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CHALLENGES 2007-2008: Regional Integration in Tatters Due to EPAs

Sue Scott

LONDON, Dec 20 2007 (IPS) - The spectre of regional fragmentation is haunting the negotiations on the finalisation of interim economic partnership agreements (EPAs) between the European Union (EU) and the African, Caribbean and Pacific countries. This is despite one of the stated goals of the EPAs being ‘‘regional integration’’.

Non-governmental organisations, which are bitterly opposed to splinter talks between the EU and individual nations, had been concerned that EU trade commissioner Peter Mandelson’s threats of trade penalties will see negotiators breaking ranks with the regional groupings and signing bilateral deals.

For its part, the European Commission (EC), frustrated by lack of progress towards the January 1 deadline, had hinted that it was willing to conclude EPAs on a country-by-country basis.

While nobody wanted to encourage the option openly, it came to be seen as a fall-back solution, according to Oliver Morrissey, professor of development economics at the UK’s Nottingham University and a commentator on African trade and aid issues.

A bilateral EPA between the EU and Kenya became an option due to the difficulties faced with Tanzania belonging to different regional groupings. In the end the members of the East African Community (EAC) entered into an EPA.

In Southern Africa, Lesotho, Botswana and Swaziland signed an interim EPA, Namibia signed a separate EPA but South Africa has so far refused to sign the EPA. These countries, all members of the Southern African Customs Union, have thus been fragmented by the EU’s intransigent attitude on concluding EPAs on goods despite the unequal levels of development of the EU and the ACP.

In West Africa least developed members of the regional grouping, such as Senegal, have refused to be railroaded. Of the eight members of the West African Economic and Monetary Union, only Cote d’Ivoire signed an interim EPA with the EU. The other members are Senegal, Benin, Burkina Faso, Mali, Niger, Togo and Guinea-Bissau.

‘‘Regional integration is the big problem. In principle, the six regions are each meant to have in place a regional agreement and achieved some level of it. In West Africa, progress on regional integration is minimal and probably highly unlikely,’’ Morrissey said.

Allowing more time for concluding the EPAs could harm countries without least developed status, such as Ghana and Jamaica.

‘‘The poorest countries typically do not have domesticated sectors that are competing with EU imports. It’s the relatively rich ACP (African, Caribbean and Pacific) countries that stand to lose most because they produce manufactured goods which are supplied to the rest of their regions,’’ Morrissey pointed out.

Fair trade charity Traidcraft’s trade policy advisor Sophie Powell said for individual ACP countries to abandon their regional neighbours for the purpose of safeguarding their own exports – as, she claimed, the EC was actively encouraging – would be a disaster.

With reference to Kenya, Powell pointed out that it is not an LDC while its immediate neighbours are. Kenyan export producers were extremely worried about the threat of raised EU tariffs of the EPA end-of-year deadline was missed.

In a bilateral EPA with the EU, it would have opened its market while Uganda did not, which would have forced Uganda to put in place strict border controls and defensive measures against trade from Kenya in order to stop goods coming in from the EU.

This would have been a real impediment to regional trade, Powell said.

Before the EAC and Southern African countries signed the EPA, business was suffering from the uncertainty of not knowing whether or not its access to EU markets would be affected on January 1 when the EPA deadline had expired. Both the horticultural sector in Kenya and the beef exporters in Southern Africa were thrown in turmoil, she said.

Even if developing countries agreed to sign framework EPAs by year end, they need to be reassured that there was enough money in the pot to help in their transition to a liberalised market, said Dr Sanoussi Bilal of the independent research and dialogue organisation the European Centre for Development Policy Management.

‘‘It’s still unclear what amount of money (from the EU) will be available under national reform,’’ he said. ‘‘The EPA could simply be a question of relabeling some existing development aid. The ACP countries are right to ask for additional commitments.’’ He suggested individual EU member states could improve their credibility by pledging more.