including the ESA countries, have been negotiating such improvements since 2007; and some new formulations have been agreed. It is therefore a major concern that this un-amended interim EPA is presented to Parliament for consent while both parties recognise its inadequacy. This is all the more so since only two out of the four signatories have ratified the agreement (Seychelles and Zimbabwe), while the two others have only notified provisional application. Moreover two other ESA countries that have initialled this agreement have considered it inopportune to sign (Zambia and Comoros). The agreement leaves a lot to be desired. It does not adequately address the development needs of the countries concerned, nor does it strengthen regional integration. On the contrary, it has caused tensions and divisions in the region. Ratifying the current interim EPA will consolidate these divisions, making it more difficult to come to an agreement that would be acceptable for all members of the ESA configuration. The rules of origin of the interim EPA will also negatively affect regional trade and economic cooperation since they only allow cumulation with other “EPA states” and not with other ACP countries, unless customs cooperation agreements have been concluded whit these “non-EPA” ACP states. This will affect cross border production chains and lead to trade diversion. The ESA interim EPA contains the worst stand still clause (art.14) of all iEPAs; one that applies to all products whether excluded form tariff elimination or not and that fixes the ceiling at the applied level (and not at the bound WTO tariff level). Yet new improved text for the final EPA exists; but still the un-amended version is the one that the European Parliament is asked to ratify. The interim EPA forbids new export taxes and restrictions unless the EU allows them, which goes far beyond WTO provisions. Flexibility on these measures is important as they allow contributing to the promotion of local value addition. They should not be banned and their introduction should not depend on EU permission. The EU should refrain from curbing this policy space by introducing rigid and self-interest driven provisions. The interim EPA contains the highly contentious MFN clause that does not appear in most other EU FTAs and which unnecessarily limits the rights of the ACP countries under the WTO. The interim EPA contains a very restrictive clause on quantitative restrictions and a weak infant industry safeguard. It misses a provision that foresees the possibility to modify the tariffs schedules when the development needs of the ESA countries so require. The interim EPA foresees a moratorium of five years, before positive tariffs have to be eliminated, but it contains fixed dates for this moratorium (2008-2012). As a result the question arises: although the agreement was signed in 2009 and provisional application only started in 2012, is the five year moratorium already over and should tariff

elimination start in a few weeks? Or should the date of the provision application (14 May) be taken as the start of the tariff elimination calendar, and has the moratorium therefore only just begun? The five years from signing to ratifying were supposed to be used to prepare for the tariff elimination (by finding other forms of fiscal revenue or preparing sectors for competition).But since the Commission has insisted that the interim EPAs can not be amended, and has taken rigid positions on the contentious issues, the past five years have been totally consumed by the continued negotiations. As a result the ESA countries are now finding themselves in a situation in which the Commission may require them to start tariff elimination in a few weeks time without any accompanying measures in place. With regard to tariff elimination the INTA rapporteur assumes that the EU and ESA exports are complementary and hence there will be little competition. However research by the South Centre in Geneva (Analytical Note SC/TDP/AN/EPA/30 of June 2012) indicates that the interim EPA will eliminate an important number of tariffs on products that the four countries produce and trade among each other and for which the EU is more competitive. This will therefore lead to direct competition of EU exports with local products which may destroy local production and disrupt regional trade. These local products include: processed oil products, processed agricultural products, medicines, light industrial products, cement clinkers. The interim EPA does not have a chapter on sustainable development. Improvements to the interim EPA can not be made by the joint EU-ESA EPA Committee that the interim agreement creates because it has only weak powers (art.64) and not the usual powers to amend the agreement that Joint Councils have. ***
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