African, Caribbean And Pacific Research Articles

The Economic Partnership Agreements: Rationale, Misperceptions and Non‐trade Aspects

The European Union and the African, Caribbean and Pacific (ACP) countries entered a new era in 2008. The Cotonou trade regime and the WTO waiver legitimising it have expired, and the long anticipated, and much debated, move to Economic Partnership Agreements (EPAs) has begun. This article explains the background and analyses the ‘alternatives’ to EPAs, in order to tackle common misperceptions. Moving on from what has been the focus of debates, namely, the reciprocal liberalisation required under WTO rules, it sheds some light on the non‐goods trade aspects of EPAs which, while integral to economic policy, are inherently hard to quantify and often skimmed over in existing studies or addressed in ideological terms.

Alleviating the consequences of marginalisation? EU aid policy towards the Caribbean ACPs

AbstractThe article reviews the EU's development policy in relation to the Caribbean members of the African, Caribbean and Pacific (ACP) group. It considers the particular challenges faced by these small economies before assessing their trade and aid relationship with the EU. The article evaluates both the regional assistance programme and the particular experiences of Guyana and Jamaica. Both countries are singled out because of the breadth and depth of their aid relationship with the EU. Finally, the article provides an analysis of EU aid policy within the context of EU–Caribbean relations more generally. Copyright © 2008 John Wiley & Sons, Ltd.

Investment Provisions in Economic Partnership Agreements

The African, Caribbean and Pacific (ACP) group of countries are negotiating trade agreements with the European Union in six regional blocks. In December 2007, the CARIFORUM region was the first region to conclude a full ‘Economic Partnership Agreement’ with Europe. The Agreement includes provisions on trade in goods, services and investment, intellectual property, competition, and government procurement. This report examines the investment provisions of the CARIFORUM Economic Partnership Agreement as an illustration of the EPA model.

Implications of REACH for developing countries

AbstractThe new European Union (EU) chemicals regulation, the Registration, Evaluation and Authorisation of Chemicals, or REACH, went into effect in 2007. In the extensive advance discussion of the expected impacts of REACH, questions were raised about the effects of this new chemical policy on developing countries. In particular, will it harm the economies of the group of African, Caribbean and Pacific (ACP) countries that historically have been connected to Europe? We found, in brief, that there are only limited, isolated cases where REACH could be problematical for ACP exporters. Almost all ACP exports subject to REACH face insignificant obstacles from the new regulation. Copyright © 2007 John Wiley & Sons, Ltd and ERP Environment.

Livestock, Liberalization and Trade Negotiations in West Africa

West Africa is shifting towards an increasing liberalization of agricultural markets. This trend will continue in line with current trade negotiations at the World Trade Organization (WTO) and between the European Union and African, Caribbean and Pacific (ACP) countries. The objective of this paper is to assess the impact of these negotiations on the livestock sector in the region. Livestock systems, in spite of their technical weakness, are strongly integrated with markets. Liberalization has had an important impact on national livestock sectors, especially dairying and poultry production. Imports of poultry meat increased, for example, from 500 to 17,000 tonnes between 1996 and 2002 in Senegal. Similar changes have been seen in Ghana and Ivory Coast. The dairy sector has had to compete with milk powder imports for years, but this competition seems to be limited by market segmentation, which explains the recent good prospects for local milk production. In addition, powdered milk production has had a significant role in the establishment of a local dairy industry. African countries should invest further in trade negotiations if they are to increase national capacities, eg via improvements in the negotiating power of administration services and the encouragement of national and regional research networks for market analysis.

The EU-ACP Economic Partnership Agreements and the 'Development Question': Constraints and Opportunities Posed by Article XXIV and Special and Differential Treatment Provisions of the WTO

This article argues that Article XXIV and special and differential treatment (SDT) provisions of the WTO present a number of constraints and opportunities to the design and scope of the proposed economic partnership agreements between the European Union (EU) and African, Caribbean and Pacific (ACP) countries. It examines the negotiating positions of both sides to argue that were the EU's position to prevail, ACP and other developing countries would likely suffer an erosion of the development principles embedded within the WTO. It is shown that the differences between the two groups over the desirability and/or applicability of negotiating free trade agreements between developed and developing countries under the strict jurisdiction of Article XXIV, and of negotiating agreements on services and the Singapore Issues , amount to a contestation over the principles of reciprocity and SDT within the WTO, and of the scope of the WTO.

The Impact of Economic Partnership Agreements in Countries of the Southern African Development Community

In the context of economic partnership agreements (EPAs) currently under negotiation between the European Union (EU) and African, Caribbean and Pacific (ACP) countries, trade is meant to be progressively liberalised in a reciprocal way as of 2008. EPAs are also intended to foster existing regional integration efforts among the ACP. This paper presents a computable general equilibrium model simulation of the impact of EPAs for countries of the Southern African Development Community (SADC). Different liberalisation scenarios are compared. We find that EPAs with the EU are welfare-enhancing for SADC overall, in particular if reductions in unemployment are considered. Results are robust to variations in key model parameters. For most countries, further gains arise from intra-SADC liberalisation. The possibility of the EU entering an free trade agreement with other countries, such as Mercosur, reduces estimated gains, but they still remain largely positive. Similarly, estimated gains need to be revised downwards if agriculture liberalisation is not as far reaching as a reduction of import barriers for manufactures. At the sectoral level, the largest expansion in SADC economies takes place in the animal agriculture and processed food sectors, while manufacturing becomes comparatively less attractive following EU--SADC liberalisation. Results also show the need for the Southern African Customs Union tariff pooling formula to be adjusted to reflect new import patterns as tariffs are removed. Copyright 2008 The author 2007. Published by Oxford University Press on behalf of the Centre for the Study of African Economies. All rights reserved. For permissions, please email: journals.permissions@oxfordjournals.org, Oxford University Press.

Sugar rush [bioenergy conversion

The recent reforms initiated by the World Trade Organization (WTO) have made it possible for some of the world's most disadvantaged countries to become leaders in environmentally friendly power generation from biomass. In their search for ways to modernize and generate more profit, the sugar industries in the African, Caribbean and Pacific (ACP) have discovered the possibility of producing renewable energy by generating electricity from burning bagasse. If sugar mills become ethanol producers, this could lead to the production of competitive and ecologically sound biofuels.

EU Preferential Trading Arrangements with the Caribbean: A Grim Regional Economic Partnership Agreements?

The European Union (EU) has more preferential trading arrangements than any other trading entity. For a quarter of a century African, Caribbean and Pacific (ACP) countries have benefited from unreciprocated preferential access to the EU market under a succession of Lome Arrangements. Sunset provisions now apply to these concessions and after 2007 unreciprocated preferences will end. The EU is proposing that a network of regional Economic Partnership Agreements (REPAs) replace Lome. This is a new form of regional trading arrangement for both the EU and ACP countries. In this paper we develop an analytical framework for evaluating the impact effects of a REPA and apply this to estimate costs and benefits in the CARICOM region. Our results suggest that a REPA would be inferior on welfare grounds to either extended reciprocity with the EU and US, or broader multilateral liberalisation.

Are the Economic Partnership Agreements a First-best Optimum for the African Caribbean Pacific Countries?

The 77 countries of the African, Caribbean and Pacific (ACP) group 2 have been negotiating free-trade agreements with the European Union (EU) since 2002. The Economic Partnership Agreements (EPAs) will replace the non-reciprocal preferences the EU currently grants to the ACP group with a reciprocal preferential scheme that conforms to World Trade Organization (WTO) rules. This article estimates the effects of the EPAs on the ACP economies, and compares them with the potential impact induced by the alternatives to the EPAs. Based on an original methodology, mixing general equilibrium analysis and disaggregated tariff calculations, the article highlights the significant costs induced by the EPAs, even under the hypothesis of a high asymmetry between the commitments of the ACP and European countries. It shows that switching from the Cotonou preferences to the Generalized System of Preferences (GSP) and the ‘‘Everything But Arms’’ initiative would be less costly for most ACP countries than adopting the EPAs. Furthermore, it investigates the ‘‘GSP+’’ option, whereby the current GSP is extended to better cover sensitive products for ACP economies. It demonstrates that a marginally extended GSP would indeed be the optimum choice for ACP countries.

Preference Utilisation and Tariff Reduction in EU Imports from ACP Countries

Despite the long relationship between the European Union and the African, Caribbean and Pacific (ACP) countries aimed at encouraging their exports while stimulating growth and investment, the ACP states still face difficulties in integrating into the world economy. This paper examines the non‐least developed ACP countries preferential trade with the EU using data on EU member states’ imports eligible for preferences under the Cotonou agreement for the period 2001 at the 8‐digit level. Using data on tariffs and preferential quota applicable on each 8‐digit product for the year 2001 ad‐valorem tariff rates were calculated. The paper also investigates the existence of a threshold in the offered duty reduction under which traders have no incentives to ask for preferences since the costs of obtaining these exceeds their benefits. Our results showed that the higher the value of preferences offered, the higher the probability that preferences are requested. Using endogenous threshold estimation techniques we also provided evidence that there exists a minimum value of preferences needed for traders to request preferences. More specifically, if the difference between preferential and third country tariff rates are lower than 4 per cent, there are no incentives for traders to request preferences since the costs of obtaining the preferences are expected to be higher than the benefits from obtaining the preferences. Our results additionally indicate that country specificities also play an important role in the decision whether requesting preferences or not and how much to import.

The Role of EBA in the Political Economy of CAP Reform

This paper explores whether the EU's Everything But Arms (EBA) scheme, under which exports from 50 least developed countries (LDCs) are admitted duty-free to the EU market, influenced the trajectory or pace of Common Agricultural Policy (CAP) reform. It finds no evidence that it played a role except in the case of two products, sugar and rice. The overall volume of exports, or potential exports, from LDCs in CAP products is just too small to create market management difficulties outside of these two products. It could play an indirect role in reform in the future in the context of the Economic Partnership Agreement negotiations between the EU and African, Caribbean and Pacific (ACP) countries under the Cotonou Agreement. ACP countries could use EBA as a benchmark and demand equivalent treatment for their exports in these negotiations in return for liberalising their markets towards EU exports. Any move to extend more generous preferential access to non-LDC ACP countries for CAP-supported products would have much greater implications for the CAP simply because of their greater supply capacity.

UNORTHODOX HUMAN RIGHTS INSTRUMENTS: THE ACP‐EU DEVELOPMENT CO‐OPERATION FROM THE LOMÉ CONVENTIONS TO THE COTONOU AGREEMENT

The Cotonou Agreement between the African, Caribbean and Pacific (ACP) countries and the European Union (EU) has received much attention in the past years. Most of the time, this attention focuses on the economic dimensions of the Agreement, while forgetting that the co‐operation partnerships that the Agreement generates are meant to be centred on human rights and human development rather than on economic development per se. This article evaluates the human rights potential of the Cotonou Agreement and of the development co‐operation policies initiated between the ACP countries and the EU under this agreement. First, the article looks at the EU regulatory framework and the place of the Lomé Conventions in the human rights and trade debate, as well as in the generation of the Cotonou Agreement. Next, the article presents those elements of the Cotonou Agreement that reveal a potential for enhanced human rights realisation in the ACP countries. Through the Cotonou Agreement the participation and integration of the ACP countries in the global market economy is not only ‘footnoted’ with human rights rhetoric, but also infused with human rights principles and human development standards. Last, the shortcomings inherent in the Agreement are identified and assessed, and the implications of these shortcomings for the realisation of human rights and development are highlighted in the conclusions.

Some Simple Analytics of the Trade and Welfare Effects of Economic Partnership Agreements

The Cotonou Agreement, successor to the Lome Convention, offers African, Caribbean and Pacific (ACP) countries preferential access to EU markets by establishing economic partnership agreements (EPAs) between the EU and blocks of ACP countries that are members of regional trading arrangements. ACP countries entering such arrangements could retain preferential access to the EU market, but on a reciprocal basis. This paper presents a relatively simple method (with moderate data requirements) to measure the likely short-run welfare consequences, static effects on trade flows and tariff revenue, of such an arrangement for ACP countries. The partial equilibrium method is illustrated for the case of the East African Cooperation (Kenya, Tanzania and Uganda). The analysis suggests that the welfare effects (excluding revenue effects) from a reciprocal agreement with the EU will be small, whether positive or negative, but ACP countries will experience short-run adjustment costs, especially in the form of revenue losses.

The Tariff‐Only Import Regime for Bananas in the European Union: Impacts on ACP and Non‐ACP Suppliers

The European Union is bound by World Trade Organisation agreements to move to a tariff‐only import regime for bananas no later than 1 January 2006. What should change at that date is the trade regime, not the level of protection offered to African, Caribbean and Pacific (ACP) countries. This article provides an assessment of the trade impact of this tariff‐only regime on the basis of simulations carried out with a dynamic partial equilibrium model of the world banana market using 2002–03 as the base year. Simulation results show that the tariff levied on imports from non‐ACP countries should be set at around €250 per tonne in order to maintain in 2008 the EU import structure that prevailed in 2003. A lower tariff would increase EU total imports, to the benefit of non‐ACP countries and to the detriment of the group of ACP countries. Conversely, a higher tariff would decrease EU imports from non‐ACP countries and increase imports from ACP suppliers. Under this assumption, the increase in ACP exports to the EU would mainly benefit the two West African suppliers, Cameroon and Ivory Coast, who are more competitive and have a more price elastic supply than the ACP suppliers of the Caribbean islands.

Sweetening the Transition in EU Sugar Preferences: The Case of Fiji

The European Union grants preferential market access for sugar to a group of African, Caribbean and Pacific (ACP) countries. Sugar exported under these quotas receives between two and three times the world price. These trade preferences are intended as a form of aid, but they tend to stifle productivity growth in the recipient countries. The European Union could better assist ACP countries by providing direct development assistance in place of sugar subsidies, for example by investing the aid transfers into infrastructure or other essential public services. This paper tests this proposition for the case of Fiji using a computable general-equilibrium model. It is found that significant gains in economic performance can be achieved by employing such alternative strategies for aid. These gains are particularly strong over the medium to long term when the aid funds are diverted to infrastructure development. However, there are issues of equity to consider since, in the case of Fiji, the rural poor would be the losers if trade preferences were to be removed. Moreover, the degree of benefit in alternative strategies such as infrastructure development will be contingent on the economy's flexibility, which in turn depends upon the country's regulatory regime and education performance.

Six months on: What shift is there in the EU approach to EPA negotiations?

With the UK presidency of the EU Council of Ministers pending (July 2005), EU Trade Commissioner Peter Mandelson is coming under increased pressure to modify the European Commission’s approach to Economic Partnership Agreement (EPA) negotiations with African, Caribbean and Pacific (ACP) countries. Criticism and pressure for change is not only coming from an increasingly vocal and active campaign by non-governmental development agencies in the UK, Europe and Africa (see http://www.stopepa.org/ for details of the campaign), but also from several more official sources. These include the Africa Commission established by prime minister Tony Blair, the inquiry by the House of Commons Select Committee on International Development into EU-ACP EPA negotiations1 and the joint position paper adopted by the UK Department of Trade and Industry and Department for International Development.2 Commissioner Mandelson has responded to this criticism by modifying and extending the rhetoric on the centrality of development concerns to the EC’s approach to EPA negotiations. However it is still unclear to what extent the Commissioner’s rhetoric is being taken up in practice by EC trade negotiators and EC aid officials. As the Zambian trade minister, Dipak Patel, has recently declared: what Peter has said in his speech to the LSE [London School of Economics] was excellent, but perhaps his negotiators need to read it more than we do.3

Europe's global responsibility to govern trade and investment sustainably: climate, capital, CAP and Cotonou

This paper examines the progress made towards forging a Sustainable Development Strategy of the European Union on the basis of three structures of the global economy: Trade, Investment and Knowledge Generation. It identifies deficits in all three, and cites alternatives for improvement such as acknowledging ecological debt and setting up a Global Marshall Plan. It outlines how, over the medium term, compatibility with trade law could be maintained, and how Sustainability Impact Assessments (SIA) could cushion the effects of the current governance regimes. It then considers alternatives such as encouraging the EU's African, Caribbean and Pacific (ACP) partners to form Regional Trade Areas among themselves. Guidance is given regarding reform of the Common Agricultural Policy and the question as to whether the investment regime can be governed multilaterally and, if so, at which venue.

Would All ACP Sugar Protocol Exporters Lose from Sugar Liberalisation?

The pressures for reform within the World Trade Organization (WTO) have led to recent proposals from the European Commission for the reform of the European Union's (EU's) sugar policy. The impact of this reform would be felt not only by EU sugar producers but also by the sugar protocol African, Caribbean and Pacific (ACP) countries who gain preferential market access at the protected EU price as a result of the Lome and Cotonou Agreements. This paper explores the way in which reform will affect the transfers of welfare to these ACP countries. It explores how the protocol countries are affected by the current regime and would be affected by reform in a very non-uniform manner. While some countries' transfer would fall with reform, others may gain due to the impact that sugar reform has on world prices. These differences are due to the very uneven allocation of the preferential quotas across protocol countries, and the highly differential dependence of the countries on EU and non-EU export markets. Les pres...

Implications of the Doha Development Agenda on the Economic Partnership Agreement (EPA) Negotiations

On September 27, 2002, in Brussels, the 77 African, Caribbean and Pacific (ACP) countries and the European Union (EU) officially opened negotiations on Economic Partnership Agreements (EPAs). These new WTO-compatible agreements should replace, at the latest by 2008, the current non-reciprocal trade preferences between the ACP and the EU under the Cotonou Agreement. The EPAs, proposed by the European Commission, would be free trade areas (FTAs) between (regional) groups of ACP countries and the EU. In parallel, a new WTO round of multilateral trade negotiations has been launched in Doha, Qatar, in November 2001, which should be concluded by a single undertaking in 2005. In consequence, the ACP countries are confronted with the commitment to negotiate new WTO-compatible trade agreements with the EU while the WTO rules are being negotiated at the multilateral level, and thus subject to changes. The challenge of the new Doha Round of negotiations, like that of the negotiation of an EPA, is to realise expectations concerning the relationship between international trade and sustainable development. The aim of this study is to determine to what extent EPA negotiations between the EU and ACP countries, and in particular EPAs between COMESA member countries and the EU, will be influenced by multilateral negotiations under the Development Round under the auspices of the WTO.