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Economic Partnership Agreements: Equal Partnerships?

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Topic: Economic Partnership Agreements

 

The EPAs: Unfair trade policy

The Economic Partnership Agreements (EPAs), are trade agreements between the EU and countries in Africa, the Pacific and the Caribbean (ACP countries). The EPAs in their current form undermine poverty eradication by putting EU trade interests over development objectives.


Problem 1: Regional Disintegration

The EU concludes EPAs with regional blocs, which shoves together countries hardly comparable in terms of economic development. They have different interests with regard to the EU (some export mango, others manufactured goods), causing problems during negotiations. Because of long delays in negotiations (taking place since 2002), the EU in some cases went ahead and signed interim EPAs (iEPAs) with willing countries.
However, these iEPAs can also serve to delay a full EPA even further, as the negotiating terms of the individual country differ from the regional bloc as a whole. In the case of Ghana for instance, the iEPA provides for an 80% liberalisation of the country’s market, while ECOWAS, the regional bloc aims for 70% (South Centre, current state of play EPAs March 2013).

Problem 2: Damaging Trade Liberalisation

The EU guidelines for the EPAs state that at least 80% of trade should be liberalised. For the remaining percentage of trade, the developing country needs to create an exclusion list on which they list all the products that they want to protect. Countries are unable, once agreed on, to change the list of production excluded from liberalisation if the market situation changes. Countries usually get around 15 years to liberalise their economy, which means that countries may have to open up their economy when they are not ready to do so.

Problem 3: Threatening Regional Trade

The ‘rules of origin’ clause means that only goods originating from a country that signed an EPA or iEPA are allowed on the EU market. This means that products containing inputs from other countries cannot access the EU market, constraining trade between Southern countries. The rules of origin clause thereby counters the EU’s objectives of broadening market opportunities and fostering regional integration of developing countries. The Most Favoured Nations (MFN) clause also threatens South – South trade by not allowing other trade agreements to be more favourable in any way then the trade agreements with the EU.

Problem 4: Limiting Policy Freedom

The EPAs generally do not provide for an effective safeguard mechanism to enable ACP countries to protect their market from certain (subsidised) EU products. Furthermore, one of the core principles of the EPAs is not to allow export taxes, even though they are entirely legal according to international trade regulation. Export taxes are a historically proven instrument to encourage industrialisation and diversification. Especially for resource-rich developing countries banning export taxes will be extremely damaging.

Unfair Politics

The EU has been negotiating the Economic Partnership Agreements since 2002. Negotiations are marked by endless delays and contentious issues, and to date only two EPAs has actually been signed. The EPAs are a key example of an EU policy incoherent with EU development policy objectives, and undermines poverty eradication. Read our recommendations to see how the EU can come to a more fair and coherent trade policy!

for the background paper on EPAs, click here

(Photo: European Commission)

Click here to read our Ghana Impact Study that (amongst others) researched the impact of EPAs on Ghana.