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TRADE-AFRICA: EU Still Pushing Offensive Interests in EPA Talks

Analysis by Aileen Kwa*

GENEVA, Feb 26 2008 (IPS) - The European Union (EU) has an ambitious agenda for the economic partnership agreement (EPA) negotiations. It is pushing for the conclusion of full agreements in the next one to three years, covering everything from services to ‘‘trade-related’’ issues such as investment, competition and government procurement.

The latter include issues, also called ‘‘new generation’’ or ‘‘Singapore issues’’, which developing states successfully blocked in the World Trade Organisation (WTO) as they were regarded as detrimental to development. The issues first arose in the run-up to the WTO ministerial meeting in Singapore in 1996.

A European Commission (EC) official told IPS, ‘‘we want to finish negotiations on outstanding issues in 2008. The interim agreements so far include provisions on market access, development cooperation and revised rules of origin.

‘‘We want to continue negotiations on services, investment and trade-related rules. This is the work plan for this year. We will continue negotiations at regional level in order to bind all ACP (African, Caribbean and Pacific) countries into full EPAs.’’

According to the official, who spoke on condition of anonymity, ACP countries would be willing to enter into expanded EPA negotiations. ‘‘Transforming the interim agreements into full trade and development agreements means going beyond market access and including wider issues, such as trade-related rules.

‘‘We believe that market access alone is not sufficient to help their economies integrate into the global economy.

‘‘Preferential access granted under the Cotonou agreement has not contributed to increasing the world trade share of the ACP. Creating a more predictable business climate with transparent trade rules could make their markets more attractive for investors,’’ said the official.

Marc Maes, an EPA expert from the Brussels-based development organisation 11.11.11., has a different opinion regarding this expanded EPA agenda: ‘‘The trade-related issues which the EC seeks to negotiate belong to its most offensive interests.

‘‘These issues can seriously reduce the ACP countries’ policy space while it remains uncertain whether they really will attract many investors. Investors not only look at rules but also at infrastructure, the proximity of lucrative markets and the availability of skilled workers,’’ Maes pointed out.

The interim EPAs include trade in goods. The EU’s full EPA agenda also includes other trade rules. The liberalisation of services and the liberalisation of rules in investment and competition will guarantee the EU’s services companies access to the African markets.

The EU wants services to be liberalised across the entire spectrum: professional, business, telecommunications, distribution (retailing / wholesale services); environmental; financial; transport; energy; tourism and so forth.

These negotiations will entail African countries being expected to make commitments to remove any domestic regulation they have that could impede European companies in accessing these markets.

This could include removing any existing limitation on land ownership rights for foreign enterprises.

It also could include scrapping laws subjecting foreign corporate takeovers to government approval; laws that require foreign investors to form joint ventures with local companies should they enter the market; and laws limiting the scope of operation of foreign investors.

The liberalisation of investment rules could also mean getting governments that currently have ‘‘positive discrimination’’ regulations to scrap such rules if they are not deemed to be in the interest of foreign investors.

For example, some countries may mandate their banks to put aside a certain percentage of their loans for small farmers. Such rules may have to be cancelled.

The EC will also demand that foreign companies be given the same rights and privileges as local companies, includes government subsidies and support.

The new issues will also include the liberalisation of government procurement. All government projects and purchases will have to be opened to bidding by European companies.

In order to boost employment and strengthen local companies and industries, government contracts to build schools, hospitals and to set up information technology are often provided to local companies.

If the new government procurement rules are agreed upon, this will no longer be possible. European companies will have to be given equal access to all government projects and purchases.

There is uncertainty about how far the EC will able to push the ACP in the months ahead. According to Maes, ‘‘by the end of last year there was a lot of opposition. Relations between the EC and ACP negotiators have been soured. They are very frustrated by the pressure the EC exerted and what they saw as the mercantilist ambitions of the EC.’’

But there are two areas which the EU is likely to use to pull ACP countries back to the negotiating table in 2008. According to Maes, ‘‘under the EPAs, some rules of origin (market access rules dealing with the ‘nationality’ of products) have been improved upon compared to what countries had under the Cotonou agreement, for instance in fish and textiles.

‘‘However, on the whole these rules have not been improved upon. The EU could propose negotiations to make these rules less burdensome for the ACP countries.

‘‘The other area is development. The development chapters (where the EU is supposed to outline how they can support the ACP with aid) are incomplete and also have to be improved upon.’’

*The second in a two-part series.

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