fao seminar- riga, 05-06 june 2006 1 epas and their impacts on acp agriculture and development anne...

FAO Seminar- Riga, 05-06 June 2006

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EPAs and their impacts on ACP agriculture and development

Anne Wagner

[email protected]


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Cotonou Agreement

A significant change in EU-ACP relations


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From Lomé to Cotonou

• A radical change in 2000

• Lomé Convention– an Aid section, the EDF (15 bn €/5 years)– a commercial section, based on non-

reciprocal commercial preferences– 4 product specific protocols

• banana, sugar, meat and rum


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Reasons for change• WTO non compatible

– discriminatory and non reciprocal– Contrary to MFN clause

• Advantages given to one partner must be given to all

• 2 exceptions– concessions to all LDCS or to all DCs– or reciprocal concessions in the framework of a FTA

(GATT art. 24 )

– EU obliged to ask for a waiver from WTO


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A mixed outcome for Lomé preferences

• A mixed outcome– A decrease of the share of imports originating from

ACP on the EU market (from 7 in 1976 to 3 % in 2003)

– Exports from ACP that remain very concentrated on primary products (ex: Burkina Faso)

– Exports from ACP very dependant on EU market– Supply side structural constraints

• Some individual success stories (Mauritius, lichee from Madagascar, …)


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The Cotonou Agreement• Introduction of Economic Partnership

Agreements (EPAs)– Reciprocity : ACP markets opened to european

products, but asymmetry• EU opens at 100 %• ACP open at 80 %

– Negotiation by regional groupings (6), to encourage regional integration

– On a voluntary basis

• A new Aid system– Same amounts (15 bn €)– New mechanisms, not yet defined– Probably linked to EPAs


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If no EPA

• Different options depending if LDC or not– Non LDC : return to GSP– LDC : EBA Initiative (Everything but Arms)

• Consequence: not in interests of LDCs and risk of regional destabilisation

• Probable consequences on aid mechanisms, not yet fixed


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Calendar

• Beginning of EPAs : 1st January 2008

• … implementation in a 12 year period

• 2000-08 : preparation period– until end 2003 : Phase 1 at all ACP level– since 2004 : regional negotiations,

specific to each EPA


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Consequences for ACPWhat impacts on agriculture sectors and development of those regions?


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Impacts of regional integration

• Will a larger market enable economies of scale?– Yes, if removal of non tariff barriers

(infrastructure, administrative)– But:

• Danger of an accelerated integration process, risk that current processes are destabilized

• Increase of inequalities between costal countries and land-locked countries

• Risk of trade diversion


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Market opening to european products (1/4)

• Tariff removal: fiscal losses– Between 5 and 10% of fiscal incomes for West

African States– Less public investment– Implementation of a new tax system

• but problem of perception• VAT : effect on consumers


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• Increased competition on local products:– Average increase of 15% for imports into W

Africa– Stronger impact on certain products, when

direct competition on local production– Sensitive products : meat, milk, wheat flour,

rice, potatoes, onions, sugar, tomatoes, oils…


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• Some European products that are supported by CAP – Cereals

• Direct tranfers to producer • Export subsidies: removed (decrease of internal european price), and

used again beginning 2005 (€/$ parity)– Milk

• High internal price (production quotas)• Export subsidies for milk powder

– Tomatoes• Direct transfers to producer for canning• Export subsidies for tomato concentrate

– Sugar: • Current reform process

– Chicken meat:• dumping


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• Threat for ACP agro-processing sector – Decrease of input price – But import competition for processed products– More fiscal pressure on the formal sector

• Advantage for consumers– Decrease of final consumer price, BUT if

intermediaries DON’T transmit the decrease


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Fast liberalization not advised• Fast liberalization not advised:

– Incremental

• Protection of certain products, among them agro-processed ones

• CET level:– Considered as too low, should be

increased and maintained until 2020


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• Ex: debate on WAEMU CET– Applied by WAEMU since 01/01/2000– 4 levels : 0%, 5%, 10%, 20%– Insufficient to protect agriculture production – Revision demanded:

• by farmer’s unions first ;• Then by governments

– But without success


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Access to european market (1/2)• Few new opportunities for LDCs, because EBA• Non-LDCs : removal of remaining tariffs (mainly

processed products)• But :

– Compliance to sanitary norms and standards– Structural supply constraints– Competition with other countries on european market– Danger of preference erosion if no EPA

• Ex: CEMAC


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Access to european market (2/2)

• Risk of regional desequilibrium:– Favorable to costal countries

• What consequences on natural ressources?

• What consequences on development modell?


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Recommendations

1. Capacity building

2. Compensation for fiscal losses

3. Negociatiation of commercial agreements that enable development of agriculture and exports


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Increase political and productive capacity (1/2)

• Capacity of States, to implement necessary reforms– Customs and administrative rules – New tax system– Transport and communication infrastructures

• At regional level– Coordination between members– Sectoral policies

• R&D, training, promote industrial development…

– Investment regulation


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Increase political and productive capacity (2/2)

• Support civil society stakeholders• Develop exports

– Support competitiveness– Training for economic stakeholders (knowledge

of european markets)– Standards and norms

=>EU must guarantee sufficient and unconditional aid


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Compensate for fiscal losses

• By the EU, more important for LDCs

• Finance improvement of production capacity

• additional to existing funds


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Trade dimension

• Market opening to european products– Exclude sensitive products (e.g. meats,

vegetables, wheat flour, oils)– Incremental– Room for manœuvre in EPA must not be more

restrictive than in WTO (SP/SSM), on the contrary

• Exports– Loosening of norms (feasible ?) and rules of origin

fao seminar- riga, 05-06 june 2006 1 epas and their impacts on acp agriculture and development anne...

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