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Q&A: EPAs Will Provide Africa With "Better Export Opportunities"

Francis Kokutse interviews DICK NAEZER, EU trade representative in Ghana

ACCRA, Aug 13 2009 (IPS) - The European Union has pressurised Ghana to sign an economic partnership agreement (EPA) despite civil society concerns being raised about the detrimental effects further trade liberalisation will have on development in the West African country.

IPS’s Francis Kokutse fired some questions at Dick Naezer, head of the macro-economic trade section of the European Union delegation in Ghana, to understand why he directed this call at Ghana’s government.

IPS: You say that the EPA "trade agreements aim at facilitating the successful integration of ACP countries in the global economy and the multilateral trading system". Ghana has been trading with Europe for decades in terms of the Lome Conventions. Why would the EPAs involve more "successful integration" than the Lome Conventions? Dick Naezer (DN): After more than 30 years of bilateral trade with Europe, the ACP (Africa, Caribbean and Pacific countries) still exports just a few basic commodities, most of which fetch lower prices than they did 20 years ago. Old recipes have not promoted diversification, competitiveness, growth.

And they are no longer compatible with WTO (World Trade Organisation) rules on non-discrimination and have been successfully challenged. New solutions are necessary and urgent.

The EPAs are the agreements that the EU is negotiating with the ACP that are meant to replace the trade chapters of the Cotonou Agreement as the trade preferences of this agreement expired in 2007. We had until that date to negotiate new agreements that are WTO compatible.

The EPAs are intended to be broad agreements, helping first of all to build increased, balanced and sustainable trade between the two regions. They will change our relationship from one that offers tariff preferences – an eroding lifeline – to one that builds lasting and more efficient regional and international markets for the ACP.

EPAs will integrate the ACP economies into the global economy and the multilateral trading system by strongly improving their supply side characteristics and their international competitiveness, by opening up their markets and by improving the business and the investment climate.

IPS: The EU also says that EPAs will promote development. Can you give specific examples of this? DN: Financial development aid should promote the development of the ACP states. Financial development aid is programmed in parallel with the EPAs in accordance with the Cotonou Agreement and the negotiating directives given to the EU Commission by its member states.

The regional preparatory task forces in each EPA region have the job of linking the negotiations and the aid (development) requirements they throw up.

Development financing will stimulate industry and help companies in fields such as to comply with EU sanitary and phyto-sanitary and quality standards. But the development component of the EPA is much more than just extra money: they offer a way to improve the business environment and diversify the economies of ACP countries.

To this end a substantial increase in development aid is foreseen. The 10th European Development Fund (EDF 2008 – 2013), the instrument for development aid for the ACP states, is 355 bigger than the ninth EDF and stands at almost 23 billion euros.

The 10th EDF regional programmes, which by definition support regional integration and therefore the EPAs, have been allocated 1,75 billion euros – twice as much as under the ninth EDF.

Thanks to this overall increase in resources, our focus on other priorities such as health and education can be maintained while investment under the EPAs in economic structures and economic governance can be boosted, which should prevent the ACP countries from being sidelined in the world economy.

Total development aid from the EU member states to the ACP states stood at more than 12 billion euros in 2005 and this will rise considerably if the member states fulfil the commitments they have often repeated.

IPS: What exactly does the EU want in return for 100 percent market access for certain Ghanaian export products? DN: The ACP trade preferences are incompatible with WTO rules because they’re discriminatory in relation to other non-ACP developing countries, such as Indonesia, Thailand, India and China.

It was therefore decided by the EU and its ACP partners that, when the WTO derogation for the trade provisions of the Cotonou Agreement expired, a system would be set up which was fully compatible with the WTO so as to retain and even improve the EU preferences granted to the ACP compared with other developing countries.

This system takes the form of regional trade agreements in accordance with Article XXIV of GATT concerning free-trade areas.

This requires trade liberalisation between the EU and the ACP regions, but the opening up of the ACP market will be very gradual (with a long transition period), controlled (asymmetric commitments accepted) and mutually advantageous in order to attain development objectives.

As stated, the opening up of the ACP markets will be very gradual and will afford enough flexibility to protect sensitive sectors, especially agriculture, and offer safeguard mechanisms for coping with unforeseen problems.

IPS: The EU has negotiated with Ghana on a one-to-one basis. This does not make sense. Not only does Ghana not have the trade expertise to compete by itself in trade talks with the EU but this is bad for regional integration. The EU has alleged in the past that the EPAs will promote regional integration but this action did the opposite. Why has the EU persisted with this approach? DN: ACP and EU negotiators faced a difficult decision when it became clear that full regional EPAs would not be agreed in all ACP regions by the end of 2007.

In just a few months they had to agree on a new legally secure trade regime for 36 ACP non-LDCs (non-least developed countries) such as Kenya, Mauritius, Ghana and others and ensure that relevant legislation was in place by Jan 1, 2008 in 27 EU member states.

To add to the difficulties, the non-LDCs are scattered across six ACP regions, each of which has a unique regional integration process with their LDC neighbours. Without a new trade regime the non-LDCs, because of WTO requirements, would have had to pay additional import duties under the EU generalised system of preferences from Jan 1, 2008.

Some faced trade disruption and job losses in key sectors like cocoa, horticulture, fruit and fisheries. This is why EU member states gave their full backing to the European Commission to negotiate interim agreements at national level for non-LDCs, based on new terms for goods trade.

These interim agreements will gradually be replaced by comprehensive regional EPAs as full negotiations with the various ACP regions will be concluded. So the interim agreements have not replaced the original commitment to regional integration – they are a necessary step on the road to final regional agreements.

IPS: Why has the EU threatened African countries with trade disruption? Isn't that blackmail? DN: The EU never threatened with trade disruption but has on the contrary done everything possible, together with its ACP non-LDC partners, to avoid trade disruption caused by a legal vacuum.

IPS: Civil society organisations like Third World Network Africa say the EPA would not in any way increase exports from Ghana to the EU, so what do you mean when you that it would benefit Ghana? DN: When you open up completely the EU market; you help resolve supply-side constraints in the ACP countries; and give massive development aid in order to improve elements like transport infrastructure and the business and investment climate through technical assistance to standard and quality requirements, putting in place of trade facilitation and the simplification of administrative procedures, I would normally expect better export opportunities.

But the ACP countries have to act, they have to call a halt to the negative trends of the past and grab the opportunities of the future.

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