Regional Perspectives on EPA Negotiations: Eastern and Southern Africa SAIIA

1. Regional Perspectives on EPA Negotiations: Eastern and Southern Africa SAIIA Sandton Intercontinental Hotel Johannesburg, South Africa 2nd April 2007 Mark Pearson

2. ESA and SADC EPA Configuration Rwanda Burundi SADC Djibouti Eritrea Ethiopia Sudan COMESA Uganda Kenya Tanzania EAC Mozambique Malawi Zambia Zimbabwe Angola IOC SACU (TDCA) Swaziland Mauritius Madagascar Comoros Seychelles Reunion Botswana Lesotho Namibia South Africa SADC EPA group Eastern & Southern Africa EPA group Egypt Libya D.R. Congo CEMAC Euro Med

3. 15 countries in the ESA EPA out of 19 member States of COMESA. Egypt and Libya not ACP countries but part of Euromed. Swaziland part of SADC EPA. DR Congo part of Central Africa Negotiations. • Out of 15 ESA negotiating countries only 4 (Kenya, Seychelles, Mauritius, Zimbabwe) are NOT Least Developed Countries. ESA EPA Key Characteristics

4. The ESA Group has spent most of the time from the launch of the EPA negotiations (February 2004) on working amongst themselves to arrive at common positions. They have done this through a series of Trade Negotiating Forums (TNFs), held at regular intervals, divided up into six clusters – Development, Market Access, Agriculture, Fisheries, Trade in Services and Trade-Related Areas. ESA EPA Background

5. ESA EPA Negotiating Structure

6. - COMESA Impact Assessment Study on EPAs (completed February 2003). • - Configuration issues resolved. • - Negotiating Guidelines. • - Negotiating Mandate. • - ESA EPA Roadmap. • - Launch of ESA EPA and adoption of ESA-EU Joint Roadmap. • Series of meetings of the RNF and between the ESA Region and EC. • Preparation of draft EPA text which is now the basis for negotiations with the EC. Progress Made

7. Priority – Development then Market Access. Development Who will pay for transition and how much will it cost? Initially circular argument – ESA wanted all costs to be borne by the EC through additional resources. EC said all that was available was EDF. Issue resolved through the ESA making an estimate of adjustment costs (development matrix) and EC “compromising” with EDF plus EU Member States contributions. (Is this additional money or the €1b pledged at Hong Kong 2005 WTO Ministerial for Aid for Trade?) ESA EPA Negotiations – Priority Issues

8. Options - EBA for LDCs and GSP for non-LDCs. EPAs are supposed to be instruments for development; to strengthen regional integration, preserve the Lomé acquis and be WTO compatible “EPAs will be phased, asymmetrical and contribute to sustainable development through first building capacity and then build markets” However, LDCs, (11 ESA countries) through EBA already have NON-RECIPROCAL duty-free market access into EU. What incentive to go to a reciprocal EPA if no additional support is available? EDF is not dependent on EPA negotiations – EC belatedly trying to make it so – is this legal? Development - Political Economy Aspect

9. ESA Market Access – Possible Solution Agree on a tariff to offer the EU (perhaps COMESA CET of 0%, 10% and 25%) Agree on a list of sensitive products (100% product coverage for EU and 80% (?) for ESA Agree on a phase-down (grace period then liner reduction to zero except on sensitive products) Free Trade Arrangement that is compatible with Article 24 of GATT (1994) = ESA (COMESA) close to this solution. Need to agree headline CET of 0-10-25 (and deal with sensitive products later) then phase-down. But is this better for LDCs than EBA?

10. Tariffs into the EU – should be the lowest common denominator – LDCs get DFQFMA (EBA) so all countries in the group should expect this. Tariffs into ACP – negotiate a phase down with sensitive products excluded completely or phased in gradually. Rules of Origin – ESA want simple Rules of Origin based on value addition OR change of tariff heading. EC presented a more complicated solution to 133 committee. ESA EPA Market Access (Goods) - Summary

11. Trade in Services: COMESA completing needs assessment surveys and GATS templates for all members. Need to agree a regional framework then a EPA position. Possible offensive interests in Mode 4. Can services be dealt with in a revision clause? Investment: Should build on COMESA Common Investment Area agreements. Is there a need for a bilateral agreement – can this also be dealt with through a revision clause? Other Areas of Negotiation:

12. Marine Fisheries: Complex link between marine fisheries Rules of Origin (based on ownership of vessel and nationality of crew not where fish are caught), tariffs on frozen fish into the EU (zero rated), subsidies (under discussion at WTO), preferential access (currently 24% for processed tuna but under threat in WTO NAMA negotiations) and local costs of production (Asian producers have significantly lower costs). Changing one affects others so probably safest option for ESA in short-run is maintain status quo. Other Areas of Negotiation:

13. The ESA region can conclude a WTO-compatible EPA with the EC by December 2007. However, this would probably not cover issues such as services and investment in any meaningful way and the ESA region might want to include a revision clause in the EPA to revisit these topics. Rules of Origin should also have a revision clause – important for all regions. However, the fact remains that ESA countries that are LDCs remain to be convinced that EPAs will be beneficial to them. Conclusion:

14. Thank You Regional Trade Facilitation Programme Building 10F, CSIR PO Box 317 Persequor Park Pretoria 0020 mpearson@rtfp.org www.rtfp.org (012) 349 1197