Review of the ESA EPA Negotiations with EU (Final Report)

REVIEW OF THE ESA EPA NEGOTIATIONS WITH THE

EUROPEAN UNION CONSITENT WITH THE COTONOU

AGREEMENT, ARTICLE 37.4

FINAL REPORT

Submitted to:

COMESA Secretariat

Ben Bella Road

Lusaka, Zambia

www.comesa.int

Prepared by:

Dr. Evarist Mugisa

Premium Consulting Limited

4th Floor, Impala House

13/15 Kimathi Avenue

P. O. Box 3068 Kampala, Uganda

Tel: 256 (041) 253 783

Fax: 256 (041) 253 783

E-mail: [email protected]

_________________________________________________________________________

FEBRUARY 2007

http://www.comesa.int/

mailto:[email protected]

TABLE OF CONTENTS

EXECUTIVE SUMMARY ................................................................................................................................ v

I INTRODUCTION .................................................................................................. 1

1.1 THE CONTEXT OF THE EPA NEGOTIATIONS ............................................1

1.2 THE SIGNIFICANCE AND SCOPE OF THE REVIEW ....................................2

1.3 THE REPORT STRUCTURE ............................................................................2

II THE STATE OF PLAY IN THE EPA NEGOTIATIONS IN ESA REGION ....... 3

2.1 OBJECTIVES AND PRINCIPLES .....................................................................3 2.1.1 Objectives of the EPA ............................................................................................... 3 2.1.2 The Principles of EPA ............................................................................................... 3

2.2 THE CONFIGURATION OF THE NEGOTIATIONS ......................................3

2.3 THE STRUCTURE AND PROCESS OF THE NEGOTIATIONS .......................4

2.4 THE SUBSTANCE OF THE NEGOTIATIONS ................................................6 2.4.1 Development ............................................................................................................... 6 2.4.2 Agriculture .................................................................................................................... 7 2.4.3 Market Access .............................................................................................................. 8 2.4.4 Fisheries ........................................................................................................................ 8 2.4.5 Services ......................................................................................................................... 9 2.4.6 Trade-related issues ..................................................................................................... 9

2.5 NEGOTIATION WORK PLANS / ROADMAPS .............................................10 2.5.1 Phase I: Setting of priorities .................................................................................... 10 2.5.2 Phase II: The Substantive negotiations ................................................................. 11 2.5.3 Phase II: Continuation and Finalization ................................................................ 11

2.6 CONCLUSIONS .............................................................................................11

III THE MAIN CHALLENGES IN THE NEGOTIATIONS ................................... 20

3.1 FUNDING .....................................................................................................20

3.2 THE NEGOTIATION STRUCTURES.............................................................20

3.3 THE NEGOTIATING STRATEGY AND CAPACITY .....................................21

3.4 STAKEHOLDER BUY-IN ..............................................................................21

3.5 COHERENCE, CONTINUITY AND CONSISTENCY ....................................22

3.6 THE ESA CONFIGURATION AND LEGAL MANDATE ...............................23

3.7 OVERLAPPING MEMBERSHIP OF REGIONAL INTEGRATION SCHEMES24

3.8 RELATING EPA TO WTO NEGOTIATIONS ................................................25

3.9 CONCLUSION ...............................................................................................26

IV AN ASSESSMENT OF THE DEVELOPMENT ASPECTS OF TRADE AND

TRADE-RELATED PROVISIONS....................................................................... 27

4.1 THE DEVELOPMENT DIMENSION OF THE ESA EPA ...............................27

4.2 TRADE IN GOODS .......................................................................................33

Review of the ESA EPA Negotiations Final Report

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December 2006 By Premium Consulting Limited

iii

4.4 TRADE-RELATED AREAS ............................................................................38

4.5 CONCLUSIONS .............................................................................................42

V AN ASSESSMENT OF THE ROLE OF ESA REGIONAL PREPARATORY

TASK FORCE AND THE SUPPORT OF THE EU AND OTHER DONORS . 43

5.1 THE ESA REGIONAL PREPARATORY TASK FORCE ..................................43 5.1.1 The main objectives of the RPTF .......................................................................... 43 5.1.2 Outputs of the RPTF ............................................................................................... 44

5.2 DEVELOPMENT SUPPORT FROM THE EU AND OTHER DONORS ..........44

VI ASSESSMENT OF COHERENCE BETWEEN COMESA INTEGRATION

PROCESSES AND EPA COMMITMENTS ......................................................... 46

6.1 COMESA INTEGRATION OBJECTIVES AND PROCESSES .........................46 6.1.1 COMESA Integration Objectives .......................................................................... 46 6.1.2 COMESA Integration Processes ............................................................................ 47

6.2 COMESA COMMITMENTS TO EPA ..............................................................48 6.2.1 COMESA Common External Tariff ..................................................................... 49 6.2.2 Regional Infrastructure Programmes ..................................................................... 50 6.2.3 Regional Energy Programmes ................................................................................. 51 6.2.4 Regional Institutions ................................................................................................. 51

6.3 CONCLUSION ...............................................................................................52

VII THE MAIN CONCLUSIONS AND WAY FORWARD ..................................... 53

7.1 THE MAIN CONCLUSIONS ..........................................................................53

7.2 THE WAY FORWARD ...................................................................................55 7.2.1 Measures necessary to support the completion of the negotiations ................. 55 7.2.2 Time needed to effectively conduct negotiations ................................................ 57

REFERENCES ..................................................................................................................... A

APPENDICES ..................................................................................................................... D

APPENDIX 1: TERMS OF REFERENCE FOR THE REVIEW .................................. D

APPENDIX 2: SUMMARY OF ESA AND EC POSITIONS ........................................ H

APPENDIX 3: THE SIX NEGOTIATING GROUPS .................................................. I

APPENDIX 4: SUBJECT OF NEGOTIATION ........................................................... J

APPENDIX 5: ESTIMATED ADJUSTMENT ............................................................ N

APPENDIX 6: PEOPLE INTERVIEWED ................................................................. O

ACRONYMS AND ABBREVIATIONS ACBF Africa Capacity Building Facility

ACP Africa, Caribbean and Pacific

AU African Union

CAP Common Agricultural Policy

CARIFORUM Caribbean Forum of ACP States

CET Common External Tariff

COMESA Common Market of Eastern and Southern Africa

CPA Cotonou Partnership Agreement

CTA Chief Technical Advisor

CTN Common Tariff Nomenclature

EAC East African Community

EBA Everything-But-Arms

EC European Commission

EDF European Development Fund

EPA Economic Partnership Agreement

ESA Eastern and Southern Africa

EU European Union

FAO Food and Agriculture Organisation

FTA Free Trade Area

GATS General Agreement on Trade in Services

GATT General Agreement on Tariffs and Trade

ICT Information and Communications Technology

IGAD Intergovernmental Authority on Development

IOC Indian Ocean Commission

KEPLOTRADE Kenya-European Union Post Lomé Trade Negotiations

LDCs Least Developing Countries

MDG Millennium Development Goals

NDTPF National Development and Trade Policy Forum

PMDT Production, Marketing, Distribution and Transportation

PMU Project Management Unit

RNF Regional Negotiating Forum

ROO Rules of Origin

RPTF Regional Preparatory Task Force

RTA Regional Trade Agreements

SADC Southern Africa Development Community

SDT Special and Differential Treatment

SEMAC Communauté Economique et Monétaire de l’Afrique Centrale

SPS Sanitary and Phytosanitary

TBT Technical Barriers to Trade

UPTOP Uganda Programme of Trade Opportunities and Policy

WTO World Trade Organization

EXECUTIVE SUMMARY

1. For the last 25 years trade between the ACP countries and the EU was based on non-

reciprocal preferences (the Lomé Conventions), which granted nearly all products originating

from the ACP countries duty-free access to the European market. These preferences have not

helped the ACP countries to achieve their development objectives, to diversify their

production and increase trade with the EU. The preferences have also been incompatible with

the WTO principles of MFN and non-discrimination that forbid preferential treatment of

selected countries. In light of the above, the Cotonou Partnership Agreement (2000)

establishes a new trade cooperation framework - Economic Partnership Agreements (EPA) -

to replace the existing regime effective from 2008. The new framework is based on the

principle of reciprocity between the EU and the ACP countries.

2. The negotiations for EPAs with the EU are taking place in six groups in the ACP regions.

Article 37 of the CPA spells out the procedures for such negotiations and provides that EPAs

shall be negotiated during the five-year period, starting from September 2002 to be concluded

by December 2007, after which the EPAs are supposed to enter into force effective January

31st, 2008. Also, the CPA (Article 37.4) mandates the parties to undertake a comprehensive

review of EPA negotiation during 2006. It states that; “…the parties will regularly review the

progress of preparations and negotiations and will in 2006 carry out a formal and

comprehensive review of the arrangements planned for all countries to ensure that no further

time is needed for preparations or negotiations”. This report reviews the ESA EPA

negotiations with the EU in accordance with the above-mentioned Article 37.4.

3. The ESA configuration is composed of 16 countries. It is a heterogeneous and diverse

grouping and the countries that constitute it are at unequal stages of development. 12 of them

are classified as LDCs. The LDCs enjoy duty and quota-free access to the EU through the

Everything-But-Arms (EBA) initiative, whereas the more developed economies of the non-

LDCs still face significant tariff barriers to the EU in certain sectors. Within the ESA group,

there are separate regional groups in operation creating problems of overlapping membership.

There are at least three overlapping economic integration blocks (COMESA, the EAC and

SADC), all of which have different political and economic priorities. The EU is ESA’s

largest trading partner. Total value of trade flows between ESA and the EU is about 10


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billion per year (EC, 2005).

4. In December 2003, the ESA established its negotiation structures. At the national level, each

country has a National Development and Trade Policy Forum, which is multi-sectoral and has

representatives of both the public sector and non-state actors. At the regional level, there is a

Regional Negotiating Forum, which is the technical preparatory organ of the ESA group

responsible for preparing negotiating positions. The negotiating level is made up of two sub-

levels. The first one consists of ambassadors and senior officials from the EC; the second is

made up of ESA Ministers and EC Trade Commissioner. The regional integration

organisations (COMESA, EAC, IOC and IGAD) provide secretariat services to the

negotiating structures above the national level, with COMESA taking the lead. The

negotiating structure is largely participatory and representative, involving various

stakeholders at national and regional level.

5. Formal negotiations between the ESA region and the EU were launched on February 07th,

2004. Since that time, as many as 9 meetings have taken place at RNF level. Detailed work

has been undertaken in areas such as the regional fisheries agreement, development issues,

market access issues, trade-related issues, etc. A draft EPA text was drawn up as a basis for

detailed discussions. The first text-based negotiations were held in September 2006. There

have been concerns in the preparatory process over the effectiveness of the consultations and

preparations in terms of equipping the negotiators to deal effectively with the EC on the

multiplicity of complex issues. As a result, there have been suggestions and conclusions that

the EC side is “calling the tune” and “forcing the pace”, which might lead to an agreement

that is poorly suited to the region’s development needs.

6. In terms of substance, the ESA-EU negotiations have evolved around the six clusters, namely

development, agriculture, fisheries, market access, services, and trade-related issues. In the

development cluster the negotiations cover issues such as policy and regulatory framework;

production, distribution, marketing and transport; financial resources; financial cooperation;

investment; mining and mineral resource management; natural resource management; as well

as technology transfer and knowledge-based systems.

7. In agriculture, ESA is negotiating improved SDT, preservation of the benefits obtained under

EBA; improvement of existing market access, specific safeguards, a programme to build

capacity and commodity agreements. In fisheries, the negotiations cover ensuring improved

market access of fishery products, improving competitiveness to meet EU standards and SPS


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requirements; commitment by EC member states having access to ESA surplus fish resources

to transparency and full disclosure of catches and supply of all data, allocations of financial

resources for the sustainable development of marine and inland fisheries, a programme of

support for national and regional efforts to combat IUU fishing in general. In market access,

the negotiations cover simplified ROO with in-built asymmetries in favour of the private

sector in ESA, capacity building and development of the region in the area of SPS, full

market access to the EU, a transitional period of 25 years, with an initial 10-year moratorium,

and maintenance of a list of sensitive products and a safeguard clause.

8. In the area of services, ESA is negotiating (a) establishment of a special safeguard

mechanism, (b) establishment of a sound regulatory framework, (c) time and support

(financial and technical) to carry out baseline surveys upon which potential initial offers

could be made to the EU, (d) a specific package for the progressive opening of the EU market

for services under mode IV and for the development of a coherent policy regarding mode IV;

(e) support to strengthen ESA countries’ capacity in the supply of services, and (f) measures

that will allow the region’s citizens’ easy access to ICT as outlined in Article 43 of the CPA.

9. Finally, in the area of trade-related issues, ESA negotiators have been mandated to emphasize

the need to build adequate legal and institutional capacities in the ESA region before any

disciplines in these areas can be envisaged for negotiations. In addition, the ESA region is

mandated through its RPTF to study how to build capacities in this area and subsequently

decide on whether or not to incorporate trade-related issues into the ESA EPA negotiations.

With regard to the “Singapore Issues” (competition, procurement, trade facilitation and

investment), the ESA negotiating mandate stresses the need to continue with the educative

process at the all-ACP level.

10. In assessing the subject of negotiations, it would appear that while there may be justification,

some of the demands by ESA may be difficult to defend, because they may be perceived as

unrealistic. The issues of limiting the loss of benefits arising from the erosion of preferences,

preservation of the benefits obtained under EBA, and commodity agreements are cases in

point. There are indications that their maintenance will be difficult on account of the global

trends and some may be subject to legal challenge as the EC has indicated.

11. The ESA-EU negotiations have been conducted in three phases. Phase I (March – August

2004) was for setting of priorities, Phase II (September 2004 – December 2005) was for

substantive negotiations, and Phase III (January 2006 – December 2007) was planned for


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continuation and finalization. In spite of putting in place an elaborate work plan, the

negotiations are generally behind schedule.

12. As negotiations have proceeded, particularly as they entered into the most crucial and last

phase, major challenges have emerged. There have been challenges specific to the clusters as

well as those which have been cross-cutting. The development cluster remains one of the

most controversial because the EC does not accept the ESA position on development and has

refused to negotiate the development cluster. It has argued that (a) EPAs deal with trade and

hence development is already covered under the CPA, (b) it has no mandate to negotiate

development and has therefore proposed limiting the EPA text to two very general

paragraphs, and (c) the development chapter contains EC commitments to the ESA and little

or nothing in form of commitments for ESA, especially on regional integration. The ESA

remains firm on its demand for a development dimension in the EPA and argues that there

will be no EPA without development.

13. In the agriculture cluster, while the ESA group has made its negotiating position clear, the EC

has hitherto not presented a written and coherent response to the ESA position. It has rejected

discussion of the Common Agricultural Policy (CAP) reforms, saying the CAP reforms

constitute a domestic policy and hence are not subject to negotiations under EPAs. This, of

course, is diversionary and is unacceptable to ESA. The EC has also rejected the issue of

commodity protocols arguing that their maintenance is contrary to the spirit of an FTA

14. In the market access cluster the EC has not been quite responsive to ESA demands. In

particular, in the area of ROO, the EC has insisted on the use of the value-addition criterion

instead of ESA’s proposed cumulation-and-wholly-obtaining criteria. In the area of SPS, the

EC has insisted on compliance with the SPS standards. The EC has not committed itself to

providing full market access as demanded by the ESA; it has also rejected the ESA demand

that the LDCs within the group should be exempted from any tariff liberalization under EPA.

15. In the area of services the review notes that there had been a planned assessment to cover

sub-sectors, such as financial services, telecommunications, transport, construction and

related engineering, professional tourism, health, education, business, computer and energy

services. Unfortunately, the assessments were not carried out in all the member countries

and, even in the countries where they were done, there was no clarity about how these will

input into the regional positions on the issue of trade in services. There have also been


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concerns regarding the ad-hoc nature in which the assessments were conducted. In the on-

going negotiations, some countries in the ESA region are already pushing for opening up of

the services sector without due consideration for full assessment at the national and regional

level and the needed capacity building in terms of regulation and provision of services.

16. With regard to trade-related issues, the EU negotiating mandate appears to be more ambitious

in terms of its demands on the ESA region than the Doha negotiations and the provisions of

the CPA. Thus, while it had been agreed to exclude negotiations on such issues as trade and

investment, competition policy and government procurement from the Doha Work

Programme, the EU mandate for the EPA negotiations contains explicit liberalization on

these trade-related issues, along with facilitation.

17. Other challenges include problems with the funding of the EPA negotiations and

implementation (the debate on “additionality” of funding); the stringent EDF procedures, the

limited information flow about the EPA negotiations; limited negotiating capacity; flaws in

the negotiating strategy; problems of the geographical configuration and legal mandate;

problems associated with the overlapping membership to regional integration blocks; WTO

compatibility, etc. All these and the above challenges clearly show that the ESA region is not

prepared for the conclusion of the EPA negotiations as envisaged under the Cotonou

Agreement. Moreover, ESA’s success in the six clusters of interest seems to be firmly pegged

to the EC’s goodwill.

18. An assessment of the coherence between the COMESA integration processes and EPA

commitments shows that the ESA EPA and the COMESA regional integration agenda have

potential to co-exist and support each other consistent with one of the key principles of EPA.

To that extent it is notable that even before EPAs, the regional integration initiatives in

COMESA were pursuing the very objectives being pursued by EPA such integrating the

regional economy into the global economic system. COMESA’s integration agenda therefore

has a direct link to the proposed EPA through its various programmes. However, there are

difficulties being experienced in the COMESA integration agenda. For example, not all the

COMESA members have joined the FTA, the establishment of a COMESA customs union is

expected only in 2008 yet the EPA negotiations are expected to be concluded in 2007; etc.

19. EPA is providing some stimulus for further integration by pushing the ESA region to deal

with the various problems relating to integration within COMESA. However, it is also clear


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that much of the pressure for taking forward the regional integration agenda through EPAs is

being exerted externally by the EC by imposing arbitrary timetables and progress targets.

This is a matter of serious concern given that region-specific internal factors, such as the ones

faced by the ESA region, should be the driving force of this process. There are concerns that

the external pressure being exerted on the regional integration process by the EC through

EPAs is leaving little space to focus on these internal factors and provide time for suitable

solutions to be found.

20. This review concludes, based on the above analysis, that: (a) there has been some limited

progress, which has been characterized by some measure of consensus on a number of issues

as well divergence of opinions in a number of areas. (b) In spite of putting in place an

elaborate work plan, the negotiations are generally behind schedule. (c) The ESA countries

are generally not prepared for the conclusion of the EPA negotiations. (d) One of the key

challenges for the ESA region relates to capacity constraints, which is compounded by the

region’s involvement in various trade negotiations – at regional and multilateral levels. (e)

There are differences in the level of ambition among the ESA members, as a result of which,

there are differences in expectations from the EPA among the various members. (f) In terms

of substance of the negotiations, the key priority for the ESA region is the development

component of an EPA, without which there will be no EPA. (g) The financing of EPAs is one

of the most contentious issue in the negotiations. (h) The EC is keen to promote its own

interests at the cost of the weaker partner - the ESA region.

21. As a way forward, the review recommends the following measures to help in the completion

of the negotiations to ensure the interests of the negotiating parties, particularly the ESA

region are secured. They include: (i) Integration of EPA activities into the national trade

policy; (ii) strengthening the technical capacity of the ESA group, (iii) coordination with

other regions, (iv) improvement of information flow, (v) improvement of the negotiating

strategy, (vi) improvement of the funding of EPA-related activities, (vii) extension of the time

– by three years – for conclusion of the EPA negotiations.

I INTRODUCTION

1.1 THE CONTEXT OF THE EPA NEGOTIATIONS

For the last 25 years, trade between the African, Caribbean and Pacific (ACP) countries and the

European Union (EU) has been based on non-reciprocal preferences (Lomé Conventions I –IV,

1975-2000), which granted nearly all products originating from the ACP countries duty-free

access to the European market. In spite of these preferences the share of the ACP countries in

total EU imports continued to decline, the ACP exports remained largely undiversified, and the

ACP countries have become increasingly marginalized in global trade. In addition, the Lomé

Conventions were not compatible to the WTO principles of Most Favoured Nation (MFN) and

non-discrimination that forbid preferential treatment of selected countries and apply favourable

conditions to all trading partners.

Against this background, the EU and ACP countries and agreed to establish a new trade

arrangement based on reciprocal trading relations in conformity with the WTO rules, starting in

year 2008. The new arrangement is based on the Cotonou Partnership Agreement (CPA), which

was signed on December 31st, 2000. The CPA seeks to achieve sustainable economic

development, smooth and gradual integration of the ACP countries and alleviation of poverty

(Article 1). The main instrument for achieving these objectives is an Economic Partnership

Agreement (EPA) that comprises of a reciprocal, WTO compatible FTA between the EU and the

regional groupings of the ACP countries (Article 36). By definition, an EPA is a free trade

agreement (FTA) based on reciprocal opening of markets by the parties.

Article 37 of the CPA spells out the procedures for such negotiations and states that EPAs shall

be negotiated during the five-year period, starting from September 2002 to be concluded by

December 2007, following which the EPAs are supposed to enter into force effective January

31st, 2008. The negotiations were structured in three main phases. The first (Phase I) was an

overall ACP Group discussion with the EU on general issues of common interest to all ACP

countries as well as the framework of the EPA. This was followed by Phase II on substantive

negotiations at the regional level, and Phase III for finalization of the negotiations.

The EPA negotiations are taking place in six groups (geographical configurations) in the ACP

regions (Annex 2). Although the regions are negotiating independent of each other, they are

following an overall similar framework of negotiating principles and indicative schedules. For

each region, the two parties have agreed on a Joint Road Map for the conduct of the negotiations.

Against this background, the CPA (Article 37.4) mandates the parties to undertake a

comprehensive review of EPA negotiation during 2006. It states that; “…the parties will regularly

review the progress of preparations and negotiations and will in 2006 carry out a formal and

comprehensive review of the arrangements planned for all countries to ensure that no further time

is needed for preparations or negotiations”. Although this mandate sounds controversial, it was

endorsed by the ACP Council of Ministers held in Papua New Guinea in June 2006. The review

will seek to assess the progress made so far, the outstanding issues and challenges encountered

and will make suggestions on the way forward. It is also important to note that even though the

review mandate points to “regular reviews” in addition to the comprehensive reviews, not much

has been done by both parties in this respect.


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Given that the EPA review process is mandated under CPA and that it is contractual, it is useful

to note that ESA and EC have different approaches and expectations regarding this process. From

the onset, the EC seemed unconvinced about the need for an independent and comprehensive

review, expressing an increasing desire to reduce the “comprehensive review” to a bilateral

discussion with ESA. On the other hand, the ESA region has insisted (and rightly so) that the

review process should be independent, consultative and comprehensive.

This report has been prepared taking into account the provision of Article 37 (4) of the CPA and

the decision of the Council of Ministers of June 2006. It also takes the view of the ESA group of

the need for consultation and comprehensiveness.

1.2 THE SIGNIFICANCE AND SCOPE OF THE REVIEW

The Significance of the Review

A lot of time and resources have been invested in the negotiations of the EPA by the two parties.

However, there remains a lot of uncertainty as to whether the parties will manage to resolve the

various issues surrounding the negotiations before the deadline of December 31st, 2007. There is

also concern about what the EPAs will bring in terms of benefits for the ESA countries. Some

countries are concerned whether their interests will be adequately taken into account in the

negotiations. The Review therefore provides an assessment of the progress of the negotiations,

the challenges that have to overcome and how best to move forward to ensure that the interests of

both parties are secured.

The Scope of the Review

The Review covers:

state of play of the negotiations;

the development aspects, including the trade and trade related provisions;

the negotiation work plans/road-maps;

the contribution of Regional Preparatory Task Force and the support from the European

Development Fund, EU Member States or other donors on a national or regional level;

the measures necessary to support the timely completion of the negotiations;

the coherence between COMESA integration processes and EPA commitments.

1.3 THE REPORT STRUCTURE

This report is organized in seven parts. It starts with an acknowledgement and Executive

Summary. The first part gives the background and justification for the review. Part 2 deals with

the state of play of the EPA negotiations. Part 3 examines the challenges and concerns in the

negotiations. Part 4 assesses the development aspects of trade and trade-related provisions. Part

5 assesses the role of ESA regional preparatory task forces and the support given by the donors.

Part 6 assesses the coherence between COMESA integration processes and EPA commitments.

Part 7 makes conclusions and recommendations on the way forward.

II THE STATE OF PLAY IN THE EPA NEGOTIATIONS IN ESA

REGION

2.1 OBJECTIVES AND PRINCIPLES

Based on the CPA and the outcome of the first phase of the negotiations, both parties agreed on

the objectives and principles of the EPA. These objectives and principles are contained in the

ESA-EC Joint Roadmap (January 7th, 2004) and the Negotiating Mandate (February 6th, 2004).

2.1.1 Objectives of the EPA

The overall objectives of the EPAs, as stated in these documents, are to: (i) ensure the sustainable

development of ACP countries (including the ESA countries), (ii) their smooth and gradual

integration into the global economy, and (iii) the eradication of poverty.

The specific objectives of the EPA for ESA countries are:

(a) promotion of sustained growth;

(b) increasing the production and supply capacity of the ESA countries

(c) fostering of the structural transformation and diversification of the ESA economies and

their diversification to allow them to be more competitive globally; and

(d) promotion of regional integration.

2.1.2 The Principles of EPA

The main principles of the EPAs as laid down in the CPA include:

serving as an instrument of sustainable development,

support for regional integration,

preservation of the Lomé acquis

compatibility with the WTO rules, and

special and differential treatment (SDT).

2.2 THE CONFIGURATION OF THE NEGOTIATIONS

The ESA group is composed of 16 countries shown in Box

2.1. All these countries are members of the COMESA.

The Group excludes some members of COMESA, namely

Angola, Egypt, Libya and Swaziland1. The ESA

configuration is a heterogeneous and diverse grouping and

the countries that constitute it are at unequal stages of

development. 12 of the 16 members are classified as

LDCs. The majority consists of highly-indebted poor

1 Angola and Swaziland are negotiating in SADC, while Egypt has already negotiated an Association

Agreement with the EU.

Box 2.1: The ESA Group

Burundi

Comoros

D R Congo

Djibouti

Ethiopia

Eritrea

Kenya

Madagascar

Malawi

Mauritius

Rwanda

Seychelles

Sudan

Uganda

Zambia

Zimbabwe


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countries and 3 of them are small island vulnerable economies. This distinction is important

because, the LDCs do enjoy duty and quota-free access to the EU through the Everything-But-

Arms (EBA) initiative, whereas the dominant economies are non-LDCs (Kenya, Mauritius,

Zimbabwe and Seychelles) and therefore still face significant tariff barriers to the EU in certain

sectors. These two groups of countries therefore have differing concerns when it comes to gaining

access to the EU market, which may not be easy to bridge. Secondly, within the ESA group,

members have more or less similar production structures, which make reduction of intra-regional

tariffs a very sensitive issue, especially for the economically weaker members.

Within the ESA group, there are separate regional groups in operation creating problems of

overlapping membership. There are at least three overlapping economic integration blocks, all of

which have different political and economic priorities. The main regional integration blocks with

a trade policy agenda are: the Common Market for Eastern and Southern Africa (COMESA), the

East African Community (EAC), and the Southern African Development Community (SADC).

COMESA has a Free Trade Area with 13 members and is working towards a customs union in

2008. The EAC launched its customs union in January 2005. SADC plans to have an FTA in

2008 and a customs union in 2010. The Indian Ocean Commission (IOC) and the

Intergovernmental Authority on Development (IGAD) are other, but smaller regional

organizations which are sub-groups of the larger COMESA integration scheme and follow its

overall regional integration agenda.

It is important to note that the EU is ESA’s largest trading partner. Total value of trade flows

between this group and the EU is about 10 billion per year (EC, 2005). Exports to the EC are

dominated by a few products such as fish (both marine and freshwater), textiles, diamonds,

vegetables, sugar, cut-flowers and tobacco. In 2004 ESA exports represented 5.1 billion, while

ESA imports were 4.8 billion (EC, 2005). Agriculture still represents more than half of ESA’s

exports. Overall, ESA exports remain largely confined to agricultural and primary commodities.

2.3 THE STRUCTURE AND PROCESS OF THE NEGOTIATIONS

In December 2003, the ESA ministers established the relevant negotiation structures and

organisations as shown below. The ESA negotiating structure has three main levels, namely (i)

national, (ii) regional, and (iii) the negotiation.

The national level: Each country has a National Development and Trade Policy Forum

(NDTPF), which is multi-sectoral and has representatives of both the public sector and non-

state actors. Chaired by the Permanent Secretary of the Ministry responsible (usually for

trade), the NDTPF is responsible for formulating a national position in each country which is

then presented at the regional level.

The regional level: At the regional level negotiations are held in the Regional Negotiating

Forum (RNF). The RNF is the technical preparatory organ of the ESA group responsible for

preparing negotiating briefs that are used by the region’s negotiators in negotiations with the

EC. The RNF meets four times a year to consolidate and harmonize national views and

interests which seek to advance development and regional integration agenda.

Between the national and regional levels are the dedicated sessions, which are technical in

nature and serve as a useful tool for refining positions on different issues. Several dedicated

sessions have been convened on different clusters – on services, investment, SPS, fisheries etc.


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The negotiating level: The negotiating level is made up of two sub-levels. The first one is

made up of ambassadors (from the ESA region) and senior officials (from the EC).

Negotiations at this sub-level take place in six clusters with one ESA ambassador accredited to

Brussels (supported by two alternates) as lead spokesperson in each cluster. The second sub-

level of negotiations (where first level negotiations will be ratified and first level impasses

resolved, (where possible) is made up of Ministers (from the ESA region) and Trade

Commissioner (from the EC). Negotiations at this sub-level take place in six clusters with one

Minister from the ESA region (supported by two alternates) taking the lead as spokesperson in

each cluster. The Ministers and the EC Trade Commissioner meet twice a year.

The regional integration organisations (COMESA, EAC, IOC and IGAD) provide secretariat

services to the negotiating structures above the national level, with COMESA taking the lead.

However, it is notable that the involvement of the EAC Secretariat in the EPA process has been

conspicuously absent. This Review was informed that this is in part attributed to capacity

problems at the Secretariat as well as other factors. The non-state actors are represented at the

national level through participation in the NDTPF and through one or more organisations of non-

state actors at the regional level. Liaison with other negotiating regions is done both bilaterally

and through the ACP follow-up mechanism.

A Regional Preparatory Task Force (RPTF) was set up to examine the strategic link between EPA

negotiations and development cooperation, with terms of reference being agreed in May 2004.

Formal negotiations between the ESA region and the EU were launched on February 07th, 2004.

Since that time, developments have taken place in three key areas, namely (i) internal ESA

preparations, (ii) EU support for regional preparations for EPA negotiations and wider

preparations for adjustment, and (iii) ESA-EC negotiations. Of these three, the most intensive

have been the ESA preparations for negotiations. As many as 10 meetings have taken place at

RNF level, dealing with: the state of preparations for negotiations at the national level and

support for this process, establishment of the TORs for the RPTF. In addition, detailed work has

been undertaken on the so-called regional fisheries agreement, development issues, market access

issues, trade-related issues, etc.

In order to focus the negotiations, a draft EPA text was drawn up as a basis for detailed

discussions. The draft recognizes the vulnerability of the ESA regional economies in the context

of trade relations and gives priority to building and consolidating the young and fragile regional

markets. In this context, it proposes a radically different level of product coverage and time frame

for implementation of tariff reductions to that currently under consideration by the EC. It suggests

a total of 60% product coverage subject to tariff elimination, implemented after a 10-year

moratorium, designed to allow the consolidation of the regional markets over a 25-year period.

Though not yet complete, the text also will explore the establishment of pre-emptive safeguard

provisions to avert any threat of market disruption during the period of transition as well as the

establishment of distinct financial instruments to address the profound supply-side constraints

faced in the region. The first text-based negotiations were held in September 2006 in Mombasa.

The text has been criticized because (a) some important issues (e.g. concepts, terminologies,

interpretations, etc) were not agreed before the drafting; (b) the drafting itself did not involve

trade lawyers, (c) there are too many repetitions and irrelevancies, (c) its mixing of form with

substance, etc. In our view, while these are legitimate criticisms, this is the first attempt at

producing a working document. It is interesting to note that when Egypt was negotiating its

association agreement with the EU it produced not less than 10 texts (SEATINI, 2004)! Indeed,

for ESA this may not be the only one, but more improved versions will be prepared. It is


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important that the ESA negotiators take note of the comments and criticisms made on the various

versions of the text.

There have been concerns in the preparatory process over the effectiveness of the consultations

and preparations in terms of equipping the negotiators to deal effectively with the EC on the

multiplicity of complex issues that have to be addressed. As a result, there have been suggestions

and conclusions that the EC side is “calling the tune” and “forcing the pace”, which might lead to

an agreement that is poorly suited to the region’s development needs.

2.4 THE SUBSTANCE OF THE NEGOTIATIONS

The substance of negotiation is contained in the ESA negotiating mandate to which the EC

agreed. Accordingly, the negotiations have centred on six main areas also known as clusters.

These are: development cooperation, market access, services, agriculture, fisheries, and trade-

related issues.

2.4.1 Development

The ESA group has strongly argued that development is at the core of the EPA. Cooperation in

this area should aim at structural transformation of the region by establishing a strong,

competitive and diversified economic base in the ESA countries, by promoting production,

distribution, transport, marketing, trade capacity and the region’s investment policies and

regulations. Against this background, ESA has put the following issues for negotiation:

Policy and regulatory framework: This includes (a) development of a comprehensive

programme to address domestic regulatory and administrative factors of the poor competitive

position of the region’s producers; and (b) modernization and decentralization of ESA

countries’ public administrations, including the overall organizational efficiency of the

legislative and institutional framework, revenue collection, customs administration, etc.

Production, distribution, marketing and transport: This includes (a) the establishment of a

special programme to promote the development of activities in production, processing,

marketing, distribution and transportation of commodities, and (b) establishment of a

mechanism to restructure, modernize, upgrade and rehabilitate the region’s main transport and

communication links both internally and with the outside world.

Financial resources: This includes: (a) a more transparent process of approval and

disbursement of EDF financial resources, which takes into account the needs and concerns of

the NAOs and RAOs to facilitate access to the EDF resources, whilst maintaining the principle

of sound management of the same resources, and (b) commitment from the EC to allocate

additional resources to those committed under the EDF 9 to the EPA process to take account

of: (i) the expected loss of revenue as a result of liberalization, (ii) the costs of adjustment and

(iii) the removal of supply constraints.

Financial cooperation: This includes: (a) the development and implementation of an

“Adjustment Facility” to act as a mechanism through which budgetary support is provided to

ESA countries to allow them to continue with the economic liberalisation programme

necessary to the implementation of an EPA; and (b) the cancellation of all debts owed by ESA

states to the EU and its member states.


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7

Investment: This includes (a) provision of sufficient financial resources for the rehabilitation

of existing, and construction of new, infrastructure particularly in the transport and energy

sectors, resulting in the establishment of an Infrastructure Investment Fund in addition to what

is provided for under the EDF, which can finance regional and national infrastructure

programmes; (b) utilization of the EIB Investment Facility to benefit the region, (c) setting up

an appropriate investment instrument which will encourage European investment in the ESA

markets by supporting EU private sector in managing risks (including risk-sharing) associated

with foreign direct investment; (d) setting up financial instruments, which would reduce the

cost of finance for the EU private investors in the ESA markets; (e) development of a

programme to improve the overall financial environment of the ESA countries in terms of (i)

diversification of financial instruments, (ii) strategic alliances between ESA and EU investors.

Technology transfer and knowledge-based systems: This includes a programme of activities

aimed at improving the utilisation of technological information and knowledge required to

enhance the trade and development capacities of ESA countries; and (b) a programme to

support the further development and strengthening of the use of information and

communications technology (ICT) in the ESA region.

Natural resource management: This includes a programme of activities aimed at improving

the utilization of the region’s natural resources, including water harvesting and preservation

methods to meet the development needs of the region.

Mining and mineral resource management: This includes (a) development of a special

programme to support mining and mineral resource development in the ESA region, including

cooperation in research and technology transfer as well as making mineral resources and geo-

science information accessible for exploration and mining investment (b) creating, through

cooperation with EU firms, a mutually beneficial climate for attracting investment in the

sector, including the SME sector; and (c) development and implementation of a mechanism

for addressing vulnerability to mineral export dependency.

2.4.2 Agriculture

Agriculture is very important for the ESA region as the mainstay for the region’s population.

Agriculture contributes significantly to the region’s efforts to reduce poverty and attain the UN’s

Millennium Development Goal (MDG) number 1 (which seeks to reduce hunger and poverty by a

half by 2015). Against that background, ESA has chosen to negotiate:

Improved special and differential treatment (SDT) to ensure increased flexibility for

implementation of an EPA;

Preservation of the benefits obtained under EBA to ESA LDCs;

Preservation and improvement of existing market access for ESA countries, while taking into

account existing commodity arrangements, timeframes, tariff reduction percentages, and the

need to limit loss of benefits arising from the erosion of preferences;

Specific agricultural safeguards, given the sensitivity of agriculture;

A programme to build capacity in the agriculture sector;

Commodity agreements for the importation into the EU of part of the ESA production of

commodities in order to ensure a fair remuneration to ESA producers and a mechanism to

provide insurance to absorb the volatility in prices of commodities.


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8

ESA countries are keen to use the EPA as a source of funds for public investment in key areas

such as agricultural research, extension services, training, infrastructure development, as well as

targeted investment in some key growth sub-sectors of the agricultural sector. In addition, ESA is

interested in ensuring food security and sustainable agricultural development, elimination by the

EU of domestic support for its farmers under the CAP, particularly those subsidies that affect

goods of export interest for the ESA region. ESA is also keen to ensure support and assistance to

net-food import countries the region, reducing commodity risks and vulnerability for ESA

producers and maintenance of commodity protocols of the Cotonou Agreement. ESA has also

proposed preparation and implementation of an ESA regional agricultural policy and regional

market for agricultural products to be underpinned by regional preference. It also wants a

programme to be implemented on PMDT in order to add value to the supply chain, which is

critical for the structural transformation of the economies of the ESA region, thus reducing their

dependence on exports of a limited number of agricultural commodities.

2.4.3 Market Access

ESA contends that market access need not be viewed as an end in itself, but rather, it should be

linked strongly to the development concerns of the region. The ESA countries already enjoy 98%

duty-free and quota-free market access to the EU, while the 12 LDCs within the group has full

access under the Everything-but-Arms (EBA) arrangement. Nonetheless, the ESA region has

interests in a number of areas, particularly in agriculture. One of these relates to the rules of

origin (ROO) where there has been agreement to have an all-ACP approach. The key demand is

to have simplified ROO with in-built asymmetries in favour of the private sector in ESA.

Furthermore, under this cluster, ESA is pushing for capacity building and development of the

region in the area of SPS. The emergence of the EU’s stricter food safety policy since 2000 has

brought about new challenges for the ESA exporters (in ensuring compliance of their production

with EU safety standards) and national authorities (ensuring compliance with EU standards of

local exporters). There are very real financing costs associated with meeting these challenges both

at the level of the private sector and ESA governments. Indeed, the level of the financial burden

should not be underestimated. At the level of the private sector operators alone it has been

estimated that SPS measures can represent between 1% and 10% of company’s export turnover2.

The ESA has also demanded full market access to the EU and has offered in turn to gradually

open its market over a transitional period of 25 years, with an initial 10-year moratorium, while

maintaining a list of sensitive products and a safeguard clause.

2.4.4 Fisheries

In the fisheries cluster, ESA is negotiating inland as well as ocean fisheries. As far as inland

fisheries are concerned, ESA is interested mainly in (a) ensuring improved market access of

fishery products into the EU market; (b) improving competitiveness to meet EU standards and

SPS requirements, while at the same time ensuring that the industry is sustainable. (c) It is also

interested in a programme to encourage development and sustainability of inland fisheries,

including small-scale fish farming to ensure food security. With regard to ocean fisheries, ESA is

keen to enhance what has been agreed in the framework of already existing fisheries agreements

2 It is interesting to note that the issue of financial burden of new food safety standards was a source of

concern to the EU Agricultural Ministers when the new food safety policy was introduced in 2000.


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and establishment of a framework within which future bilateral agreements between the EU and

ESA will be negotiated. ESA is also mandated to negotiate, among others:

Commitment by EC member states having access to ESA surplus fish resources to

transparency and full disclosure of catches and supply of all data to enable ESA coastal states

to effectively manage their resources, as well as financial and technical support from the EC to

ensure sustainable and responsible management of EEZ as per the FAO Code of Conduct;

Allocations of financial resources for the sustainable development of marine and inland

fisheries, particularly for research, infrastructural development, processing and marketing;

A programme of support for national and regional efforts to combat IUU fishing in general;

A programme for promotion and strengthening of regional partnerships, strengthening of

systems and capacities for collecting, processing and sharing of data on fish stocks,

ecosystems and the economic and social contribution of the fishery sector;

Obligatory measures for surveillance and control in all agreements.

2.4.5 Services

The CPA (Article 41.5) recognizes the need for ACP countries to first build their capacity in the

area of trade in services while Article XIX of the GATS agreement provides for the progressive

liberalization in services. The ESA negotiating mandate recognizes that there is no firm

obligation under the CPA to liberalize trade in services in the context of EPAs, but is cognizant of

the existence of agreement on the objective of extending the partnership to encompass

liberalization as provided for in Article 41.4. In this regard, liberalization of trade in services

within the ESA EPA should be progressive, in principle based on the positive list approach and

adapted to the level of development of the ESA countries concerned, both in overall terms of their

services and sub-sectors and to their specific constraints, and should be underpinned by the

principles of SDT, asymmetry and positive regional discrimination.

Against this background, ESA negotiators were mandated to negotiate: (a) establishment of a

special safeguard mechanism, (b) establishment of a sound regulatory framework, (c) time and

support (financial and technical) to carry out baseline surveys upon which potential initial offers

could be made to the EU, (d) a specific package for the progressive opening of the EU market for

services under mode IV and for the development of a coherent policy regarding mode IV; (e)

support to strengthen ESA countries’ capacity in the supply of services, with special reference to

labour, business, distribution, finance, tourism, culture, health and construction and related

engineering service with a view to enhancing competitiveness; and (f) measures that will allow

the region’s citizens’ easy access to ICT as outlined in Article 43 of the CPA.

2.4.6 Trade-related issues

Negotiations in this area are based on the provisions of the CPA, particularly Articles 44 to 52

and on the need to ensure increased cooperation in this area, enhanced capacity building and

technical assistance. ESA negotiators have been mandated to emphasize the fact that there is need

to build adequate legal and institutional capacities in the ESA region before any disciplines in

these areas can be envisaged for negotiations.

With regard to the “Singapore Issues” (competition, procurement, trade facilitation and

investment), the ESA negotiating mandate stresses the need to continue with the educative

process at the all-ACP level. Given the importance of trade-related issues, as reflected in the


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CPA and the progress made in their development at the regional level as part of the integration

process, the ESA region is mandated through its RPTF to study how to build capacities in this

area and subsequently decide on whether or not to incorporate trade-related issues into the ESA

EPA negotiations. The ESA Group mandates the COMESA Secretariat to identify those areas,

which require further studies to submit appropriate proposals to the RNF.

In assessing the subject of negotiations, it would appear that while there may be justification,

some of the demands by ESA may be difficult to defend, because they may be perceived as

unrealistic. Limiting the loss of benefits arising from the erosion of preferences, preservation of

the benefits obtained under EBA, and commodity agreements are cases in point. As some studies

have indicated, the erosion of preferences is irreversible. The value of preferences is eroded under

the impact of two phenomena. Firstly, the EU has been progressively lowering its trade barriers

consistent with the GATT framework in favour of all the WTO members or a specific group of

countries (e.g. EBA). At the same time, it is also increasingly concluding preferential agreements

with a number of third countries (e.g. Eastern Europe, Turkey, Morocco, Tunisia, Egypt, South

Africa, etc). The protocols themselves are being affected by factors over which the ACP countries

have no control. Secondly, there are arguments that the types of preferences granted are becoming

“outdated”: tariff and quantitative restrictions are no longer the only instruments of protection by

the EU. Other obstacles, such as veterinary and quality standards, anti-dumping measures or the

distortions caused by national legislation, play an increasing role against which preferences

inherited from previous arrangements with the EU may be difficult to sustain.

It is also important for ESA to remember that the preferences are not compatible with WTO rules

and their legitimacy is therefore subject to challenge. This has been the key argument put forward

by the EU to justify the ending of the non-reciprocal preferences. Preferences violate the principle

of non-discrimination established by Article I of GATT, where all preferences granted to one

member must automatically be extended to all others.

2.5 NEGOTIATION WORK PLANS / ROADMAPS

The ESA-EU Ministerial Meeting held in February 2004 in Mauritius adopted a Joint Roadmap

for the EPA negotiations with three distinct phases indicated below:

(a) Phase I: Setting of priorities (March – August 2004);

(b) Phase II: Substantive negotiations (September 2004 – December 2005); and

(c) Phase III: Continuation and finalization (January 2006 – December 2007).

2.5.1 Phase I: Setting of priorities

During Phase I, the ESA group organized itself according to the structure described in section 2.3.

It was agreed that during this phase, the NDTPFs would hold their first meetings to agree on the

composition, rules of procedure, the terms of reference, work programmes, and funding

mechanisms. The RNF, on its part, would meet to agree on the rules of procedure, finalize its

work programme (issues and phasing of the next Phase) and agree on the composition of the

technical teams to support the Lead Ambassadorial Spokespersons. During this phase, too, studies

on issues of relevance to the EPAs would be conducted.

It was also agreed, as part of the preparations for the negotiations with the EC that three

representatives from each NDTPF and representatives from the participating regional

organizations would go through an orientation session of one week, beginning in March in


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Brussels, to outline the operations and functions of the EC, (the Commission, Council, European

Parliament, etc). Furthermore, for purposes of coordination, the ESA and EC would establish a

Regional Preparatory Task Force (RPTF). The RNF was mandated to prepare the terms of

reference for the RPTF and determine its composition and functions. This phase also agreed that

the first meeting of the at the ambassadorial/senior officials level in July 2004.

2.5.2 Phase II: The Substantive negotiations

According to the Joint Programme, during this phase, it was intended that negotiations would

cover all issues of relevance to the EPA. It was expected that by end of this Phase, an outline

EPA would be agreed on.

2.5.3 Phase II: Continuation and Finalization

It was agreed that at during this phase, substantive negotiations would continue, if necessary, and

areas of disagreement to be revisited, compromises reached and the EPA agreement finalized and

ratified by all parties. ESA countries and the EC would use this Phase to enact any necessary

legislation to allow the EPA to come into force in January 2008.

2.6 CONCLUSIONS

From the foregoing analysis of the state of play the following conclusions can be made:

1. The objectives and principles adopted by the ESA group in its negotiation with the EC

logically derive from the CPA, the negotiating mandate and the regional integration agenda.

The objectives and principles are the cornerstones on which the ESA EPA will be built. They

are largely generic and to that extent the challenge for the negotiating parties will be how to

correctly and appropriately interpret them in the process of negotiation and uphold them in

the course of implementation of the EPA.

2. EPA represents a radical shift in the relationship between the EU and the ESA countries (and

indeed all the ACP countries). This shift is reflected in the movement from non-reciprocity

under the Lomé Convention, to reciprocity in the CPA and the EPA. This new dimension is

the one which is compelling, for the first time, the ESA and all the ACP countries to negotiate

a trade agreement with the EU, which contains binding commitments on both sides.

However, reciprocity is also the most controversial and difficult requirement in terms of

development for the ESA countries. It is clear that implementing a reciprocal free trade

agreement will be extremely difficult for the ESA countries whose level of development

firstly lags far behind that of the EU and, secondly, varies within the ESA region. Reciprocity

could have unforeseen effects on the ESA region particularly in terms of premature

liberalization by these countries.

3. The substance of negotiation is also guided by the CPA and the negotiating mandate. ESAs

offensive interest is primarily in development cooperation and to that extent development is

at the core of the ESA EPA negotiation. In our opinion, this is logical because there can be no

market access or trade in services without development. The challenge, however, is how to

finance this development, given the inadequacy of the current funding arrangements under

the EDF. There is general consensus in the international community today that trade

liberalization alone cannot result in development. There must be adequate finance to address

supply-side constraints, (including transport infrastructure, utilities, marketing, etc). Such


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financing ideally must be provided on a long-term basis in a predictable manner and in

amounts that are critical to break the various vicious cycles.

4. The negotiating structure is largely participatory and representative, involving various

stakeholders at national and regional level. While the structure has made some progress in

keeping the negotiations on track, there is less clarity as to who shoulders the overall

responsibility for the negotiations. Moreover, at the national level, the capacities of most

NDTPFs of most ESA members to effectively feed into the RNF remain extremely weak, due

in part to lack of guidance as well as human and financial resources.

5. In spite of putting in place an elaborate work plan, the negotiations are generally behind

schedule. The reasons for this are discussed in Part 3 but have included (a) the EU’s

prevarication (going back and forth) on crucial issues (such as development, fisheries), (b) its

untimely and selective responses to key issues raised by ESA group (especially through the

draft EPA text), (c) the late commencement by the ESA region on Phase II, mainly due to the

challenge of putting in place negotiating structures and building of regional harmony and

positions, and not least is (d) the slow disbursement of EDF funds to expedite negotiations.

All these delays have filtered through the negotiation phases and have resulted in the fact that

to date, ESA is way behind schedule as per its mandate. According to the schedule, ESA was

supposed to have five years of negotiations. However, negotiations were only launched in

February 2004, which in effect means the region has had just three years of actual

negotiations.

III THE MAIN CHALLENGES AND CONCERNS IN THE

NEGOTIATIONS

As the EPA negotiations enter into the most crucial and last phase, challenges are continuously

emerging. Indeed, as many observers have noted, the negotiations are plagued with problems of

both content and process, and in their current form, the proposed EPAs may not deliver the

development promises to the ESA region. This Part attempts to articulate the challenges faced by

the ESA in terms of both the content and process.

3.1 FUNDING

The main challenge facing the ESA region is that of funding of the preparations for EPA

negotiations, particularly the inadequate and untimely availability of funds to expedite the

negotiation process. Currently, the funding for the negotiations comes from various sources,

including the EU-funded Regional Integration Support Programme (RISP), the Hubs and Spokes

Project, the Project Management Unit (PMU), etc. Member countries only contribute to the

remuneration of Chief Technical Advisor (CTA). However, all in all, the funding for preparation

of the EPA is inadequate. Information obtained by this Review shows that at national level, most

NDTPF are not well funded and hence cannot carry out all the activities for effective preparation

of EPA negotiations. A few of these (such as Kenya’s KEPLOTRADE and, to some extent,

Uganda’s UPTOP) have been able to benefit from specific project funding aimed at trade policy

development, but the majority are handicapped by lack of adequate funding. The situation has not

been any better at regional level. Lack of adequate resources and the over-reliance on the EC has

resulted in the suspension of five ESA meetings.

3.2 THE NEGOTIATION STRUCTURES

The negotiation structure described in section 2.3 above has been instrumental in moving the

ESA EPA agenda forward and generally highly participatory and representative. In spite of this,

however, there is a concern that the ESA negotiation structure is rather distorted. Many

stakeholders believe that the ambassadors, some of whom have conceded to the Review, are not

technical enough and have no skills to match those of their counterparts from the EC side. The

Director General DG Trade of the EC, for example, is a technical official at the level of a

Permanent Secretary. So, there is a disparity in terms of technical familiarity with issues between

the two sides that does not favour the ESA3.

Furthermore, there is a problem of getting the Permanent Secretaries involved in the negotiations.

Permanent Secretaries used to be very instrumental in the RNF meetings, but they have become

less and less involved in these deliberations. This has further reduced the effectiveness of the

3 In fact, it has become clear that it is only the ESA region that has handed these negotiations to

Ambassadors. The Lead Negotiators in other regions are technical officers. There have been views

suggesting that the use of Ambassadors is alright with some arguing that some of these did participate in

the negotiation the CPA. In fact, they argue, that negotiations do not occur at a technical level. In our

opinion, this notion is a fallacy at best and cannot withstand any serious criticism. The fact of the matter is

that if the technical groups on both sides of the negotiation table came to some agreement on a point, it

would be very unlikely that the Ambassadors would re-open the debate.


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RNF and has slowed down its decision making process (since absence of Permanent Secretaries

means that the available junior members heading country delegations cannot take major decisions

on issues). In addition, there has been a communication gap among the structural pillars, notably

between the Lead Ambassadorial Spokespersons and the Lead Ministerial Spokespersons. At the

same time, there has been little or no feedback by the RNF delegates to their NDTPFs.

Finally, the structure has been criticized on account of the poor overall responsibility for the

negotiations. In other words, within the structure, no one seems to take responsibility for the

success or failure of negotiations. This has largely been viewed as a double-edged sword.

3.3 THE NEGOTIATING STRATEGY AND CAPACITY

The ESA strategy has generally sought to build consensus among the ESA countries as well as

the negotiating partner. It has also been consistent with the negotiating mandate and it has

emphasized development. Finally, the strategy has tended to adopt the “first-mover advantage”.

This has been reflected by the fact that ESA prepared the EPA negotiation text and sent it to the

EC for comments. The idea was to compel the EC to react to ESA positions and to direct the

course of the negotiations.

In spite of this, however, there is a concern that the ESA does not have a clear method of work for

identifying its concessions or its fallback positions. Not much time has been spent on developing

the ESA negotiating strategy, which, next to the lack of legal input in the negotiation text, is a

major flaw. One cannot help feeling that the “the cart was put before the horse”, given that ESA

first developed a text and now needs to go ahead to articulate what can be traded away and under

what conditions. Regarding the sequencing of issues for negotiation, ESA (through various

RNFs) stated that while it had offensive interests in market access, trade-related area, and

services, and it would (as a matter of strategy) ensure that these issues are negotiated after a clear

position on development had been found. Nonetheless, this strategy has been not been followed

consistently throughout the negotiations. In most cases market access negotiations have tended to

precede or even run concurrently to negotiations on development as was evident in Mombasa.

Finally, the ESA group does not seem to be firm in asserting its negotiating positions and is very

prone to abandoning them at the slightest hint of “a pie in the air” or opposition from the

negotiating partner. The Mombasa 1st text-based negotiation meeting was a case in point. The EC

was clearly opposed to discussion of the development dimension as reflected in their comments

on the ESA EPA text. On learning of the threat by ESA to abandon the negotiations, the EC

delegation had informal meetings with the Lead Ambassadors, after which they informed the

meeting that the EC was committed to development. This was met by celebration by ESA

negotiators claiming that “EC are now walking the walk and talking the talk”. This celebration

was premature as the technical discussions clearly showed that key issues such as development

and funding were still heavily bracketed in spite of the ECs “commitment”. Clearly, the ESA

negotiators had not internalized the carefully worded statement of the EC DG Development.

Analysis of the meeting shows further that apart from nothing on development, ESA region

unknowingly conceded some positions in other clusters such the fisheries and market access.

3.4 STAKEHOLDER BUY-IN

The key stakeholders to the ESA EPA are member states, private sector, civil society and all other

relevant national players. An analysis of their involvement throughout the EPA negotiation

process shows that they have been considerably represented (as per the ESA negotiation mandate


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22

as well as the CPA Article 2). The NDTPFs and RNFs are therefore by nature participatory. The

involvement of civil society in the negotiations has also been considerably structured (through

NDTPFs). Indeed, in some instances, the ESA Secretariat has even funded at least two members

of non-state actors (one from private sector, one from civil society).

In terms of countries’ participation in EPA negotiations, some have been more active than others

in preparing their country negotiating positions by reaching out to and involving the various

stakeholders, while others have been less successful in this regard, in part, due to resource

constraints, but also on account of limited involvement of the key stakeholders, their commitment

to the EPA notwithstanding. This has inadvertently given the impression that negotiations in the

ESA are being driven primarily by a handful of countries. A frank assessment by some observers

of the Dedicated Sessions and the RNF process, suggests that debate is actually often between the

same set of countries – primarily the non-LDCs in the ESA Group - with a handful of LDCs

occasionally intervening. The result is that the needs of the LDCs are lost in the internal

negotiation process. This creates a legitimacy problem with the text and output, if the non-LDCs

in the region are able to impose their interests over those of the LDCs. This is an issue that was

raised by domestic stakeholders and in our view requires urgent attention if there is to be true

ownership of the final text.

A related problem is the domineering effect of the Lead Ambassadors, which tends to

overshadow the participation of other participants, at the RNF meetings. While they are “Lead

Spokespersons” by definition, they speak on behalf of the RNF which is a technical forum.

Therefore they need to do more listening at the RNF deliberations instead of dominating the

meetings. While it is true the Lead Ambassadors are informed, knowledgeable and experienced, it

is important that they leave space for the flow of ideas from other members in the deliberations.

Another issue is the lack of effective participation by most Francophone ESA member states in

negotiations. The main problem has been the language barrier. Many of them cannot speak

English and have complained about the often poor translation and interpretation services at most

EPA negotiating fora. Almost always the French versions of official documents, including the

final reports of key meetings, come late and when they do they are not devoid of grammatical

and/or contextual errors. This language barrier often excludes them from effective participation in

crucial discussions.

Other key stakeholders such as parliamentarians have not been effectively integrated in the EPA

process both at national and regional level. This is a major flow, given that in almost all countries

these are the key decision makers and are the ones to oversee the ratification process of trade and

other agreements of national importance. Encouraging and soliciting their structured and

sustained participation can be done through trade committees (at national level) and the ACP

Joint Parliamentary Assembly (at regional level). Cabinet too has not been fully involved at least

by way of regular information and briefing, yet as the executive arm of government they have to

take major decisions regarding any agreement, including EPA.

3.5 COHERENCE, CONTINUITY AND CONSISTENCY

The ESA group has been commendably coherent and consistent in their negotiation with the EC.

There has neither been a significant deviation from the ESA mandate, nor major inconsistencies

and incoherence in positions over the period of negotiations to date. In similar manner, the region

has also been consistent in demanding an EPA with a development component. They have

maintained that an EPA without development, devoid of ability to equip member states with


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23

capacity to compete and devoid of development finance, will not be viable, sellable and hence

will not be signed by ESA member states.

The above notwithstanding, the negotiating position of ESA as a group, is sometimes

compromised by lack of consistency in the delegations. At RNF level, delegates are always

changing, with many attending for the first time. Some have admitted not following in the

deliberations for lack of understanding of issues. Many are not even well prepared for these

meetings. This tends to disrupt the smooth engagement and continuity in rapport and

understanding around the EPA issues.4 This is the more serious issue considering the fact that

capacity building and understanding on EPAs is very much of a challenge. Negotiators such as

ambassadors have also been replaced5. By the end of the year two ESA ambassadors will be

leaving Brussels. This tends to disrupt the negotiations and capacity building process6. While,

change is inevitable and often desirable, it is this Review’s contention that this is one issue that

needs to be addressed at national level.

3.6 THE ESA CONFIGURATION AND LEGAL MANDATE

Section 2.2 highlights the configuration of the negotiations. As can be seen from Box 2.1, while

all the ESA countries are largely members of COMESA, the group does not negotiate on behalf

of COMESA per se. Excluded from this group are three COMESA members, namely Egypt,

Libya and Swaziland. This means when COMESA meets, the delegates from the three countries

are present, but they do not participate when a matter of ESA-EU EPA negotiations comes on the

agenda. The EC has raised concerns that they need to be clear and sure who they are negotiating

with, as this has important legal implications. This Review was informed that the ESA

configuration was created by a directive of the COMESA Heads of State. This notwithstanding, it

is also clear that ESA does not have a legal mandate, no binding commitments and is, in fact, a

“marriage of convenience” with no historic or economic logic. This view seems to be vindicated

by the position of the DRC, which does not seem to be clear where it belongs as it is negotiating

in both ESA and CEMAC. Besides, ESA as group does not have a common external tariff, which

is a key requirement for the EPA negotiations.

It must be noted that the ESA countries recognize this dilemma and have made efforts to find a

solution to it. One suggestion has been to rename the configuration from ESA to COMESA EPA.

However, there seems to be no consensus on this too. Renaming it to COMESA-EPA has even

worse complications. For a start, it commits all COMESA countries including those that are not

negotiating an EPA. Secondly, the COMESA-EPA would be complicated by the Egypt-EC

agreement given that the latter cannot belong to two FTAs. Thirdly, a COMESA-EPA would

complicate access to Aid-for-Trade funds announced recently by the EU for countries

implementing the EPA given that some COMESA countries are not negotiating and EPA.

This Review is of the opinion that this issue must be tackled in a highly consultative manner, first

among COMESA-ESA member states then among the non-ESA COMESA member states to find

a viable solution. More importantly, due care should be taken to ensure that this process does not

4 One delegate from ESA member states noted that “…at time Ministers don’t seem to appreciate the need

for continuity in these negotiations. If you keep on attending RNF meetings they tend to think that you

are travelling too much and hence the need to give others chance to travel also”. 5 These are often recalled by their countries at the expiry of their tour of duty. 6 A possible solution to this is to have regional ambassadors solely in charge of EPA negotiations, from the

various countries. They may rotate, but will still remain influential in EPA negotiations.


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24

disrupt the COMESA regional integration programmes. In addition, adopting the name COMESA

for the EPA negotiating group should also be synchronized with the overall RECs rationalization

process at the continental level. One of the biggest challenges in renaming ESA group to

COMESA-EPA group is that of ensuring that the institutional set-up at the Secretariat subject

EPA programs to regional integration programs. In other words, the institutional set-up still

remains relevant to non-EPA negotiating members of COMESA, such as Egypt and Libya.

3.7 OVERLAPPING MEMBERSHIP OF REGIONAL INTEGRATION SCHEMES

One of the challenges for the ESA EPA is the overlapping membership of the countries in the

region to various regional integration organizations. As noted earlier, the core group of the ESA

configuration is made up of COMESA members. However, not all COMESA members are in the

ESA group, while several of those in the group also belong to other regional integration

organizations such as the EAC (Kenya and Uganda), ECCAS (Burundi, DRC, and Rwanda),

IGAD (Djibouti, Eritrea, Ethiopia and Kenya), IOC (Comoros, Madagascar, Mauritius,

Seychelles) and SADC (Mauritius, Seychelles, Zambia and Zimbabwe). The inclusion of IGAD

and IOC member countries in the ESA group built around COMESA should not create major

technical problems since these organizations have broadly adopted COMESA’s trade

liberalization programme. However, the same cannot be said of the EAC and SADC, each of

which has a trade liberalization agenda that is different from that of COMESA. At the same time,

for the main regional blocks there are some differences in policies, leading to divergences in tariff

reduction schedules, rules of origin, etc, and potentially creating a complex set of incentives for

the private sector and investors.

The multiplicity of regional memberships creates difficulties for the ESA countries, since it

means they must comply with various tariff reduction schedules, rules of origin and other

liberalization requirements. For instance, countries that are members of both SADC and

COMESA must implement both the SADC Trade Protocol and the COMESA FTA, though the

two regional trade agreements offer different trade preferences. Similarly, the EAC has already

established its customs union. COMESA plan to establish one in 2008. However, we know that

no country may belong to two different customs unions, unless the two unions have equivalent

trade policies, including the same common external tariff, in which case the two could be merged.

This means, for example, that Uganda and Kenya would have to decide whether they want to be a

member of the COMESA or the EAC. The same is true for Tanzania with respect to its dual

membership of SADC and EAC.

In addition, Libya and Egypt are now full members COMESA. In joining COMESA, the two

countries wished to intensify political and trade relationships with Eastern and Southern African

countries. However, as the two countries are not ACP members, they cannot not participate in

EPA negotiations with the EU within the ESA configuration. The scheduling of the creation of a

FTA as part of the Euro-Med trade cooperation with the EU by 2010 complicates relationships

with the COMESA group further as Libya and Egypt would also belong to two different customs

unions with, in all likelihood, diverging common external tariffs.

The ESA configuration therefore has not solved the problem of overlapping membership and, as a

result, the requirement that the EPA process should be built on existing integration initiatives has

been difficult to satisfy. The so-called “variable geometry” of regional organisations complicates

the issue. EPA negotiations with the EU add another layer to these overlapping intra-regional

processes, since the new partnership agreement and related tariff reductions are to be negotiated

and implemented by ACP sub-regions and not individual states. This notwithstanding, it is clear


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25

that to discuss and EPA as a regional group would involve an agreement – and thus a prior

negotiation – between member countries on a common negotiating mandate and the delegation to

a supranational entity of powers to negotiate with the EC.

3.8 RELATING EPA TO WTO NEGOTIATIONS

The ACP guidelines for the negotiations of the EPAs note that, “EPAs are expected to be notified

to the WTO. It will therefore be necessary for the ACP to participate actively in the current

negotiations in the WTO so as not only to inject flexibility into the WTO rules, especially those

relating to regional trading arrangements, and to have the development dimension better taken

into account, but also to make the future EPA compatible with the WTO”. This is consistent with

one of the principles of the EPA. However, the suspension of the WTO negotiations makes it

difficult to craft an appropriate EPA. It is not clear when the talks will resume.

Assuming the EPA negotiations are completed in time, but the WTO negotiations resume after

December 2007, it will be too late to bring into the WTO rules the said flexibility, or to revisit the

EPAs to the make them compatible with whatever the WTO rules will come up with. This is

notwithstanding Article 37.7 of the CPA in its reference to “conformity with the rules then

prevailing”. Moreover, what is even more serious is the fact that the suspension of the WTO

negotiations has made the EPA negotiations complex, since without understanding what

commitments will be required of the EU multilaterally, it is hard to know the bargain that the

ESA or other regions are really negotiating.

The EC has committed itself to respecting “…their obligations assumed within the framework of

the WTO and to further the objectives of the WTO”. In spite of this commitment, the EC is intent

on continuing the EPA negotiations, although the WTO trade talks have been suspended.

Similarly, the issue of compatibility is contestable. The general understanding is that WTO

compatibility implies compatibility with Article XXIV of GATT. However, this article has been

challenged by the ACP countries seeking to have it amended to make it development friendly.

Hence emphasis on compatibility to this article in its current form will not be helpful for ESA and

other developing countries7.

As noted earlier on, the EC’s position on a range of issues has also been marred by

inconsistencies and contradictions. It has largely argued that commitments under EPAs should

not commit the EC beyond the requirements in international agreements on those issues, yet in

some areas they require ESA countries to do exactly the opposite. For example, on fisheries, EC’s

stated position is that the FFA with ESA should not commit EC beyond what is contained in the

OTC and other related agreements, yet when they talk about EPA and WTO compatibility, their

focus is more on ensuring WTO-plus compatibility.

7 The ACP group presented a proposal to the WTO regarding its concerns as they pertain to Article XXIV.

However, to date ESA positions on trade-related issues are proceeding without taking this into account.

However, they need to be clear on the issue of synchronizing their position within the WTO with the

EPA negotiations. This is because most of the issues to be addressed in the ESA-EU trade relations are

still work in progress at the WTO, yet the ESA region has already developed positions on these issues.

Hence it may be prudent and less far-fetched for ESA countries to take the collapse of this round of

negotiations as an opportunity to make serious assessments of the EPA process as well as the draft text. If

the same ESA member states (in a bigger ACP grouping) rejected new issues under the WTO, what

makes them convinced that now is the time and EPAs (the fora) for negotiating these issues.


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26

3.9 CONCLUSION

The foregoing analysis shows that there are serious challenges to be overcome during the

negotiations. As we have pointed out earlier, the negotiations are plagued with problems of both

content and process, and in their current form, the proposed EPAs may not deliver the

development promises to the ESA region. This Review is an ideal time to turn the tide on the

proposed EPA. It will be recalled that in preparing for the Review, the EU pressed for a process

that would essentially avoid questions of content and would merely assess whether the

negotiations were on track for “timely completion” in December 2007. The ACP countries, on the

other hand, insisted that the Review must be “inclusive and consultative”, “conducted at national

and regional levels” and must include “the structure, process, substance of the negotiations, the

trade and development dimensions, as well as the capacity and the preparedness to conclude the

EPAs”. The ACP countries won the day. The challenge now is for the EU and ACP to make sure

the review recommendations are implemented to reflect the wording of this mandate.

It is clear from the foregoing analysis that the ESA countries are generally unprepared for the

conclusion of the negotiations. This is reflected in the reports of the NDTPFs to the various RNF

meetings. Some have not carried out impact assessment studies or those that have been carried

out have been substandard and cannot help in guiding the country positions. Many NDTPF have

reported challenges including institutional, financial and capacity problems. They have not been

able to sensitize the public about EPAs, as a result of which there remains limited understanding

about EPA and general hostility towards EPAs among many sections of the public. Key

stakeholders such as parliamentarians have not been involved. At the regional level, the

integration agenda which started well before the EPAs is yet to be finalized. The COMESA

customs union, which is a crucial ingredient of an EPA, is a case in point. In the circumstances,

the EPA will be seen to be rushing the regional integration agenda, although in principle EPAs

are supposed to support and not to disrupt regional integration agendas.

IV AN ASSESSMENT OF THE DEVELOPMENT ASPECTS OF

TRADE AND TRADE-RELATED PROVISIONS

4.1 THE DEVELOPMENT DIMENSION OF THE ESA EPA

Article 37.3 of the Cotonou Agreement gives some guidance on the issues that fall under the

development dimension of the EPA. It provides for support in “… capacity-building … of the

ACP countries … for assistance budgetary adjustment and fiscal reform, as well as infrastructure

upgrading and development for investment promotion”.

The development cluster is by far the most critical and controversial cluster and one that will

determine the success or failure of the EPA negotiations. The EC does not accept the ESA

position on development and has refused to negotiate the development cluster. The EC has

advanced three main arguments to back its position. First, that EPAs deal with trade and hence

development is already covered under the CPA. This argument is not accepted by ESA which

feels that there is no guarantee that the CPA, which expires in 2020, will be renewed, while EPAs

are a permanent feature (for an indefinite period) and as such must cover both trade and

development issues. For trade to be an engine of growth and development there has to be policy

coherence as well as resources to finance trade-related development aspects – such as

infrastructure, capacity building, etc.

Secondly, the EC argues that it has no mandate to negotiate development and has therefore

proposed limiting the EPA text to two very general paragraphs arguing that the rest of the text

under development constitutes programming and can be covered under 10th EDF programming.

This view is not consistent with logic. By restricting development to the CPA provisions, the EC

is not being realistic and honest, especially in light of the fact that EPAs will last longer than the

financing provision under the CPA. So there is need for a financing mechanism for EPAs which

is pro-development as entrusting development to the CPA will not yield the desired results. The

stated objective of economic and trade cooperation (under CPA) is to enhance production, supply

and trade capacities. ESA is echoing that objective in the EPA text. ESA position on development

(as contained in the draft ESA EPA text) very much reflects the spirit of CPA provisions on the

same issue only that in the ESA EPA text development is unpackaged.

Thirdly, the EC suggests that the development chapter contains EC commitments to the ESA and

little or nothing for ESA, especially on regional integration. This too is not correct because the

integration agenda by the regional integration blocks within the ESA region is clear and on

course. There are already clear commitments to the EPA by the region in the context of their

regional integration agenda.

4.1.1 Supply Constraints

Most ESA countries face formidable challenges as economic entities due to a combination of

factors, such as the size of their economies, the small size of their populations, low GNPs, etc. In

nearly all of these countries, enterprises face constraints in producing goods competitively. Their

main supply-side constraints include unreliable public utilities (electricity and water supply), poor

infrastructure (poor road networks and railways, poor telecommunications), weak institutional

capacity (e.g. customs and policy-making bodies), low labour productivity (on account of poor

education and health systems) a shortage of human resources, etc. These factors do not allow


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28

these countries to expand their exports to external markets including the EU. Their participation

in the multilateral trading system is generally conditional on their ability to address these supply

constraints. While it may not be possible to draw a clear distinction among the ESA countries,

overall, however, the LDCs are affected more than the non-LDCs by these constraints.

How to address these problems and the sequencing of actions to address them has so far been a

matter of serious contention. The ESA region, and other ACP regions, has argued so far that the

supply-side constraints should be addressed first before introduction of free trade with the EU in

the EPA. The EC, on the other hand, has been reluctant to discuss development and maintains

that EPAs will promote more effective action in addressing the supply-side constraints by

opening up the ESA economies to competition. This, EC contends, will lead to more competitive

forms of production in the region, capable of promoting sustainable development.

In the opinion of this review, the ESA position is logical, since it is highly unlikely that a policy

shift in one area – external trade – will have such a profound effect on underlying causes of the

supply side constraints faced by the ESA countries. Indeed, trade policy reform will address some

policy-driven constraints, but will leave largely intact those constraints arising from low labour

productivity, remoteness from major markets, unreliable public utilities and poor public

infrastructure. As Heidemarie Wieczorek-Zeul, Federal Minister for Economic Cooperation and

Development, argues “… trade liberalization does not lead to increased export and reduced

poverty. Trade should constitute a coherent part of the overall development strategy of

developing countries. … In this regard, it is important to strengthen the economic environment

and institutions before liberalization is fully implemented, and the donor community should

contribute to this”8.

As we know, however, to-date the EU aid programmes have been heavily focused on addressing

some public infrastructure constraints (particularly in the transport sector) and more recently on

promoting policy reform. The problems of low labour productivity and public utility provision

have received relatively minor attention. Yet these issues are central to the ability of ESA

producers to take advantage of the trade preferences provided by the EU. This can be seen from

the current debates over the EBA initiative. Studies have shown that most of these beneficiary

countries have not had the capacities to exploit the improved market access provided under EBA

due to limited supply side capacities.

One of the key challenges, therefore, for the ESA region is addressing these constraints in a

systematic and comprehensive manner. The ESA region has put in place programmes intended to

address these problems. They include (i) the adjustment facility, (ii) the infrastructure fund, (iii)

studies on mineral export dependency, external debt, inland fisheries, (iv) use of intellectual

property as a development tool, etc. In spite of these efforts, the ESA countries were still far from

realizing their objectives. To that extent, the EU had been requested to support the Priority

Investment Programme (PIP) and the COMESA Fund, which would address the issues of

infrastructure and the costs of adjustment.

4.1.2 Adjustment Costs

The introduction of free trade with the EU under EPA comes with adjustment costs for the ESA

region. The first set of costs relates to the restructuring of the human resource base. This has to do

with incorporating the human resource development aspects into all sector-based restructuring

8 http://www.inwent.org/ef/events/epa/07467/index.en.shtml

http://www.inwent.org/ef/events/epa/07467/index.en.shtml


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29

programmes – be it linked to meeting increasingly strict hygiene standards, adaptation to new

technologies or skills development in packaging, design and marketing. These human resource

development requirements are sector-specific. Clearly, there is need to establish re-training

programmes for workers in sectors that are affected by the introduction of free trade with the EU

under the EPA. Such programmes could focus on re-training retrenched workers for new formal

employment or self-employment, establishment of a small loan facility for the creation of small-

scale enterprises, etc.

Secondly, most locally owned companies are very small by European standards and are managed

by individuals or families, with no real professional managerial cadre outside family members.

These enterprises are often not flexible enough to respond to the changed market conditions. In

other words, at the management level the opportunity cost of re-deploying staff to get to grips

with the various dimensions of the restructuring challenge (be it in identifying new markets,

coping with SPS issues, developing new products or re-designing packaging) is relatively high

since they are being pulled away from day-to-day management tasks. This lack of flexibility in

responding to market conditions is often compounded by a range of other human resource

constraints including lack of formally trained skilled labour and a range of support services.

There is therefore need for specific programmes targeted at easing the management constraints

arising from EPAs. One option in this regard is the use of cost-sharing grant schemes.

Thirdly, given the structure of ownership, many private sector businesses in the ESA region tend

to be risk-averse. Their natural response to increased competition is to down-size and to

concentrate on their core activities. In this context, if dynamic restructuring in response to the

challenge of free trade under the EPA is to be encouraged, then financial facilities must be put in

place to reduce considerably the risk borne by individual entrepreneurs in trying to respond

positively to the evolving market situation. This is particularly the case give the fundamental

inequalities between the relatively small enterprises in the ESA region and the giant enterprises of

the EU. Currently, a range of concessional loan financing is available to ESA, and other ACP

public and private enterprises under the newly established Investment Facility, in form of “risk

capital” and “own resource” loans. The loan terms and conditions can vary considerably. In

developing appropriate financial assistance instruments to support economic restructuring ESA

governments need to consult closely with the business chambers and sectoral associations and

will need to fully exploit the flexibility that exists under the provisions of the CPA.

Against this background, it is clear that the various aspects of the EPA have to be accompanied

by development support measures to build up the capacity of enterprises in the region to compete

effectively under conditions of free trade. This is seen as essential if the adjustment costs

associated with the EPA are to be minimized and the benefits realized maximized.

4.1.3 Revenue Losses

One of the concerns of the ESA, and other ACP

countries, is that the move towards a free trade with the

EU under the EPAs has serious implications for

government revenues. These implications are likely to

be more profound for the LDCs which constitute the

majority in the region. In virtually all the ESA

countries, revenues from import duties on traded

products are a major source of income for Government.

To that extent, because the EU is a major trading partner

Table 4.1: Estimates of Revenue Losses in BLNS

Country Loss (in %)

Botswana Namibia Lesotho Swaziland

5.3 8.6 12.9 13.9

Source: Davies and Mbuende


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of the ESA region, customs duties on imports from the EU often represent a significant

proportion of total customs duties raised by these countries. The progressive elimination of

import duties on goods from the EU could therefore adversely affect total government fiscal

revenues. The gap created in the revenues available to ESA governments would limit their ability

to finance important social and economic activities.

The concerns of the ESA countries in this context are not without justification. Davies R. and

Mbuende K. (2003) quote a study on the impact of EU-South Africa trade agreement on the

BLNS that came out with estimates of revenue losses indicated in Table 4.1 for each of the four

countries as a result of implementation of the tariff reductions set out in the TDCA. The study

showed that for Namibia, for example, the losses were nearly equivalent to two-and-a-half times

the government budget deficit. This shows, therefore, that the main challenge for the ESA

countries is how to find alternative sources of revenue to compensate for the fiscal losses arising

from moves towards an ESA-EU EPA. Today, the tax base in the region is still small and even if

additional revenues are generated on all likely and viable options this would still be insufficient to

substitute for the revenue lost as a result of the introduction of free trade with the EU under the

ESA EPA. A substantial expenditure review would thus be inevitable.

Given the high dependence of ESA countries on custom duties, the scale of the fiscal

restructuring which their governments would have to face under the EPA is quite considerable.

The EU must accept the existence of such serious fiscal implications arising from the EPA, and

that where introduction of free trade occurs at a high pace than the envisaged pace of multilateral

tariff reductions, this will result in revenue losses in well above those which would have to be

occurred solely as a result of the multilateral process of trade liberalization.

Against this background, ESA governments need support with the difficult process of fiscal

restructuring. Specifically, they need EU commitments to support (i) comprehensive tax and

expenditure reviews in each ESA country where trade taxes are a major source of government

revenue; (ii) detailed analysis of viability of various possible reforms in the specific context of

each ESA country facing fiscal adjustments in order to identify optimal solutions in the light of

wider poverty reduction objectives; (iii) specific programmes of tax reform, possibly including

support for the establishment of independent revenue authorities. Finally, where fiscal

implications of the EPA are particularly severe, an implicit commitment to providing additional

direct budgetary support to the government affected should be considered.

4.1.4 Additionality of Resources

The issue of additional funding is a major source of contention. The ESA region has

demonstrated (through the development matrix [See Appendix 6]) that there will be a funding gap

even after considerable prioritisation9. The need for funding is much more compelling,

considering the fact that the EPA lifespan is indefinite whilst the EDF resources are negotiated

and made available in short uncertain cycles.

The ESA negotiating mandate has called for “…the development and implementation of an

9 At the moment the funds that ESA uses for EPA negotiations come from the Regional Integration

Support Program (RISP). It also gets funding from the Hubs and Spokes project, the Project Management

Unit (PMU), etc. As far as EPA negotiations are concerned member countries are only contributing the

Chief Technical Advisor (CTA) salary. However, funding inadequacies as well as over reliance on the

EC has resulted in the suspension of five ESA meetings.


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31

“Adjustment Facility”, which would act as a mechanism through which budgetary support would

be provided to ESA countries, to allow them to continue with the economic liberalization

programme necessary for the implementation of an EPA”. The EC, on the other hand, has not

committed itself to such a facility and the prospects of reinvigorating it under the EPA are very

slim (although there is possibility of accommodating it under Aid-for-Trade [AFT]). The mandate

also emphasizes the need to “…obtain a commitment from the EC to allocate resources additional

to those committed under EDF 9 to the EPA process to take account of, where necessary, a loss of

resources through the removal of trade barriers with the EU; the costs of adjustment and removal

of supply-side constraints”.

To date, the EC commitment is not forthcoming although several international fora10, to which

the EC is a major party, have all endorsed the need to avail more resources to Africa and its

regions to enable them to eradicate poverty through sustainable development. The EC insists that

no resources will be provided outside the 10th EDF. Indeed, Roger Moore, the DG Development

reiterated at the Mombasa first text-based negation meeting in September 2006, that “…providing

resources outside and parallel to the EDF is tantamount to financial mismanagement”. As a

demonstration of the inherent inconsistency in positions regarding EPA funding, the 10th EDF

programming process (from which EPAs are supposed to be funded) is already underway, yet

EPAs have not been concluded.

Linked to the issue of additionality of resources is the inherent inflexibility in the EDF

procedures, leading to low disbursement and utilization as Table 4.2 below shows. This is more

important, bearing in mind that additional resources without increased and easy accessibility will

not help the ESA countries much. Table 4.2 shows that total allocations in nominal terms have

been progressively increasing – from Euro 3,390 million under the 4th EDF to Euro 15,200

million under the 9th EDF. Total cumulative allocation between the 4th and 9th EDF stood at Euro

58,415 million. In spite of this growth in nominal terms, disbursements in real terms in the same

period grew very slowly, with the lowest disbursement during the 8th EDF (Euro 2,921.6 million

or 20%). Overall, out of the Euro 58,415 million allocated for the entire period a miserable 31.2%

was actually disbursed.

Table 4.2: Funds allocated and spent during each five-year financing cycle (Million Euros)

EDF assistance package

Funds allocated during the 5-year envelope (nominal value)

Real value of envelope (1975 base year)

Disbursements in the 5 years to which the envelope was allocated (nominal value)

Percentage of total allocation disbursed in the 5 years to which it was allocated (nearest per cent)

4th EDF (1975 – 1980) 3,390 2,696 1,454.5 43 5th EDF (1980 – 1985) 5,227 2,586 2,041.0 39 6th EDF (1985 – 1990) 8,400 3,264 3,341.6 40 7th EDF (1990 – 1995) 12,000 3,514 4,417.9 37 8th EDF (1995 – 2000) 14,625 3,463 2,921.6 20 9th EDF (2000 – 2007) 15,200 3,131 4,239.0 28

Source: Oxfam (2006). Data from http://ec.europa.eu/comm/development/body/cotonou/stat11_en.htm

10 The Commission for Africa Report, the Monterrey Consensus on Development and Finance, the MDG

conferences, LDC conferences as well as G8 summits such as Gleneagles

http://ec.europa.eu/comm/development/body/cotonou/stat11_en.htm


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32

The implications of the above allocation and spending scenario by the EC are quite clear. The

first one has to do with effective and timely delivery of assistance. The EC past record in this

regard cannot be a basis for optimism for the ESA region when it comes to EPA-related trade

development challenges. Part of the problem is the inappropriateness of the EC procedures to the

delivery of time-sensitive support, with EPA-related adjustment needs being “time-sensitive”.

Consequently, the recent EU pronouncements regarding AFT, while encouraging, should be

treated with caution. The EU has pledged to provide two billion euros (one billion form the

commission and one billion from members states) a year to developing countries pursuing EPAs.

Nonetheless, there is no clarity on how the EC will implement AFT package. The main challenge

for ESA is to ensure that the disbursement is efficient and where possible should be channeled

through local (regional and continental) vehicles such as COMESA fund, and African

Development Bank.

4.1.5 Development Benchmarks

In the spirit of ensuring that development aspects of trade and trade related issues are

comprehensively addressed, the ESA region has been advocating for development benchmarks11.

The ESA has argued that the implementation of tariff reduction should be linked to the attainment

of certain development indicators. This is logical given the extent to which many of these

countries have been ravaged over the years by civil conflict (Uganda, Rwanda, Burundi, Sudan,

DRC, Ethiopia, etc) and the HIV/AIDS pandemic (along with the ravages of malaria and TB).

The stock of physical capital and the human resource base have been eroded in many of these

countries. Indeed, the very concept of development – which implies constant improvement in

economic and social conditions – has been brought into question by the reversal in human and

development indicators in these countries. Therefore, to open up such economies to free trade

with the EU under the EPA is likely to be somewhat risky with a real danger that the costs of

adjustment far outweigh the potential benefits. It might particularly not be prudent to open up

vulnerable sectors of such economies to free competition with a giant such like the EU until

significant progress has been made in developing the physical and human resource base for

internationally competitive forms of production.

The basis of benchmarking is provided by Articles 19 and 20 of the CA. Article 19.2 states that

“cooperation shall refer to the conclusions of United Nations Conferences and to the objectives,

targets and action programs agreed at international level…” It further notes that “…cooperation

shall also …pay particular attention to putting in place qualitative and quantitative indicators of

progress”. Article 20 commits the parties to cooperation strategies that are aimed at:

(a) achieving rapid and sustained job-creating economic growth, developing the private sector,

increasing employment and improving access to productive resources;

(b) ensuring equitable distribution of benefits from trade;

(c) promoting institutional reform and development, as well as capacity building.

In spite of the strength of the ESA arguments and the provisions of the CPA, the EC is very

reluctant to link the implementation of tariff reduction with the attainment of specified

development indicators. On the other hand, the EC is inclined towards using human rights and

good governance as benchmarks. The EC argues that many countries in the region are in constant

state of conflict and wars which may turn back (destroy) the development attained. This position

is not acceptable to ESA countries.

11 These are qualitative or quantitative development targets that should be met during the EPA implementation process.


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33

Work on this issue at the regional level is still in progress. However, it is important to note that

well thought-out, simple, unambiguous and realistic benchmarks are important in strengthening

the region’s development concerns. These benchmarks should be reviewed after every five years.

In spite of the EC’s prevarication on this issue, ESA countries should fully explore it in a way

which benefits majority of its members. The region should also ensure that it develops

benchmarks that cater for countries different levels. But this is problematic given the ESA

countries different levels of development and ability to adjust. For example, a period of 5 years

may be too short for some ESA countries to have fully taken advantage/mainstream the

development implications of EPAs, indicated by development benchmarks. Thus others may fail

to meet the development benchmarks due to structural problems, whereas the more developed of

the ESA countries will be able.

4.2 TRADE IN GOODS

4.2.1 An Overview of the ESA Region’s Trade with the EU

Trade is quite important for all the ESA countries. Partly for historical reasons, the EU is the

region’s largest single trading partner, accounting for 40% of merchandize exports and 17% of

merchandise imports (EC, 2004). The trade relationship with the EU is thus very important for

the region’s development and the proposed EPA could have a significant impact in all the

countries of the ESA

region. As can be seen

from Table 4.3 above, in

2002, trade between the

two regions amounted to

10,318 million, with ESA

recording a trade surplus of

1,599.5 million.

The ESA region’s exports to the EU show little diversification: in 2002, six products accounted

for 60% of total ESA exports to the EU. Precious stones (diamonds) are the main exports to the

EU (accounting for 21% of ESA exports). Textiles follow, accounting for 11%, aluminium (8%),

sugar (7%), tobacco (7%) and plants/flowers (6%). Most ESA exports are primary products

53.8%, particularly agricultural products (44%). Merchandize imports from the EU constitute

primarily of manufactures, machinery, and equipment, although agricultural products are

increasingly becoming important as well.

The level of trade with the EU varies among the ESA countries: four countries account for 69%

of the region’s trade with the EU. These are Mauritius (23%), DRC (17%), Kenya (16%) and

Zimbabwe (13%). The LDCs among the ESA countries benefit from special trade preferences

under the “Everything-But-Arms” initiative. This means that since 2001, these countries have had

duty-free and quota-free access to the EU market for all their products. For three products,

namely fresh bananas, sugar and rice, full liberalization is being phased out gradually.

A comparison of the two regions, shows that trade between the EU and the ESA region is less

important for the EU than it is for the ESA region, because the economy of the EU is by far larger

the economy of the ESA region. The region accounts for a small share of the EU’s total

merchandize imports. Consequently, the impact of an EPA with the ESA region is likely to be

limited and much easier for the EU to adjust than for the ESA region. By the same token, the

difference in economic size and the relative importance of the EU-ESA trade to the two parties

( MILLION) 1998 1999 2000 2001 2002

EU IMPORTS (OF WHICH AGRI)

4,964.8 2,648.6

5,034.2 2,508.0

5,322.2 2,492.3

5,994.2 2,624.2

5,958.7 2,605.8

EU EXPORTS 4,162.5 4,233.5 4,304.7 4,594.5 4,359.2 TRADE BALANCE -802.3 -800.6 -1017.5 -1,399.7 -1,599.5

Table 4.3: EU – ESA Trade, 1998-2002

Source : EC


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34

gives the EU a much stronger bargaining position than the ESA region.

4.2.2 Market Access

In developing trade relations with the EU, the ESA countries are faced with a major dilemma

given the different options open to the different categories of countries in the region. As we have

noted already, majority of the ESA countries are LDCs, while a handful (Kenya, Mauritius,

Seychelles and Zimbabwe) are non-LDCs. The two groups of countries enjoy different facilities

of market access.

The LDCs have a recognized right under the WTO rules to non-reciprocal trade preferences. In

this regard, the EU has granted them the “Everything-But-Arms” (EBA) initiative. EBA grants

them full duty, special levy and quota-free access to the EU for all products, except arms,

munitions and, on transitional basis, sugar, rice and bananas (with free access for sugar, rice and

bananas by 2009). This is a GSP initiative which applies equally to all LDCs and it is therefore

not subject to challenge in the WTO.

However, for the non-LDCs, the alternative to the CPA is the standard GSP. This reintroduces the

standard, although reduced, import duties on a large proportion (possibly above 50%) of the

products they export currently duty free to the EU market. Consequently these countries must

find a new basis for their future trade relations with the EU beyond 2007 and this probably

explains the perceived eagerness of the non-LDCs among the ESA group to go ahead with the

EPA. Securing a new trade agreement which guarantees duty-free access is important for them

especially for the products which dominate their exports. Indeed, the EU has repeatedly argued

that no ACP country should be left worse off under future trade arrangements. However, for this

to become a reality, this commitment must be formally incorporated into any future GSP

regulation, so that EU customs authorities have an appropriate legal basis for allowing continued

access duty-free access for products from non-LDC ESA countries to the EU market.

It is important to note, that as the EU tariffs have fallen, other issues of concern to market access

(non-tariff barriers to trade) have emerged to take on increasing significance. These include rules

of origin and sanitary and phytosanitary (SPS) issues.

4.2.2.1 Rules of Origin

The ESA countries are seeking simplification and

improvement of ROO to enable them to take advantage

of the preferences given to them. The EC has insisted on

the use of the value-addition criterion instead of ESA’s

proposed cumulation-and-wholly-obtaining criteria. The

use of the value-added criterion puts a heavy burden on

firms requiring them to use modern technology and

expensive procedures to keep track of the value added to

their export products.

Restrictive and complicated ROO not only reduce the

value of the preference schemes, but also inhibit the

export competitiveness of the countries. LDCs, for

example, do not take advantage of quota and tariff-free

access under EBA, both because of supply-side

constraints and restrictive ROOs. EBA ROOs are similar

Box 4.1 Rules of Origin Rules of origin (ROO) are the criteria used to determine the origin of a product. In the context of the EU they define what goods can and cannot be given duty-free access to the EU market under any preferential trade arrangement. The aim is to prevent third countries that do not enjoy preferential access from simply routing products to the EU market through preferred trading partners. ROO generally specify what proportion of the final product must be produced in the country (or in the case of the ACP, countries) to which the trade preferences have been extended. These local content requirements vary from sector to sector and from product to product, particularly for those considered sensitive by the EU.


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35

to those of the GSP that apply to other developing countries. Under these ROOs, producers from

the LDCs cannot easily use inputs from any other country if they want to claim duty-free access

to the EU market. The Lome/Cotonou ROOs are slightly more favourable in that they allow ACP

countries to source inputs from other ACP suppliers, but far less so from a non-ACP developing

country. As a result of these restrictions, ACP manufacturers of textiles cannot buy the best-

priced cotton from other developing countries in South or East Asia. This either increases the cost

of their exports or stops exports altogether. As we noted earlier, the EC has been reluctant to

agree to the ESA and other ACP contention that ROOs should recognize the increasingly global

nature of input procurement and the need for the ESA and other ACP countries to base their

industrial development initially on final stage processing of inputs procured elsewhere.

4.2.2.2 Quality Standards and Sanitary and Phytosanitary Measures

There are certain provisions under Article 48 of the CPA of

relevance to SPS in the context of EPA negotiations. In

particular, both the ACP and the EC (a) recognize the right

to take measures to protect life or health of people, animals

and plants, (b) undertake to strengthen consultation and

coordination when new standards are adopted, (c) commit

themselves to the WTO Agreement on SPS, and (d) agree to

prior consultation and coordination of positions in

international standard bodies.

The WTO Agreement on SPS commits members to use

international standards in protecting human, animal or plant

life. In cases where such standards are not used, members

are required to notify and undertake consultations with

countries that are likely to be affected so that they can adjust

to the standards before entry into force. Further, the

Agreement requires that the measures be taken on the basis

of scientific knowledge and not for purposes of restricting trade. The Agreement also provides for

technical cooperation between the developed and developing countries, in order to build up the

latter’s capacity to meet the requirements of SPS measures.

In spite of the existence of these provisions, there have been concerns in the ESA countries over

wide-spread abuse of SPS measures by developed countries including the EU, most of which are

not reported by exporters. The result of such abuse has been a colossal loss of revenue. The ban

of Uganda’s fish exports is a case in point. In 1999, the EU banned the importation of fish from

Lake Victoria and the surrounding areas on grounds of a cholera outbreak in the region. The ban

was introduced at the time when Uganda had no capacity to challenge it under the WTO dispute

settlement system. As a result, by the time the EU lifted the ban, the country had lost about US$

80 million in export revenues from fish as well as job losses on account of closure of fish

factories (SEATINI, 2005).

One of the main conditions of access to the EU market is that agricultural exports should not

exceed the Maximum Residual Limits (MRL) for pesticides set by the EC. Moreover, access to

the EU market has been complicated effective January 1st, 2006 the date of the application of the

new regulation for the control of foodstuffs. While the new regulation is primarily an internal one

for the EU, the EC has stressed that it also applies to third countries that wish to export to the EU.

The basic principal is that any product entering the EU market must satisfy or be equivalent to

Box 4.2: SPS Measures Sanitary and phytosanitary (SPS) measures relate to “laws, regulations or administrative action taken by a country to protect human, animal or plant life or health”. Such measures involve a ban or restriction of importation of certain goods which are deemed to pose health problems if allowed entry into the country. There have been concerns that SPS measures can either limit or facilitate access into a given market. ESA countries have expressed such concern because the EU is their major trading partner.


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36

EU standards. This regulation makes it compulsory for food companies to apply the Hazard

Analysis Critical Control Points (HACCP) principle. Under this regulation, the EC also requires

that the competent authorities in the exporting countries to ensure that the products exported to

the EU market satisfy the standards in force on that market. This means in theory that even if an

ESA (or ACP) food exporter satisfies the EU standards, the exporter can only export to the EU if

the competent authority in the exporting country is recognized by the EC. This raises important

questions for the public institutions of the ESA countries, with potentially very high costs

imposed on the private sector due to lack of resources and capacities at public sector level.

During the negotiations with ESA the EC has insisted on compliance with the SPS standards.

The EC has not been wholly responsive to ESA position on market access, particularly in the

areas of ROO and SPS. Similarly, the EC has not committed itself to providing full market access

as demanded by the ESA region and argues that the level of liberalization by the ESA countries,

the transitional period and list of sensitive products are subject to negotiation. It is also significant

that the EC has also rejected the ESA demand that the LDCs within ESA should be exempted

from any tariff liberalization under EPA, arguing that this will impair the benefits from

liberalization and the regional integration agenda. The EC stance poses practical challenges for

the region, particularly for the LDCs, which are keen to ensure that their concerns are

comprehensively and systematically taken into account in the negotiations.

4.2.3 The CAP Reforms

Agriculture is important for the ESA region. As a result, the region has argued that the productive

capacity of agricultural and value-added food processing should be built up before any tariff

liberalization can be introduced. Underpinning this position are deep concerns that (a) the sector

will be wiped out by an increasingly export-oriented EU agricultural and food products industry,

and (b) threaten the value of any future trade reforms to the ESA and other ACP countries. This

concern is intimately linked to the reform of the EU Common Agricultural Policy (CAP) which

(reforms) are among the key issues affecting the future relationship between the EC and the ACP.

The above notwithstanding, the EC is not willing to discuss the CAP reforms, arguing that this is

a domestic issue for the EU farmers only. To that extent, the EC is not willing to explore how

punitive these reforms are to the ESA and other ACP countries. The only issue the EC has been

willing to discuss has been the question of export refunds. However, this issue is of declining

value given the shift away from price support by the EU to the system of aid to farmers without

undermining farm incomes and/or production.

The new system of direct aid to farmers is leading to price falls in the EU, while maintaining or

even increasing both farm incomes and output. Since 1992, for example, in the cereals sector

average prices fell by 50 - 55%. But this dramatic reduction in EU prices saw an increase in

production (EC, 2004). Direct aid payments actually allowed EU the production of cereals in the

EU to increase by about 26% by 2000. What happened in the cereals sector was extended to

virtually all other sectors. These price impacts changes have a direct impact on both the income

of the ESA and other ACP countries which earn from temperate agricultural exports to the EU

and pose a competitive threat to ESA and other ACP countries agricultural and food product

industries. Some of the products affected include beef, sugar, rice, etc.


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37

Clearly, while talking

of commitment to

building the existing

acquis and taking

into account the

impact of the CAP

reforms, the EC is

ignoring the extent to

which these reforms

are undermining the

economic value of this acquis. No effort has been made to explore alternative arrangements for

maintaining the value of the acquis.

How are the price reductions affecting the competitiveness of ESA products? The reforms are

lowering the prices of raw materials produced within the EU and significantly reducing the prices

of simple EU value added products (e.g. cereals, dairy products, etc). Since the products are often

the first stages of agro-industrial development in ESA countries, the impact this process of reform

has on trade outcomes is a source of concern.

4.3 TRADE IN SERVICES

Services cover a wide range of economic and social activities. They embrace communications

(postal/courier, telecoms and audio-visual), transport, finance, health, education, tourism and

travel-related services, recreation, and environmental services. These services are key drivers of

economic growth and they influence in a substantial manner the capacity of countries to trade.

For example, such core infrastructure services (producer services) like transport and

communications which are often used as inputs into other economic activities can either facilitate

or hinder trade and production in other economic sectors – both goods and services – depending

on the efficiency with which they are made available to users. Trade in services is increasingly

becoming important worldwide and in the ESA region, where the countries need to diversify their

narrow export base.

Trade in services was brought into the GATT for the first time in the Uruguay Round, although

developing countries had their misgivings on this matter. They failed to block the (General

Agreement on Trade in Services (GATS) and finally agreed, as a compromise, that it would have

a “bottom-up” approach, so that each member would have the right to decide which sectors, if

any, they would open, the pace and extent of the market opening, and the limitations to

liberalization in each sector (Jawara & Kwa, 2004). Because of this bottom-up approach, the

GATS has been presented by developed countries, including the EU, as development-friendly.

Developing countries are now being subjected to enormous pressure to liberalize in many sectors,

where they cannot compete. This could destroy the existing local service industries, jeopardizing

social and development objectives.

Liberalization of trade in services involves making market access commitments and removing

restrictions that discriminate against foreign service-suppliers. The types of restrictions as

indicated by Article XVI of the GATS include:

limits on the number of service suppliers, whether in the form of numerical quotas,

monopolies, exclusive rights or through economic needs tests;

Table 4.4: ACP Sugar Protocol Earnings under the “Fall Price” Scenario

COUNTRY SUGAR PROTOCOL QUOTA (TONNES)

CURRENT EARNINGS

EARNINGS AFTER STAGE I REFORMS (EURO 455 / TONNE)

EARNINGS AFTER STAGE II REFORMS (EURO 290 / TONNE)

Madagascar Malawi Mauritius Zimbabwe

10,760 20,824

491,031 30,225

5,635,012 10,905, 528

257,152,935 15,828,832

4,680,600 9,058,440

213, 598,485 13,147,875

3,120,400 6,038,960

142,398,990 8,687,250

Source:


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38

limits on the total number of service transactions;

limits on the type of legal entity (e.g. through the exclusion of branches of foreign firms or

requirements for joint ventures;

limits on foreign share-holding in individual companies or by sector or in aggregate;

discriminatory licensing or other administrative requirements.

The GATS and other trade agreements have provisions which allow to maintain certain

restrictions if they can be justified for public policy or other reasons. In this context, developing

countries can maintain certain restrictions if they are linked to their broad development strategies.

A look at the patterns of trade in services in the region shows some interesting trends. Firstly, the

share of service exports in total exports varies between 1% for Sudan, and 60% for Ethiopia,

while the share of imports in total imports varies between 16% for Kenya and 48% for Rwanda.

Secondly, in the year 2004, a number of countries in the ESA region (Djibouti, Eritrea, Ethiopia,

Egypt, Kenya, Madagascar, Mauritius, Seychelles, Uganda, Zambia, and Zimbabwe) recorded

surpluses.

4.4 TRADE-RELATED AREAS

Trade-related areas cover trade facilitation, government procurement, investment, and

competition policy. Under the WTO negotiations, they are also known as the “Singapore Issues”

or the “New Issues”. After the collapse of the talks in Cancun, WTO members agreed to drop all

these Singapore issues, except trade facilitation, from the Doha Round. On trade facilitation, they

recognized the need for a long lead-in period in some developing countries. In the CPA,

competition and investment are referred to in Articles 21.1, 21.5 and 75 as areas to be supported

in the context of regional and national economic development, but there is no clear commitment

to negotiate on them with the EU. The CPA does not even mention government procurement.

The EU negotiating mandate, however, covers all issues and in fact the EC is pushing strongly for

their inclusion in the EPA negotiations. The EC considers these issues to be important for

development and that although they were rejected in the WTO, this does not mean they would be

wrong for the EPAs (House of Commons, 2005). This is in spite of the fact that the ACP

countries have collectively stated that they are opposed to such a move and have described their

disagreement with the EU on these issues as one of a “fundamental nature” (Oxfam, 2006).

Similarly, the EU Ministerial meeting (Nairobi, April 2006) called on the EU not to press African

countries to take up obligations that go beyond their WTO obligations and called for these issues

to stay outside the EPAs. Again, the EC is not taking heed of such calls and continues to insist

that there will be “no EPA without investment rules and full reciprocity” (Oxfam, 2006).

4.4.1 Trade Facilitation

Trade facilitation essentially refers to simplification, harmonization and automation of import and

export procedures, reduced documentation, and increased transparency (Jawara & Kwa, 2004).

The EC argues that a WTO agreement on trade facilitation is needed because inefficient and

unnecessary procedures impede trade flows. According to the DG Trade “Everyone would benefit

from a push to simplify trade procedures, cutting out unnecessary bureaucracy via modern

methods … Traders both big and small would enjoy reduced costs and fewer delays, which means

competitive terms of trade”(Jawara & Kwa, 2004).


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39

Although the term “trade facilitation” may seem harmless, the establishment of rules in the ESA-

EU EPA may be disadvantageous to the ESA countries as they may find it difficult to adhere to

the standards or procedures envisaged. Khor (2003) quoting Das (2000) warns that “there are

grave dangers involved in the potential agreements in this area if the proposals of the proponents

are incorporated in the form of binding commitments. The main objective of the proponents is to

have the rules and procedures similar to theirs adopted by developing countries. This ignores the

wide difference in the administrative, financial and human resources, and the social and working

environment between the developed countries and developing countries. The EC wants an

agreement that includes:

Application of the key WTO rules - MFN, national treatment and transparency;

Harmonization and simplification of documents and data, so as to reduce delays and costs to

traders and assist in the introduction of automated procedures;

Modern customs and management techniques (e.g. pertaining to pre-arrival processing, post-

release payment, time limits for release, etc;

Automation and convergence of official controls – commitments to introduce automation

over time, replacing paper procedures, so as to speed up transactions, and allow for seamless

integrated transactions between exporting and importing administrations; and

Coordinated capacity-building to strengthen human and physical infrastructure and improve

import and export management in developing countries.

However, behind these rather fascinating objectives of facilitating trade, lies a different agenda:

to limit the ability of customs authorities to question the transaction value declared by EU

companies to prevent unfair transfer pricing. While there may be justification in improving trade

facilitation, it is better subjected to international cooperation and support, through institutions

such as the World Customs Organization. ESA countries, and indeed, other ACP countries, can

be provided with technical assistance and financial resources to upgrade their facilities in

appropriate ways. Trade facilitation should not therefore be subjected to legally binding rules and

obligations in the EPA negotiations because it would impose obligations on ESA countries to

undertake expensive programmes which they can ill afford and which are not in their priority list.

4.4.2 Transparency in Government Procurement

Government procurement covers all purchasing activities of government authorities – for

everything from pencils and paper clips to computer systems, telecommunications equipment and

consulting services. Typically, this accounts for significant share of GDP (10-15%) for developed

countries, and up to 20% in some developing countries (Jawara & Kwa, 2004).

In the context of WTO, members are allowed to exempt government procurement from WTO

market access rules, except those members who have joined the WTO’s plurilateral agreement on

procurement. Hardly any developing country is a member. Thus, developing countries have found

it unacceptable to integrate government procurement and its market access component into the

WTO. They have made clear the need to protect government procurement, as this is now one of

the few policy tools available for developing countries to pursue their development objectives.

However, because of the significant markets involved, the EU (and the USA) would like to see

the plurilateral agreement become a multilateral agreement applying to all WTO members, as this

would increase the market opportunities for their own firms.

Government procurement and policies related to it have very important economic, social and even

political roles. First, the level of expenditure, and the attempt to direct the expenditure to locally


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40

produced materials, is a key macroeconomic instrument, especially during recessions to counter

economic downturns. Secondly, there are national policies to give preference to local firms,

suppliers and contractors, in order to boost the economy and participation of locals in economic

development. Thirdly, it allows government to identify certain groups or communities, especially

those that are under-represented in economic development. Finally, where foreign firms are

involved in a bid, government can give preference to firms from particular countries (e.g. other

developing countries, or particular developed countries).

Inclusion of government procurement in an ESA-EU EPA has very serious implications. It will

mean governments in the region will not be allowed to give preferences to local companies for

the supply of goods and services and for the granting of or concessions for implementing projects.

An agreement on transparency is thus a first step toward ensuring that all goods and services

purchased by governments in the ESA region are subject to international bidding. If it is

expanded to include market access, national governments in the region would no longer be able to

use government procurement to support local companies or as an instrument of regional policy or

affirmative action for disadvantaged minorities. The scope and space to use procurement for

development would be severely curtailed.

4.4.3 Investment

In pushing for the inclusion of investment in the negotiations, the EC ultimately wants binding

rules that give EU investors the rights to enter the ESA countries without conditions and

regulations, to operate in these countries without most conditions that exist now, and to be

granted “national treatment” and MFN status. It will be recalled that the principles “non-

discrimination, MFN and national treatment” were created in the context of trade in goods. They

are not appropriate when applied to investment. When “national treatment” is applied to

investment at the pre-establishment phase, it prohibits developing countries control over entry of

foreign investors and particular types of investments. And if it is applied at the post-establishment

phase, it would also impede the ability of governments to give preferential treatment of firms, or

to channel foreign investment in certain desired directions (Khor, 2003).

The risk to ESA countries is that governments will be denied the policy space in determining the

type of investment they need for their countries. They would lose control of such issues as

performance requirements (e.g. equity ownership restrictions, obligations on technology transfer,

export orientation, geographical location, etc). EU investors would have the freedom and right to

transfer funds into and out of any ESA country without restrictions.

An EPA that includes investment rules of this nature is ultimately designed to maximize the EU

investors’ rights while minimizing the authority and policy space of governments of ESA

countries. This will have serious implications in terms of policy making in the economic, social

and political spheres, affecting the ability to plan in relation to local participation and ownership,

the ability to build the capacity of local firms and entrepreneurs, and the need to protect the

balance of payments and the level of foreign reserves.

4.4.4 Competition Policy

There is no common understanding or agreement among countries on the meaning of the concept

of competition in the context of the WTO, especially in terms of its interaction with trade and its

relationship with development. The whole set of issues of competition, competition law and

competition policy is quite complex. Those advocating for a WTO agreement want multilateral


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41

rules that compel members to set up national competition laws and policies, which incorporate

the “core principles” of the WTO, defined as transparency, non-discrimination (MFN and

national treatment) (Khor, 2003).

Within the WTO, the EC has been the leading proponent of agreements on investment and

competition policy. The EC sees the two working in closely: while an investment agreement

would ensure investor’s rights in a host country, a competition agreement would oblige host

countries to institute domestic competition legislation requiring changes to laws that directly or

indirectly disadvantage foreign companies. The EC has been keen to include competition rules in

the WTO because of the national treatment and MFN principles, and justifies this by arguing that

“private barriers” which engender uncompetitive practices can offset the benefits of trade

liberalization (Jawara & Kwa, 2004). The EC in fact opposes existence of either de jure or de

facto discrimination between local and foreign companies. It also wants domestic law to treat

hard-core cartels as a serious breach of competition law. The EC now wants all this included in

EPAs, including one being negotiated by the ESA region.

There is no doubt that in appropriate forms, competition law and policy can be beneficial to the

developing countries of the ESA region. However, each country must have the full flexibility to

choose a model which is suitable, and which can also change with time to suit the changing

conditions. Having an appropriate model is particularly important in the context of globalization

and liberalization where local firms are already facing intense foreign competition. In particular,

ESA countries should have the flexibility to choose the pattern of competition and competition

policy/law that is suitable to their level of development and priorities.

The EU proposal for competition policy to provide an “effective opportunity for competition” in

the ESA local market to foreign firms, and thus to apply the WTO “core principles” would affect

the needed flexibility for an ESA country to have its own appropriate model or models of

competition policy or law. Even if the agreement was confined to “hard core cartels”, the

principle of non-discrimination would be applied to all other issues as well in the country’s

competition policy and law. This would restrict the policy space of the ESA country.

Competition can be viewed from different perspectives. From the ESA region perspective, it is

important to curb the mega-mergers and acquisitions, which would threaten the competitive

position of local firms in the region. Also, the abuse of anti-dumping actions in developed

countries or the restrictive business practices of large firms do hinder competition. From the EU

perspective, competition is about providing EU firms national treatment and a free competition

environment in the host country. This is what the EU would want in an EPA and chances are this

is what would prevail given the unequal negotiating strength working against the ESA region.

The likely result is that the ESA countries would have to introduce national competition laws and

policies that are inappropriate for their conditions. This would limit the right of national

governments in the region to give advantages to local firms, and local firms themselves might be

restricted from practices, which are to their advantage.

Against this background, it is important to view competition from a development perspective.

Competition policy and law should complement other national objectives and policies (such as

industrial policy and seek to enable local firms and sectors to compete successfully, including in

the context of increased liberalization. From a development perspective, a competition and

development framework requires that local enterprises (industrial, service and agricultural) must

build up the capacity to compete successfully, locally as well as internationally. This requires

time and cannot be done overnight. It requires the state to play the role of nurturing, subsidizing,

and encouraging the local firms.


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42

4.5 CONCLUSIONS

An EPA will bring with it a number of policy challenges for the ESA countries, which include

restructuring of indirect tax systems, reduction of MFN tariffs, liberalization of service imports

on MFN basis and related regulatory reforms in the services sector, liberalization of trade in both

goods and services. At the same time, the EPA has potential to accelerate regional trade

integration as well as integration of the region into the global economy.

The benefits will not come easily to the ESA region. To realize the potential development

benefits of the planned ESA EPA, for example, the EU must, as it has stated before, truly treat

the EPAs as instruments of development, subordinating its commercial interest in the agreement

to the development needs of the ESA region. In equal measure, the ESA countries must be

prepared to implement a number of EPA-related trade policy reforms. However, this may not be

easy in the short-to-medium term.


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43

V AN ASSESSMENT OF THE ROLE OF ESA REGIONAL

PREPARATORY TASK FORCE AND THE SUPPORT OF THE

EU AND OTHER DONORS

In order to support the negotiations there have been efforts to create mechanisms in all the regions

negotiating with the EU in order to help the process. One such a mechanism is the so-called

Regional Preparatory Task Force (RPTF). At the same time, the regions have been counting on

the financial and other support from the EU and other donors. This part of the Review assesses

the role of the RPTF and the support from the EU and other donors.

5.1 THE ESA REGIONAL PREPARATORY TASK FORCE

The Regional Preparatory Task Force (RPTF) was introduced at the 1st RNF (Mombasa 19-21,

2004) as an informal body created to coordinate the preparatory work of the EPA negotiations at

the technical level, co-chaired by the ESA and EU. From inception the RPTF was intended to

serve as a key mechanism for addressing the EPA developmental elements identified in the

Cotonou Agreement under Articles 37, 39, and 40 (such as capacity building, supply-side

constraints and other developmental programmes of the regional integration agenda). It was also

expected contribute to the preparation of inputs into the negotiations. The RPTF is not a decision-

making body but one that is involved in the necessary preparations of the actual negotiations. It

works in the context of the Joint ESA-EC Roadmap and, as such, assists the RNF in focusing

discussions on capacity-building and identifying the regional priorities necessary to strengthen

and build upon the existing regional integration processes.

On the side of the ESA, the RPTF is headed by the Chief Technical Advisor (CTA), supported by

officials from the Embassies (whose Ambassadors serve as Lead Spokespersons), a representative

of the ACP Secretariat and technical experts who are selected by the RNF. The experts selected

by the RNF may change, depending on the issues to be discussed by the RPTF. The RNF

Secretariat will service the meetings, distribute documentation and ensure interpretation and

translation services are available. However, unless there is a specific need for interpretation, the

meetings will be conducted in either English or French, although the minutes of the meetings are

in French and English and publicly available. The RPTF holds its meetings as and when

necessary.

5.1.1 The main objectives of the RPTF

The main objectives of the RPTF are summarized below:

To prepare for the meetings of the ambassadors and the senior officials, including preparation

of a schedule of meetings, agreeing on locations and preparing draft agendas;

To exchange information and views on issues pertaining to the negotiations in an informal

manner so that areas of divergence and convergence are known to both sides;

To identify and advise on capacity building assistance which can be obtained from other

programmes financed by the EU (in particular, the €20m PMU, the €10m PMU, Trade.Com,


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44

CDE, PROINVEST, Trinnex and COLEACP (SPF and PIP));

To evaluate the effectiveness of development programmes which are aimed at the removal of

supply-side constraints;

To assess and advise on the effectiveness of the preparations for the EPA in respect of issues

raised in Article 37.3 of the Cotonou Agreement; and

To propose a programme of activities aimed at co-operation in international fora in accordance

with the provisions of Articles 39 and 40 of the Cotonou Agreement.

5.1.2 Outputs of the RPTF

Since its inception the RPTF has held five meetings12. These have covered all the six clusters as

well as specific issues, such as fisheries, SPS, rules of origin, etc. However, on some occasions

the RPTF has been accused of overstepping its mandate. For example, the 5th Meeting of the RNF

held in Lusaka on October 19-21 noted that in terms of “…procedure, the RPTF had overstepped

its mandate and terms of reference by discussing issues in detail such as tariffs, rules of origin, by

proposing a safeguard mechanism, by reacting to the EC comments on the FFA and seeking to

agree on areas of convergence and divergence for onward transmission to the Ambassadors and

Senior Officials for formal negotiations and agreement”. The TORs require the RPTF to:

“…exchange information on issues pertaining to the negotiations, with an

informal exchange of views on negotiating positions so that areas of

divergence and convergence are known to both sides, enabling each side to

be able to prepare for meaningful negotiations at the

Ambassadorial/Senior Official and Ministerial/Commissioner levels”.

5.2 DEVELOPMENT SUPPORT FROM THE EU AND OTHER DONORS

The difficulties of securing funding support for the national preparatory processes of the

negotiations have been alluded to earlier and have consistently been highlighted, especially at the

RNF meetings. This has been the case, in spite of the fact that a 2 million programme of

assistance to strengthen the negotiating capacity of the ESA region had been signed between the

EC and COMESA on January 22nd, 2004. Subsequently, the EC approved two major programmes

of support for regional integration. These were:

(a) A 30 million regional integration support programme (RISP); and

(b) An 80 million regional integration budget-support (RIBS) programme).

The RISP started in July 2005. It contributes directly to the regional integration process. It

supports the policy agenda of COMESA and the EAC, thus promoting the harmonization of their

integration agenda. It seeks to develop the capacity of the integration organizations and their

member states in policy formulation, implementation and monitoring of multilateral and regional

trade and trade-related areas. RISP has also been instrumental in supporting the ESA countries in

their preparation for the EPA negotiations, among others.

The RIBS programme seeks to support the ESA countries in their reform process to move

towards regional integration, especially by supporting them to continue with the process of

economic liberalization and reform to do so and not be constrained by budgetary limitations. It is

12 4th meeting, 16th September Brussels, 5th meeting, 22 October 2005, Lusaka.


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45

also intended to support South-South integration, one of the priority areas of the ESA EPA

negotiations.

In addition, to these programmes, the EC is providing support to the transport and

communications sector in order to help “eliminate supply-side constraints”. Consistent with this,

a special “infrastructure facility” to which 60 million in grant financing and 260 million in

loan financing from the European Investment Bank (EIB), was allocated. This was followed in

July 2006 by the launch of the “EU-Africa partnership for infrastructure” to which some 5,600

million of EDF funds have nominally been earmarked. These funds will be drawn from

allocations to national indicative programmes and regional indicative programmes as well as the

recently established EU so-called horizontal facilities (e.g. the water facility, the energy facility,

and the infrastructure facility).

Unfortunately, a closer analysis shows that the funds allocated under these initiatives fall far short

of the funding requirements of the region in general and the requirements for the types of

facilities envisaged by the ESA EPA draft text. The ESA EPA text envisages need for an

adjustment facility, an infrastructure facility, a debt facility, a general development fund, access

to EIB resource all of which would be regionally managed.


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46

VI ASSESSMENT OF COHERENCE BETWEEN COMESA

INTEGRATION PROCESSES AND EPA COMMITMENTS

More than 20 years ago, the leaders of the countries in Eastern and Southern Africa had a vision -

to create a market that was conducive to intra-regional trade and investment, which would lead to

economic recovery and sustained growth and development. It is this dream that COMESA seeks

to realise. COMESA is a regional integration grouping of 20 countries in Eastern and Southern

Africa13. The organization was established in 1994 as a successor to the Preferential Trade Area

for Eastern and Southern Africa (PTA)14. COMESA emerged as a result of the Lagos Plan of

Action (1980) and the Abuja Treaty (1991), which defines the roadmap towards the building of

the Africa Economic Community (AEC). Today, COMESA is one of the six regional groupings

considered to be the building blocks of the AEC. Its integration programmes seek to contribute to

the attainment of the continental objectives of building the AEC in the horizon of 2025.

6.1 COMESA INTEGRATION OBJECTIVES AND PROCESSES

6.1.1 COMESA Integration Objectives

COMESA is an instrument of economic cooperation, whose principal objective is to promote

harmonious and complementary development among the member states. Chapter three (3) of the

COMESA Treaty spells out the aims and objectives of the common market: These are:

(a) Attainment of sustainable growth and development of the member States by promoting a

more balanced and harmonious development of its production and marketing structures;

(b) Promotion of joint development in all fields of economic activity; to raise the standard of

living of its peoples and to foster closer relations among its member states;

(c) Co-operation in the creation of an enabling environment for foreign, cross-border and

domestic investment including joint promotion of research and adaptation of science and

technology for development;

(d) Promotion of peace, security and stability among the member states in order to enhance

economic development in the region;

(e) Strengthening the relations between the Common Market and the rest of the world and the

adoption of common positions in international fora; and

(f) Contributing towards the establishment, progress and the realization of the objectives of the

African Economic Community.

13 Currently membership of COMESA comprises 20 countries, namely: Angola, Burundi, Comoros,

Djibouti, Democratic Republic of Congo, Ethiopia, Egypt, Eritrea, Kenya, Libya Madagascar, Malawi,

Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia and Zimbabwe.

14 The PTA was established to take advantage of a larger market size, to share the region’s common

heritage and destiny and to allow greater social and economic cooperation with the ultimate aim of being

turned into an economic community.


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47

6.1.2 COMESA Integration Processes

The COMESA agenda seeks to deepen and broaden the integration process among member states

through more comprehensive trade liberation measures, such as complete elimination of tariff and

non-tariff barriers to trade and of customs duties; the free movement of capital, labour, goods and

the right of establishment; promotion of standardized technical specifications, standardization and

quality control; elimination of controls on the movement of goods and persons; standardization of

taxation rates, and conditions regarding industrial co-operation, intellectual property rights and

investment laws; promotion of adoption of a single currency and the establishment of a Monetary

Union (MU); and the adoption of a Common External Tariff (CET).

The main objective of trade liberalization has been to create a single economic space, in which

there is free movement of goods and services, capital and labour. This was to involve the gradual

reduction of customs duties and charges of equivalent effect on goods originating and traded in

COMESA, leading ultimately, to zero tariffs and charges by the end of 2000. It also involved

removal of non-tariff barriers to trade and introduction of rules of origin.

A. The COMESA Free Trade Area

The FTA was launched in October 2000 and has continued to grow. Burundi and Rwanda joined

the FTA as from 1st January, 2004, and Comoros and Libya joined in 2006, bringing the number

of countries in the FTA to thirteen15. The objective of the FTA is to create an integrated market

for trade in goods and services and to increase the COMESA region’s competitive advantage as a

production base geared for the world market. The integrated enlarged market should attract

investments much more effectively than the much smaller national domestic markets and thus

stimulate growth and raise the stakes of member States in one another’s purchasing power and

economic progress. The FTA, coupled with trade facilitation measures, has led to some

significant, albeit uneven gains for the COMESA region. Although it primarily concerned with

the free movement of goods, it has also helped in hands-on capacity building and training in trade

policy for the private sector as well as the public sector. To that extent, issues of ROO,

safeguards, dumping and anti-dumping measures, etc are now better understood.

The expansion of the FTA, however, is facing some challenges. First, there is reluctance of some

members (Uganda, Ethiopia, Seychelles, Swaziland, etc) to join the FTA. While these countries

in principle support the idea of joining the FTA, they have time and again given excuses, such as

conducting consultations with the private sector or concluding studies into the consequences of

joining the FTA. For example, Uganda has deferred its decision on joining the FTA to December

2007. Ethiopia has said it will not make a decision on joining the FTA until it receives and

considers the outcome of a study it commissioned on how entry is likely to impact its economy.

Seychelles will only make a decision after it has completed consultations with the COMESA

Secretariat on how some of the goods it wants to be treated as sensitive items are likely to be

affected once it joins the FTA.

15 Burundi, Comoros, Djibouti, Egypt, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Sudan,

Zambia, and Zimbabwe.


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48

B. The COMESA Customs Union

Although it had been planned to have a Customs Union (CU) in 2004, a decision was taken in the

same year to consolidate first the FTA. Consequently, the launch of the CU was postponed to

2008. The transition toward a CU thus began in 2004. A roadmap on the work programme to be

implemented to attain the CET by 2008 was adopted and to-date substantial preparatory work for

the CU has been done. This includes Common Tariff Nomenclature (CTN), safeguards and trade

remedies, a common valuation system and regional competition regulations. The CET target rates

for capital goods and raw materials have already been set. The outstanding issues on which

agreement has not been reached yet include: (i) the CET for intermediate goods and finished

goods, (ii) the list of sensitive goods, and (iii) the list of goods of economic importance.

COMESA members have agreed to work towards the harmonization of a 4-band CET as follows:

(a) Capital goods: 0%

(b) Raw materials: 0-5%

(c) Intermediate goods: 10-15%

(d) Finished goods: 20-40%

Nonetheless, it is hoped that the COMESA CU will create a more predictable economic and

trading environment in the region.

Figure 6.1: COMESA Transformation

C. COMESA Common Market

As part of the build up towards the attainment of

the Common Market, COMESA has also made

progress in deepening the free movement of capital

and investment and in the removal of impediments

to the movement of persons. Efforts have been

focused on establishment of a common investment

area, a regional investment agency (RIA) and the

Protocol on the free movement of persons

Implementation of the COMESA agenda as defined

in the Treaty is on track. COMESA has finalized a

medium term strategic plan for the period 2006 –

2010. The Plan aligns the strategic orientations of

COMESA over a five year period in order to facilitate gradual and coherent implementation of

the COMESA regional integration agenda. The COMESA agenda is supported to a large extent

by the RISP through a Contribution Agreement signed with the EC in 2005.

6.2 COMESA COMMITMENTS TO EPA

As noted earlier, as a matter of principles EPAs must support the existing regional integration

initiatives and not undermine them. To that extent, the ESA EPA and the COMESA regional

integration agenda must co-exist and support each other. It will also be of interest to note that

even before EPAs, the regional integration initiatives were pursuing the very objectives being

pursued by EPA such integrating the regional economy into the global economic system.

COMESA’s integration agenda therefore has a direct link to the proposed EPA through its


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49

various programmes as shown below.

6.2.1 COMESA Common External Tariff

This Review has noted already that COMESA has focused on establishment of CU. One of the

key components is a Common External Tariff (CET) which is applied by all members of the

integration block to imports non-members. The 19th Meeting of the Council of Ministers (Kigali,

Rwanda) in May 2005 approved a revised Road Map on the Work Programme to be implemented

to attain the CET by 2008. Initially a 4 tier CET structure (of 0%, 5%, 15% and 30% for capital

goods, raw materials, intermediate goods, and finished goods, respectively) had been agreed. It

was later revised to take into account the impact on the member states that were applying tariffs

lower than the CET, issues of MFN treatment, the impact of overlapping memberships to

integration bodies; as well as member-states’ tariff bindings under the WTO framework. In

addition, there was need to apply differentiated CET rates on some products considered of

economic importance, and those which are deemed sensitive to the region. The current MFN

rates of COMESA member states are shown in Table 7.1 below.

Table 6.1: MFN Rates of COMESA Member States (in %)

COUNTRY

CAPITAL

GOODS

RAW

MATERIALS

INTERMEDIATE

GOODS

FINISHED

GOODS

COMESA

CET*

0 5 0-15 20-40

Djibouti - 5-10 20 33

Egypt N/A 5-20 10-20 30-40

Ethiopia 5-15 0-15 10-30 30-40

Kenya** 15 0-5 10 25

Malawi 0-5 0-5 10 25

Mauritius 0 0 0 0-30

Rwanda 0 5 15 30

Sudan N/A 10 25 45

Swaziland Not clear Not clear Not clear Not clear

Uganda 0 0 7 15

Zambia 0-5 0-5 15 25

Zimbabwe*** 0-5 5-10 15-20 20-40

NB: * COMESA does not yet have a CET yet. These are proposals still under negotiation.

** Kenya’s structure is not confirmed in respect of splits by category

*** Protected goods are subject to tariffs of 60-100%

Source: Adopted from Kasango and Chigaru (2006)

As Table 6.1 above indicates, the MFN rates for finished goods are much more dispersed among

states, than the rates for other categories of goods. The COMESA CET has a number of

challenges to overcome before it can be realised. The most critical area of concern and by

implication for the EPA is the harmonization of maximum tariffs between states that are currently

applying rates below 30% and those presently in the range of 30-40%. Some countries remain

heavily reliant on tariffs as sources of revenue and a means of protection for their local industries


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50

and therefore wish to keep higher tariff rates. Countries in the EAC such as Uganda will find it

unacceptable to raise their rates beyond the current maximum level agreed. Secondly, in the

context of EPA, the latter has the tendency to rush the programme for attainment of the CET

without due consideration of the internal regional dynamics, which may be unsustainable. This is

in direct contradiction of one of the main principles of EPA – regional integration – in which

EPAs are expected to “… take into account the regional integration process within the ACP”

(Article 35.2) by requiring each negotiating region to adopt a CET by January 1st, 2008. While,

as indicated earlier COMESA commits itself to achieve a CU in 2008, it has not been clearly

resolved that this is the one which will be adopted for ESA and even then it is also a function of

how fast and easily the issue of tariffs will be resolved.

It is possible to argue that EPA is providing some stimulus for further integration by pushing the

ESA region to deal with the various problems relating to integration discussed above. However, it

is also clear that much of the pressure for taking forward the regional integration agenda through

EPAs is being exerted externally by the EC by imposing arbitrary timetables and progress targets.

This is of serious concern given that region-specific internal factors, such as the ones faced by the

ESA region, should be the driving force of this process. There are concerns that the external

pressure being exerted on the regional integration process by the EC through EPAs is leaving

little space to focus on these internal factors and provide time for suitable solutions to be found.

6.2.2 Regional Infrastructure Programmes

As this Review pointed out earlier, most ESA countries did not benefit from the previous trade

arrangements (Lomé Conventions), on account of supply constraints. Many agricultural products

are not able to reach markets on due to poor physical infrastructure, such as roads, ports, etc.

COMESA has been pursuing a programme to improve regional infrastructure. COMESA seeks to

provide the business community with a more efficient transport and communications system

needed for the movement of goods, persons, labour, capital, and services. Integration of transport

and communication systems is expected to increase accessibility to points of production and

consumption; lower unit costs for the services will enhance competitiveness of goods and

services and stimulate economic activity. Harmonization of transport and communications

equipment and accessories will facilitate the establishment of manufacturing enterprises.

COMESA’s philosophy has been that our transport and communications infrastructure should be

effectively linked to provide cheaper and more efficient means of moving goods and services

across national borders. The focus has been on the following sub-sectors: roads and rail transport,

air transport, inland water and coastal maritime transport, and communications. COMESA has

endeavoured to support not only the construction of intra-COMESA transport networks, but also

how these can be coordinated to facilitate traffic and regional cooperation.

In the road sub-sector COMESA has focused on rehabilitation and upgrading of existing sub-

standard interstate road links as well as construction of new ones where they do not exist. It is

estimated that intra-regional main road network is about 23,250 km long, of which 5,300 or (40

percent) are not tarmaced. Efforts have been directed at eliminating non-tariff barriers to the

smooth flow of inter-state road transport. To this end, a COMESA Motor Vehicle Insurance

Scheme was launched on July 1st, 1987. Holders of the card (issued by the national insurance

agencies) are no longer required to take out an insurance cover every time they cross inter-state

borders. In order to retain all business within the region a COMESA Re-Insurance company was

established.


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51

At the same time, while the programme of harmonisation and gradual reduction and eventual

elimination of road tolls and other charges levied on road users was implemented, COMESA

introduced a single transit transport document – the Road Customs Transit Declaration (RCTD) -

applicable to member states16. Vehicle specifications and axle load per truck and/or trailer have

been agreed upon in order to preserve the life of international roads in the region. Other measures

introduced include the liberalisation of trucking industry, the new standard railway combined

consignment note, the railway single invoicing system, the radio communications system, the

“Sender Keeps All System”, the Advanced Cargo Information System (ACIS).

6.2.3 Regional Energy Programmes

In the energy sector, COMESA envisages joint development and management of both renewable

and non-renewable sources of energy and to promote joint exploration and exploitation of

resources as well as, joint utilization of training and research utilities; and research programmes

on renewable energy. COMESA is also concerned with environmental issues such as (a) the

adoption of common strategies for the preservation of the environment against industrial

agricultural and other pollution; (b) collaboration in the management of shared natural resources;

(c) adoption of common standards in industrial production and cooperation in limiting the

dumping of toxic waste in the sub-region; and (d) cooperation in the management and

preservation of ecosystems and biological diversity.

6.2.4 Regional Institutions

One of the most successful records of achievements for COMESA has been the creation of

specialised institutions. COMESA has created key institutions covering a wide range of sectors to

assist in the implementation of the Treaty. These include the PTA Bank, COMESA Re-insurance

Company (ZEP-REP) and others. But one of the key institutions that are relevant for the ESA

EPA is the COMESA Infrastructure Fund (commonly known as the COMESA Fund).

The COMESA Fund was created following the realization that the success of the ESA region in

reducing poverty (a key objective of the national PRSPs, the Millennium Development Goals,

NEPAD, etc), leading to higher levels of economic growth, is a function of their ability to remove

supply side constraints. It was recognized that this would help in lowering the costs of

production. Consequently, this would mean significant improvements in the region’s

infrastructure and its more efficient use. In spite of the urgent need to improve infrastructure, the

problem has always been how to finance such improvement. The levels of donor aid and

concessionary financing have not been high enough to meet the region’s infrastructure

requirements. On account of a small domestic capital base, the region’s governments have also

not been able to finance their infrastructure needs from the public budget, public debt. In addition,

most ESA countries are already saddled with large, and sometimes unsustainable public debts,

which means more borrowing from international markets now is no longer an option.

16 The RCTD is a standard document has replaced the multiplicity of transit documents, which have been

used so far.


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52

Figure 6.2: The COMESA Infrastructure Fund

Source: COMESA Secretariat

The COMESA Fund has two components, (a) the Priority Investment Plan, and (b) an

Infrastructure Financing Facility.

(i) The Priority Investment Plan

Understandably, the Fund cannot meet all the region’s infrastructure requirements. It can address

a select priority needs. The PIP is therefore a framework for determining what infrastructure

projects should be considered for funding by the Fund for the whole region, with emphasis given

to transport and ICT projects. Priority is given to such projects which are instrumental in

advancing the process of integration in the region. Typically such projects should: (i) benefit

more than one country in the ESA region, (ii) be economically feasible and viable with a public

sector component, (iii) have a positive economic rate of return, (iv) satisfy the requirements of an

environmental assessment study, (v) clearly demonstrate an improvement in the regional

investment climate, (vi) facilitate increased production and trade, and (vii) be able in part to

attract private sector financing.

(ii) The Infrastructure Financing Facility

This is a mechanism for disbursing and managing the pooled funds for project financing. It

includes (i) an infrastructure fund committee, (ii) a pooled fund, (iii) a fund management

structure, and (iv) a technical assistance fund.

6.3 CONCLUSION

One of the principles of an EPA is that it must be built on existing regional integration initiatives.

COMESA has been pursuing a regional integration programme which started long ago. A lot has

been achieved, but a lot more needs to be done. However, the EC by requiring the conclusion of

the EPA negotiation by January 2008 is exerting undue pressure on the region’s integration

programme. This is in direct contradiction of the said principle of regional integration.

INFRASTRUCUTRE

FUND COMMITTEE

FUND MANAGERS

SPECIAL PURPOSE VEHICLE

LEASE AGREEMENT

POOLED FUND

ESA GOVERNMENTS

DONORS

INTERNATIONAL FINANCING INSTITUTIONS

INTERNATIONAL CAPITAL MARKETS

Loans

Loan

Rep

aym

ent a

nd In

tere

st

Equit

y

Equit

y

PRIORITY INVESTMENT PLAN

Priority Projects

VII THE MAIN CONCLUSIONS AND WAY FORWARD

The foregoing analysis has attempted to highlight the progress made as well the challenges in the

ESA-EU EPA negotiations. What is emerging is that the process is complicated and generally

reflects the uniqueness of interests of the ESA region compared to those of other regions. This

chapter attempts to identify the main conclusions arising from the analysis and to make

recommendations on the way forward.

7.1 THE MAIN CONCLUSIONS

The main conclusions arising from this analysis are as follows:

1. Change in the relationship between the EU and ESA: The EPA negotiations mark a

significant turning point in the longstanding relationship between the EU and the ACP countries

in general and the ESA countries in particular. While the Lomé Convention trade arrangements

allowed these countries preferential and non-reciprocal access to the EU market, the EPAs will

eventually become asymmetrical but reciprocal regional trade agreements. Many of the unique

features of the Lomé Convention, which up until the 1970s were hailed as the model for North-

South negotiations (such as the compensatory schemes and the commodity protocol guarantees),

have already been eroded as part of the EU’s effort to change its relationship with these countries.

The changes to the trade regime represent one more step in the process with significant

implications for these countries.

2. Unequal relationship between the EU and the ESA countries: The relationship between

the EU and the ACP in general, and the ESA countries in particular, has never been an equal one.

This has not changed in the negotiation of the EPAs. There seems to be a naïve assumption

among the ESA countries that they have the option to sign up to, or reject whatever they wish.

There could be nothing further from the truth! The EU provides aid to ESA countries, as

everywhere in the ACP regions, including funding the EPA negotiations. The ESA countries, like

all the ACP countries that are involved lack the negotiating capacity compared to the EU and are

stretched to negotiate simultaneously in other negotiations – multilateral (such as WTO), regional

and bilateral. These countries are constrained in terms of resources (especially financial) and

skills compared to the EU, and they have little to offer the EU but potentially much to gain from

the negotiations.

3. Progress made in the negotiations: Since the beginning of the ESA EPA negotiations about

two years back, there has been some limited progress, which has been characterized by some

measure of consensus on a number of issues as well divergence of opinions in a number of areas.

A summary of the positions of the negotiating parties is provided in Appendix 2. What is clear

from this is that a lot remains to be done and the parties will have to do more to ensure they

harmonize their positions.

4. The timetable for completion of the negotiations: In spite of putting in place an elaborate

work plan, the negotiations are generally behind schedule. The reasons for this are (a) the EU’s

prevarication (going back and forth) on crucial issues (such as development, fisheries), (b) its

untimely and selective responses to key issues raised by ESA group (especially through the draft

EPA text), (c) the late commencement by the ESA region on Phase II, mainly due to the


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54

challenge of putting in place negotiating structures and building of regional harmony and

positions, and not least is (d) the slow disbursement of EDF funds to expedite negotiations. All

these delays have filtered through the negotiation phases and has resulted in the fact that to date,

ESA is way behind schedule as per its mandate, even though its way ahead of negotiations when

compared to other regions.

5. The preparedness of ESA to conclude the negotiations: The ESA countries are generally

not prepared for the conclusion of the EPA negotiations. This is reflected in the reports of the

NDTPFs to the various RNF meetings. Some have not carried out the impact assessment studies

or those that have been carried out have been substandard and cannot help in guiding the country

positions. Many NDTPF have reported challenges including institutional, financial and capacity

problems. They have not been able to sensitize the public about EPAs, as a result of which there

remains limited understanding about EPA and general hostility towards EPAs among many

sections of the public. Key stakeholders such as parliamentarians have so far not been involved.

At the regional level, the integration agenda which started well before the EPAs is yet to be

finalized. The COMESA CU, which is a crucial ingredient of an EPA, is a case in point. In the

circumstances, the EPA will be seen to be rushing the regional integration agenda, although in

principle EPAs are supposed to support and not to disrupt regional integration agendas.

6. ESA’s Capacity problems: For ESA capacity constraints remain a key challenge. It will be

remembered that the countries are involved in various trade negotiations – at regional and

multilateral levels. However, negotiating a development-oriented EPA is a new experience for

the ESA countries. EPA negotiations go beyond the traditional focus on market access to include

the elements of a regulatory framework conducive to private sector development. The technical

and institutional capacity of regional and national institutions as well as the non-state actors,

along with the political commitment at all levels are essential ingredients for a successful EPA.

The challenge for ESA therefore is to build the capacity in terms of negotiating and analytical

skills within the agreed time.

7. Differences in the level of ambition: The analysis has also revealed the differences in the

level of ambition among the ESA members. As a result, there are differences in expectations from

the EPA among the various members. This is also seen in the effort with which the countries are

pushing issues which they consider of importance to their countries. This differentiation is also

discernible when one takes note of the fact that majority of the group are LDCs, with a smaller

group of non-LDCs. The latter are pushing for negotiation of such issues as services, new issues

and fisheries. The former are a little more cautious and are less enthusiastic on these issues. The

challenge for ESA is to ensure coherence of positions and to avoid conflicts in trade policy and

commitments.

8. The regional integration agenda: One of the principles of an EPA is that it must be built on

existing regional integration initiatives. There are already a number of regional integration

programmes within the region – COMESA, EAC, IOC, etc. Member-states have taken on

obligations of integration in these bodies. However, the EC by requiring the conclusion of the

EPA negotiation by January 2008 is exerting undue pressure on the region’s integration

programme. This is in direct contradiction of the said principle of regional integration. At the

same time, it is difficult to engage in negotiations in those areas, where common policies have not

yet been put in place.

9. The Singapore issues: The EC is keen to negotiate subjects (investment, government

procurement, competition policy) whose modalities are yet to be agreed in the WTO multilateral

trade negotiations. This is in spite of the fact that the ACP countries have collectively stated that


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they are opposed to such a move and have described their disagreement with the EU on these

issues as one of a “fundamental nature”. This demonstrates the EC’s readiness to ignore the

interests of other negotiating partners and to secure through EPAs what it has so far failed to

achieve in the context of the WTO negotiations.

10. The development dimension: In terms of substance of the negotiations, the key priority for

the ESA region is the development component of an EPA. ESA is justified to demand that the

EPA must include effective measures to enhance production and trading capacity, diversify

exports, and develop human resources if the ESA region is to benefit from improved market

access in the EU. Consistent with this, the ESA EPA must be accompanied by measures to

remove supply-side constraints like unreliable public utilities, infrastructure, weak institutional

policy frameworks and low labour productivity. This could include a framework investment

agreement that could attract more investments into the region. The EPA must also include

mechanisms to offset the negative effects of tariff reduction on government revenues. It must also

cover adjustment costs as well as non-tariff barriers (NTBs) in EU markets such as technical,

quality and food safety requirements.

11. Financing of EPA: The financing of EPAs is one of the most contentious issue in the

negotiations. There continue to be divergent views over whether there is need for additional

financial resources over and above the EDF to be granted to the ESA countries along with other

ACP countries. The ESA region, like other regions, has argued that additional resources are

needed to cater for adjustment costs that would result from the implementation of EPAs and to

ensure that resources currently available under EDF are not diverted from the development

priorities of these countries. Meanwhile, the EC is adamant that no resources will be provided

outside the 10th EDF. They argue that “…providing resources outside and parallel to the EDF is

tantamount to financial mismanagement”.

12. The EC as a negotiating partner: The analysis raises a fundamental issue about the EC as a

negotiating partner. One cannot help feeling that the EC is keen to promote its own interests at

the cost of the weaker partner, in this case the ESA region. This is reflected in the way it is

blocking progress on issues of interest to the ESA region, reneging on pledges and commitments

made in the context of the CPA, ignoring deadlines and pushing its own agenda heedless of the

resistance from the ESA countries. The EC mindset suggests that in the near future, as the

December 2007 comes closer, the negotiations are not going to be easy. ESA must be prepared

for trade-offs, arm-twisting, bullying, threats, etc by the EC side. This is because the EC is

determined to have its way at any cost!

7.2 THE WAY FORWARD

7.2.1 Measures necessary to support the completion of the negotiations

In order to ensure a successful completion of the negotiations, the parties must give consideration

to a number of important measures. The following measures are recommended by this Review:

(i) Integration of EPA activities into the national trade policy: The review has established

that there is considerable suspicion and misunderstanding of EPAs at national level. This is true

of both the public and private sector and has led to little attention and resources being allocated to

EPA activities. It is important therefore that the national governments of the ESA countries

mainstream EPA activities into their trade and development policies. This should go a long way

in giving the prominence and importance the EPA deserves among the public.


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(ii) Strengthening the technical capacity of the ESA group: The capacity gap of the ESA

group at national and regional level has been elaborated. There is need for support of the group

through targeted training for negotiating teams, increasing the numbers of technical staff working

on EPA at the Secretariat.

(iii) Coordination with other regions: Currently, there is very limited, if any, coordination and

sharing of experiences with other regions negotiating EPAs with the EU. This is an unhealthy

development leading to lost opportunity. ESA as a group has a lot to benefit from working closely

with, and learning from the experience of, the other regions. The Secretariat should therefore

endeavour to work out a mechanism for such coordination along with the ACP Secretariat in

Brussels. There might be a case for considerable harmonization of negotiating positions and

approaches among the regions.

(iv) Improvement of information flow: As noted earlier, the issue of information flow within

the ESA negotiating structure is important and must be addressed. At national level RNF

members need to constantly and appropriately report to the NDTPFs on the decisions taken and

the challenges that have to be addressed; the Ambassadors need to report t the Ministers and to

the RNF.

(v) The negotiating strategy: As pointed out earlier, the ESA negotiating strategy is less than

satisfactory. More time and resources should be spent on developing the region’s negotiating

strategy, including fallback positions (or redlines) on most, if not all, issues. It is important that

the negotiators stick to and articulate the region’s position clearly and definitively. They should

not be hurried to abandon the region’s position; full consultations with the member states should

be exhausted before any position or negotiating stance is changed.

(vi) Funding of EPA-related activities: This has been one of the key challenges during the

negotiations. It is important that the funding is not left to the EC alone, especially given that it

compromises the position of the countries in the negotiations. They may not be able to object to

the EC position on issues of interest to them since “He who pays the piper orders the music!”

Member states should demonstrate their commitment to EPA by allocating some funding to EPA-

related activities at both national and regional level. In fact, one reason why EPAs should be

mainstreamed into the national development policy is to make the funding easier. Furthermore,

given that some activities were shelved due to funding problems at regional level, the Secretariat

should endeavour to rationalize activities and expenditures with a view to cutting costs. Finally,

ESA should embark on a sustained strategy to lobby the EC to introduce some more flexibility in

the EDF procedures.

(vii) Additionality of resources: The ESA countries must continue to lobby the EU and other

donors for additional funding for the EPA implementation. As the review argued earlier, the

resources under the EDF are simply not enough and given that the EDF is finite while the EPA is

a permanent feature, there is even more reason for increased funding. In this context, ESA must

implore the EU to make good on the promised additional funding under the “Aid-for-trade”

initiative, including developing concrete proposals for implementing this funding.

(viii) Resolution of the issue of the ESA configuration: As the review indicated, the issue of

the geographical configuration in the region is a cause of concern. Currently, the region is

negotiating as ESA. This has its complications as indicated in Chapter 3. The proposal to change

to COMESA EPA is also fraught with controversies. This review is of the view that the resolution

of this matter should be at a higher (political) level and should be based on an informed position.

To that extent, the Secretariat should commission a study to inform the decision-makers of the


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implications of current and proposed configuration.

(ix) Resolution of the problem of overlapping membership: Another issue of concern has been

the overlapping membership to various regional integration blocks. This issue has serious

implications for the EPA as discussed in Chapter 3. This review is of the view that it should be

resolved at the highest level and the African Union should continue its efforts to find a lasting

solution to it, including harmonization of programmes as a short-term measure. Member states

must also seriously consider this matter and take concrete steps to ensure they maintain

membership in only ONE regional body.

(x) The EPA text: There has been a lot of criticism of the text from varied respondents

interviewed by this review. Some criticism has been justified, while some has not been justified.

However, some useful lessons have been learnt from the criticisms. It has been pointed out that

the text is bloated with repetitions and irrelevancies, that issues of substance were mixed with

form, that the drafting did not involve legal experts, that basic principles were not agreed before,

incomplete annexes, many bracketed issues, etc. This review has gone through the text and agrees

that there is a grain of truth in these observations. The review recommends that efforts be made to

address these inadequacies; key concepts, terminologies and interpretations be defined first in the

preamble, etc. Most importantly, there is need to watch carefully the language used in the text and

to that extent every effort be made to involve legal experts (trade lawyers) in the revision and

fine-tuning of the text, as well as in the negotiations.

(xi) The relevance of an integrated strategy: The EC is only one (albeit an important) trade

partner of the ESA countries. It is important, however, that negotiations with the EU do not

determine the global and regional interests of the ESA region. There are two important links in

this regard:

The changing value of EU offers: The value to ESA countries of any EU offers, and the cost

to them of EU demands may be different after 2007 than they are today. This is because the

policy changes agreed in other fora may have changed the base line. For instance, the value

of preferential access to the EU market will be eroded if, in the meantime, the EU offers

equivalent preferences to other countries or a fortiori lowers its MFN tariffs. Similarly, the

economic and fiscal impact of ESA reciprocity will be different if the countries have agreed

substantial MFN tariff cuts in the WTO than if they have not. There is no point therefore

struggling hard for “concessions” that will be devalued by the time they come into effect or to

resist “demands” that may be conceded any way in other fora.

Setting the agenda: It is vital that the negotiations with the EU do not set the agenda for other

fora, unless the ESA countries decide that this is in their interests. For instance, the post-2007

negotiations will run concurrently with the Doha Round (assuming its resumption), which

may cover many of the same topics. ESA countries must avoid foreclosing on their

negotiating options by premature agreement with the EU. On the other hand, if it is in their

interest to do so, an early agreement with the EU might force the hand of other, less

sympathetic parties in the WTO by presenting a fait accompli.

7.2.2 Time needed to effectively conduct negotiations

One of the major conclusions from this review was that there is need for more time to be

accorded the ESA group before signing of EPAs with the EU. Key stakeholders interviewed

indicated the need for three more years for the region to fully complete negotiations, put in place


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the necessary structures and mechanisms so as to be able to get the most out of an EPA. This

suggestion is justified given the fact that: (a) negotiations are behind schedule; (b) capacity

building measures promised during the negotiations have not been forthcoming; (c) a whole range

of issues remain controversial and unresolved (such as development, agriculture, market access,

as well as trade related issues); (d) outstanding issues such as to which agreement is unforeseen in

the near future. Reaching satisfactory positions on these key issues calls for more time for the

negotiations.

At the COMESA level, the three years will be used to adequately address the following

outstanding issues in the region’s integration agenda:

Finalization of work on the common tariff nomenclature/common external tariffs for use

during negotiations;

Finalization of the list of sensitive products in the ESA region;

Finalization of protocols on rules of origin, safeguards, SPS and TBT;

Development of development benchmarks;

Finalization of institutional and legal issues to EPA negotiations such as the configuration

and dispute settlement procedures, among others;

Exploration and clarification of the legal relationship between the CPA and EPAs.

This review has shown that the December 2007 deadline for EPA negotiations is not realistic and

is quite isolated from the reality on the ground. Therefore calls for extension of negotiations are

justified. If both parties are sincere in seeking to conclude an EPA that will be beneficial to both

parties, then they can consider the proposal for the extension of the current waiver under the

WTO. The waiver option should be used as a delaying tactic (taking into account the fact that

under normal circumstances decisions on waivers under the WTO take at least two years to be

made). This option will allow the parties to continue trading on a preferential basis without opting

for the less favourable GSP scheme.

The EC on its part needs to address the ESA concerns over the rigidity of the timetable currently

in place for the completion of the negotiations. In trying to rush the conclusion of the negotiations

by 2008, the EC is trying to avoid the negotiation of the extension of the waiver with other WTO

members. However, in keeping with the spirit of the CPA, development and poverty reduction

must remain the guiding principle. Sticking to an inflexible timescale will have negative

implications in terms of poverty reduction. As the European Parliament Committee on

Development (2005) clearly notes, WTO rules are open to interpretation when addressing the

implementation period. Article 24.5 provides that an interim agreement of a region trade

agreement should include a plan and a schedule for the formation of the RTA within a reasonable

time. The understanding of Article 24 defines “reasonable time” as 10 years and specifies that this

should be exceeded “only in exceptional cases”. In the context of EPAs, this implies there is

scope to present the EU-ACP EPA as an exceptional case as the level of development between

the parties varies.

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APPENDICES

APPENDIX 1: TERMS OF REFERENCE FOR THE REVIEW

1. Background

The ESA region is currently engaged in negotiations of an EPA with the EC that were launched

in February 2004 in Mauritius. The region has identified 6 key clusters for negotiations, namely

development, agriculture, market access, fisheries, services and trade related issues. Currently

negotiations are in the substantive stages and there have been negotiations in all areas except

services.

ESA Group is actively preparing for the negotiations through a work programme and activities

through annual work plans. The key activities envisaged in the work programme include,

continuous stakeholder consultative process, in-depth studies and preparations of position papers

over the whole period of negotiations, engaging in text based negotiations with EC, convening the

8th and 9th RNF and 4th ESA Council, the provision of trade negotiations skills training and

capacity strengthening.

In taking stock of the progress made in the ESA and EC negotiations, the ESA Ministers meeting held

in May in Kigali reiterated the commitment by both the ESA and EU to proceed to text-based

negotiations. In this regard, the ESA text would be an important basis for this purpose. Council

underlined the need to intensify work towards the finalization of the draft EPA text by holding

dedicated sessions and technical meetings in areas where there is no regional position and consensus so

as to fill up the gaps and remove existing brackets in the draft EPA text before engaging into text based

negotiations with the EC.

However there is some concern that the EU is not meeting her obligations and commitments set

out in the Article 37.3 of the CPA to provide capacity building support in the public and private

sectors of ACP States, including measures to enhance competitiveness, strengthening regional

organizations, support to regional trade integration, and assistance to budgetary support. As a

result, a number of ESA countries have faced a few challenges such as:

Delays in the release of funds by the European Union (these funds are used to facilitate ESA

countries engage in the negotiations)

Pressure from the EU on member states regarding membership to the configuration – some

countries have been asked to leave ESA and join the Central African configuration if they are

to access funds under the 10th European Development Fund (EDF)

Rationalization of Regional Integration Bodies – countries are being pressured to belong to

only one so as to avoid multiple membership in e.g. COMESA, EAC, SADC

There are differences in the definition of the development component of the EPAs, with the

EU stressing the importance of policies and regulations within the ESA while ESA stresses

additionality of resources


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Article 37.4 of the Cotonou Agreement states that:

“The Parties will regularly review the progress of the preparations and negotiations

and will, in 2006, carry out a formal and comprehensive review of the arrangements

planned for all countries to ensure that no further time is needed for preparations or

negotiations.”

Regarding this review, the ACP Council of Ministers held in Papua New Guinea at the beginning

of June 2006 decided that the review should be carried out in 2006, and that it should be

comprehensive, including an assessment of whether more time is needed for preparation or

negotiations. The meeting agreed that the review should be carried out between mid-July and

September 2006. The ACP Secretariat was mandated to procure the services of a consultant who

would liaise with the six ACP regions to ensure that the review is carried out on schedule. The

consultant will then compile an All-ACP report for submission to the ACP Secretariat. A two-

day validation workshop for all the six regions will then be held. The final report of the review

exercise will then be submitted to the MTC for consideration at a meeting which will be preceded

by that of ACP Senior Trade Officials to consider the report. The MTC will prepare a report on

the review and submit it to the ACP Council of Ministers, who may endorse it for consideration

by the Summit of ACP Heads of States and Governments that will be held in the Sudan, 4th –

10th December 2006. After endorsement by the Summit, the ACP review report will then be

used for the joint review with the EU. It was also stressed that during the review process,

negotiating configurations need to examine the progress made so far in the negotiations against

the joint roadmaps agreed to with the EU at the launch of the negotiations.

At ESA regional level the 7th and 8th RNF meeting decided that the region should undertake its

own review using the same TOR and use the results as inputs into the all ACP review. In

undertaking the ESA review the following all ACP process should be considered.

2. All ACP level preparations on the 2006 Review for EPA negotiations

To undertake this review, the Joint Committee of Ambassadors, as mandated by the Joint ACP-

EU Council, developed some terms of reference and accordingly agreed that:

1. The review shall be undertaken jointly in each of the regional EPA negotiations. This

process, which shall be formal, shall be initiated at the joint technical negotiating level

and completed at the level of chief negotiators with the objective of agreeing a joint text.

2. The review shall be comprehensive to include the structure, process and substance of the

negotiations and shall assess what progress has been achieved on both trade and

development issues (including, inter alia, regional integration, flexible and asymmetric

approaches to trade liberalisation, effective ACP access to EU markets and rules of

origin, capacity building, regulatory issues, safeguard measures etc.).

3. In order to arrive at a coherent result on horizontal issues, the parties shall ensure that

both ACP and EU Member States are kept informed regularly throughout the review

process.

4. The parties to each regional EPA negotiation shall assess jointly the work plan of

negotiations, in order to identify any necessary measures to support the timely

completion of the negotiations before the January 1st 2008 deadline for entry into force of


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the new arrangements. Furthermore, the review shall identify any ratification procedures

necessary to support the effective implementation of the EPAs in ACP regions.

3. Specific tasks

The consultant should focus on the following specific tasks for the ESA –EPA review. The

following issues, inter alia, shall constitute elements of all regional reviews:

Assessment of the state of play of the negotiations, including outstanding issues and major

obstacles (core objectives and principles; regional integration; trade in goods and services;

trade-related aspects; institutional and legal issues and other relevant issues);

Assessment of the development aspects, such as the development content of the above trade

and trade related provisions;

Assessment of the ESA EPA negotiation work plans/road-maps up to the end of 2007;

Assessment of the contribution of Regional Preparatory Task Forces, where they have been

constituted, and of the link between EPA implementation and the support from the European

Development Fund, EU Member States or other donors on a national or regional level;

Assessment of measures necessary to support the timely completion of the negotiations

(capacity to complete and to conclude the negotiations) as well as implementing the

Agreement reached;

Assessment of whether more time is needed to effectively conduct the negotiations;

Assessment of the coherence between COMESA integration processes and EPA

commitments;

Any other negotiation-related issue that either side may consider relevant to the successful

completion of the negotiation.

Please note that a joint review shall be organized at regional level in the first instance. The

results of ESA regional review, together with inputs from the all-ACP level, shall be finalized in

2006 and presented in a consolidated document to the ACP/EU Joint Ministerial Trade

Committee. The ACP/EU Council of Ministers Meeting scheduled for the first half of 2007 will

consider the report of the JMTC which may include recommendations and pave the way for the

finalisation of the EPA negotiations at the end of 2007.

4. Expected results and Deliverables

The main expected result would be a comprehensive assessment of ESA negotiations with

specific recommendations on the way forward to meet the objective as set out in the ESA

negotiating mandate. The deliverables of the consultant are indicated in point 6 below.

5. Level of efforts and profile of experts

It will be necessary to, contract the study to a consultancy firm or individual experts. The

consultant(s) would need to prepare a brief response to the terms of reference setting out a

proposed methodology for undertaking the study, the human resources complement and skill base

that will be used, and a financial proposal for the work.

The response must be able to demonstrate:

a strong understanding of, familiarity with, and contacts across ESA and COMESA on the

on-going discussions in the region on post-Lomé trading arrangements;

a strong familiarity with ESA negotiations, the WTO issues and in particular, knowledge of


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G

the emerging positions within the context of the Doha Round;

Knowledge of current regional integration processes within COMESA, EAC, IOC and IGAD;

Proven analytical ability and writing skills; and immediate availability of key personnel to

undertake the work required.

The consultants will be expected to undertake:

Desk research;

Interviews with the ESA negotiators namely lead ambassadors, SG of COMESA, CTA and

technical experts;

Visits/interviews to selected ESA Member States the ESA;

Visits/interviews to selected NSA, international organizations, the EC and other stakeholders

involved in the negotiations, government ministries and departments, national institutions and

NGOs;

Production of a Draft Final Report (to be presented at the 9th RNF) and a Final Report.

The consultants will be expected to possess the following minimum profiles:

- International Trade expert (Lead consultant): Senior expert with at least 10 years experience

acquired in an ACP or other developing country environment. The expert should possess a

post-graduate degree in international economics and practical experience as a researcher,

consultant and advisor to governments or regional integration organizations in the fields of

trade policy development, trade negotiations (bilateral, regional and multilateral), and

regional integration processes. The expert should possess demonstrable analytical and writing

skills.

- Economic Integration expert: Expert with a post-graduate degree in economics with at least 4

years field experience as a researcher, consultant, regional integration organizations in the

fields of regional economic and trade integration, trade negotiations and agreements. The

expert should possess demonstrable analytical and writing skills.

The team may be enhanced by national researchers in member States if required. The cost of

those researchers will be included in the total fees as indicated in the budget below.

6. Proposed Timing

The study is expected to be undertaken within a period of 2 months, preferably between

September and October 2006,

The envisaged distribution of man months is 1.5 months international trade expert and 1.5 months

economic integration expert. The reports will be produced in English and submitted in both hard

and soft copy to [email protected]



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APPENDIX 2: SUMMARY OF ESA AND EC POSITIONS BASED ON THE

EPA TEXT

ISSUE

ESA

EC

AREAS OF DIVERGENCE

1. Principles Position tabled Position tabled Largely agreed except on:

o Benchmarks

o Political Dialogue

2. Trade Cooperation Position tabled Position tabled QTDF Market Access

Rules of Origin

Reciprocity/ gradual liberalization,

transitional periods

LDC exemption

Link with liberalization benchmarks

Benefits of commodity protocols

3. Trade Related Issues Position tabled Position not clear ESA focusing on capacity building

EC emphasizing rule making

EC pressing for inclusion of

government procurement

4. Services No position Position tabled EC focusing on trade liberalization

ESA position not ready

5. Fisheries Position tabled Position tabled Treatment of development cooperation

Rules of origin

Erosion of trade preferences

Discriminatory treatment

6. Agriculture Position tabled Position not clear ESA wants to retain protocols

EC not committed

7. Development

Cooperation

Position tabled No detailed

comments ESA focusing on holistic treatment of

development;

Focus on strategy

8. Development

finance

Position tabled Position tabled EC no separate financial protocol

ESA emphasizing additionality

Source: COMESA Secretariat


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I

APPENDIX 3: THE SIX NEGOTIATING GROUPS

THE EASTERN AND SOUTHERN AFRICA (ESA) GROUP

ECONOMIC COMMUNITY OF WEST AFRICAN STATES (ECOWAS)

THE CARIBBEAN FORUM OF ACP STATES (CARIFORUM)

1. Burundi 2. Comoros 3. D R Congo 4. Djibouti 5. Ethiopia 6. Eritrea 7. Kenya 8. Madagascar 9. Malawi 10. Mauritius 11. Rwanda 12. Seychelles 13. Sudan 14. Uganda 15. Zambia 16. Zimbabwe

1. Bénin 2. Burkina Faso 3. Cape Verde 4. Cote d’Ivoire 5. Gambia

6. Ghana

7. Guinea

8. Guinea-Bissau

9. Mali 10. Mauritania*

11. Niger 12. Nigeria

13. Senegal 14. Sierra Leone

15. Togo

* Non-member of ECOWAS

1. Antigua and Barbuda 2. The Bahamas 3. Barbados 4. Belize 5. Dominica 6. The Dominican Republic 7. Grenada 8. Guyana 9. Haiti 10. Jamaica 11. St. Kitts & Nevis 12. St. Lucia 13. St. Vincent & the Grenadines 14. Suriname 15. Trinidad & Tobago

SOUTHERN AFRICA DEVELOPMENT COMMUNITY (SADC)

COMMUNAUTE ECONOMIQUE ET MONETAIRE DE L’AFRIQUE CENTRALE (CEMAC)

THE PACIFIC ACP STATES

1. Botswana 2. Lesotho 3. Namibia 4. Swaziland 5. Angola 6. Mozambique 7. Tanzania

1. Cameroon 2. Republic of Congo 3. Gabon 4. Equatorial Guinea 5. Central African 6. Chad

1. The Cook Islands 2. The Federated States of Micronesia 3. Fiji 4. Kiribati 5. The Republic of Marshall Islands 6. Nauru 7. Niue 8. Papua New Guinea 9. Samoa 10. Solomon Islands 11. Tonga 12. Tuvalu and Vanuatu

APPENDIX 4: SUBJECT OF NEGOTIATION

CLUSTER AREA KEY ISSUES REFERENCE

1. Development

Cooperation

A. Industry

B. Infrastructure

Facilitation of development, restructuring and modernization of industry in the ESA

region and promotion of its competitiveness

Objectives of cooperation in industry (encouragement of partnerships, promotion of

exchange of experiences and cooperation, promotion of innovation and diversification, etc)

Areas of cooperation in industry (processing, marketing, distribution, and

transportation, technology research and development, industrial cooperation, financing, capacity building, development of capital markets, stimulation of industrial

production and diversification, etc) Support for micro, small and medium enterprises (creation of an enabling

environment, financial assistance, capacity-building, promotion of joint ventures, etc)

Development of mining and minerals in the ESA region (to provide information on

mineral resources, promote value addition, promote joint ventures, etc)

Support for the development of and strengthening of a competitive tourism industry

(through support of regional promotional activities, development of projects and products, support for regional tourism support centres, provision of technical and

financial assistance to ESA countries, etc)

Objective for cooperation (development of physical infrastructure – transport, energy

and information technology – to improve the capacity and facilities in the ESA region)

Harmonization of programmes and policies on developing, restructuring and

modernizing ESA region’s transport systems, improving the movement of passengers

and goods, better access to road, air, maritime and rail transport.

Article 99

Article 100

Article 100

Article 102

Article 103

Article 104

2. Market C. Free An FTA over a transition period of 25 years Article 8 (1)


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K

Access Movement of Goods

D. Trade

Remedies

A basic duty based on the COMESA CET Elimination of customs duties on imports

Provision of full duty-free and quota-free access for all ESA products to the EU

Elimination of customs duties on imports (capital goods & raw materials) from EU

A list of sensitive products

Maintenance of regional preferences and benefits under the Cotonou commodity

agreements

Elimination of non-tariff barriers

Rules of origin

Special safeguards

Antidumping and countervailing measures

Measures by ESA to protect the balance of payments position

Compensation for loss of revenue

Article 10 (3) Article 11 (1)

Article 13 (1) Article 14 (1)

Article 15

Articles 17, 18

Article 20 Article 21

Article 24

Article 25


3. Agriculture

Food Security

Preferences

Subsidies and

domestic support

Net-food importing

countries

Commodities

Commodity

protocols

Objective for cooperation in food security and sustainable agricultural development

Provision of technical and financial assistance to ESA to increase overall agricultural

production

Maintenance of preferences by EU for ESA exports

Elimination of export subsidies and domestic support by the EU

Support to ESA net-food importing countries (establishment of a financing facility,

development of capacity for food production and processing, review of current aid policies, identification of food production constraints).

Objectives of cooperation in commodities (improvement of commodity incomes,

reduction of vulnerability, commodity risks, access to finance, etc)

Areas of cooperation in commodities (design of commodity chain strategies,

assessment and reform of international commodity bodies, development of cooperation with international organisations, etc)

Maintenance of commodity protocols 3 (sugar) and 4 (beef and veal) for ESA

countries

Article 93 (2)

Article 93 (3)

Article 94

Article 95

Article 96

Article 97 (1)

Article 98 (2)


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L

4. Fisheries E. Marine

fisheries

F. Inland fisheries and

aquaculture development

Objectives of cooperation in marine fisheries (sustainable exploitation of fisheries

resources, equitable share of benefits and development of fisheries sector,

implementation of sustainable fisheries policy, effective exploitation, conservation and management)

Areas of cooperation in the marine fisheries (fisheries management and conservation

issues, vessel management and post-harvest arrangements, financial and trade development issues)

Objectives of cooperation in inland fisheries and aquaculture development (promotion

of sustainable exploitation of resources, removal of supply constraints, improvement of quality, improvement of access to EU market, capacity building, attracting

investment, etc)

Areas of cooperation in inland fisheries and aquaculture development (capacity

building, technology, legal and regulatory framework, investment and finance, environment and conservation, socio-economic and poverty alleviation measures)

Dispute settlement mechanism

Article 83

Article 84

Article 86

Article 87

Article 88

5. Trade-related

issues

G. Sanitary and

phytosanitary measures

H. Standards,

technical regulations &

conformity assessment

I. Trade

facilitation

Special and differential treatment (SDT)

Cooperation programmes in the area of SPS

SPS competent authorities

Basic rights and obligations of the parties under the TBT agreement

EC recognition of ESA technical regulations, standards, conformity assessment

Principles (Transparency and notification)

Harmonization of standards, technical regulations and conformity assessment

Areas of cooperation (greater use of STR&CA, capacity building, participation in

standards bodies, identification and implementation of appropriate measures, etc)

Main and specific objectives of cooperation between the parties

Principles of cooperation in customs matters

Areas of cooperation in customs matters (completion of ESA computerization

programme, financial and technical support to ESA for assessment of trade facilitation

Article 35




Article 50

Articles 55, 56

Article 57


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M

J. Competition

policy

K. Intellectual

property

rights

L. Investment

and private

sector development

programmes, development and publication of ESA export/import procedures on Websites, capacity building, etc) customs valuation and trade statistics.

Objectives of cooperation between the parties in the area of competition policy

Areas of cooperation in competition policy (development of regulatory and

enforcement capacity for ESA countries, technical and financial support for capacity building for ESA countries, setting up of appropriate national and regional structures

to promote competition, etc).

Objectives of cooperation between the parties in the area of intellectual property

The areas of cooperation in intellectual property rights (legal, institutional and policy

framework, capacity building for ESA region, protection of resources, folklore and

traditional knowledge in the ESA region, patents, exploitation of genetic resources,

prevention of abuse of IPR, etc)

Objectives of cooperation between the parties in investment and private sector

development

Investment promotion

Investment support

Investment finance

Investment guarantees

Article 59

Article 62

Article 65

Article 66

Article 70



APPENDIX 5: ESTIMATED ADJUSTMENT COSTS (IN MILLION EUROS)

AND THE SIZE OF 9TH EDF NIP

Country 9th EDF

NIP

Fiscal

Adjust-t

Export

Diversification

Employ-t

Adjust-t

Skills/

Productivity

Enhance-t

Total

Cost

Burundi 226.7 50.0 65.0 20.0 45.0 180.0

Comoros 20.0 30.0 10.0 6.0 30.0 76.0

Djibouti 29.0 15.0 10.0 4.0 30.0 59.0

Eritrea 88.0 30.0 25.0 12.0 35.0 102.0

Ethiopia 523.0 70.0 65.0 50.0 65.0 250.0

Kenya 316.6 60.0 65.0 40.0 65.0 230.0

Madagascar 428.6 90.0 65.0 40.0 65.0 260.0

Malawi 298.0 40.0 45.0 20.0 30.0 135.0

Mauritius 49.8 40.0 12.0 12.0 15.0 79.0

Rwanda 178.1 50.0 65.0 25.0 45.0 185.0

Seychelles 3.8 30.0 30.0 6.0 15.0 81.0

Sudan 135.0 90.0 90.0 40.0 65.0 285.0

Uganda 246.0 90.0 90.0 50.0 50.0 280.0

Zambia 370.8 50.0 45.0 25.0 45.0 165.0

Zimbabwe 108.0 40.0 20.0 25.0 30.0 115.0

TOTAL 3,021. 5 775.0 702.0 375.0 630.0 2,482.0

Source: Agritrade, quoting the Commonwealth Secretariat


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O

APPENDIX 6: PEOPLE INTERVIEWED

COUNTRY/

INSTITUTION

RESPONDENT POSITION CONTACT DETAILS

Burundi

1. JÉRÉMIE BANIGWANINZIGO

Directeur General du Commerce et président du FNDFC

BP 492 Bujumbura, Tel.: 00257970619, 257242833, Fax: 257218205, E-mail: [email protected]

2. GEDEON MBARIRIMBANYI Directeur Hortiflor S.A., Membre du FNDPC, secteur prive,

BP 512-Bujumbura, Tel. : 257246482, Fax: 25721 8205, E-mail: [email protected]

3. DISMAS BARADANDIKANYA

Conseiller, Ministere du commerce est de l’industrie

BP 492 Bujumbura Tel : +257 2225111 or 730017, Fax : +257 218205, Email : [email protected]

Comoros

4. MOHAMED SOULE IBRAHIM

Conseiller Technique du Ministère des Finances, Ministère des Finances, du Budget et de l’Economie

BP 324 et 1018, Moroni, Tel : +269 332146, Mobile : +269 744161 ; Fax : +269 734140, Email : [email protected]

5. ILHAM SAID EL MANSOIB

Chargée de l’Analyse et statistiques, Ministère de l’Economie,

BP 474, Tel : +269 744161, Fax : +269 734155, Email : [email protected]

DRC

6. ALBERT KWETE MINGA BOPE

Secrétaire Général/Commerce, Ministère du Commerce Extérieur

BP 3095, Kinshasa Gombe 1, Tel: +243 97319114, Fax: +1 408 8695973, E-mail : [email protected]

7. BOLANDA MENGA MOMENE AUGUY

2nd Vice Président, FNDPC, Chef de Service, Fédération des Entreprises du Congo

BP 7247, Kinshasa Gombe 1, Tel : +243 8181 49658, Email: [email protected]

ETHIOPIA

8. BELACHEW BEYENE

Team Leader EU Desk, Ministry of Finance and Economic Development

P. O. Box 1037 Addis Ababa Tel.: 1226684, Fax: 226648, E-mail: [email protected]

9. HASHIM ALI AHMED Policy Advisor, Ethiopian Development Research Institute, Office of the Prime Minister

Tel.: 011 55060 66, E-mail: [email protected]

10. ANDUALEM TEGEGNE Secretary General, Ethiopian Chamber of Commerce

P. O. Box 517, Addis Ababa Tel.: 251115514005, Fax: 251115 517699, E-mail: [email protected]

11. JAMES WATSON Trade Policy Analyst, Ministry of Trade and Industry

P. O. Box 704 Addis Ababa Tel. : 251 911 799 643, E-mail : [email protected]

12. MOHAMMED NUR SANEY Ethiopian Manufacturing Ind. Assoc. P. O. Box 1995, Addis Ababa, Tel: +251 911 207252, Fax: +251 11 4402 666, E-mail: [email protected]














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P

13. AHMED ALI P. O. Box 2333, Addis Ababa, Tel: +251 911 615182, Fax: +251 11 661 3533, E-mail: [email protected]

14. BROOKE DEBEBE Deputy Ambassador Ethiopian Embassy Brussels

Mission to the European Communities Avenue de Tevueren 31 1150 Brussels, Belgium Tel.02 770 65 36 E-mail: [email protected]

KENYA

15. BERNARD KAGIRA

Technical Assistant Ministry of Trade & Industry

P.O. Box 1693 00606 Nairobi Tel: 254 202496 22/ 254 20445 1616, Fax: 254 20559507, Email: [email protected]

16. BERNARD M. KITHEKA

Ministry of Agriculture P. O. Box 30028, Nairobi Tel.: +25420271 8870 Fax: +254202713901 E-mail: [email protected]

17. DANIEL O. OWOKO S.E.T.O, Trade Industry P. O. Box 431 37 Nairobi, Tel: +25420315001-4, Fax: + 254020315011, Email: [email protected]

18. WALTER N. KAMAU Senior Executive Officer Kenya Association of Manufacturers

P. O. Box 30225-00100 Nairobi, Tel: 254 20 3746007, Fax: +254 203746028, Email: [email protected]

19. PETER AOGA Programme Officer Campaign, Advocacy & Governance, EcoNews Africa

P. O. Box 10332, 00100 Nairobi, E-mail: [email protected]

MADAGASCAR

20. ANDRIANARISOA ESTELLE

Chef du Service de la Coopération Régionale, Ministère de l'Industrie, du Commerce et du Développement du Secteur Prive

Tel.: 261 33 11 55589, Fax: 261 202228025, E-mail: [email protected]

21. ANDRIAMAMONJIARISON NORO

Assistant Technique, Ministère du Commerce

9 Av. Grandidier 101 Antananarivo Tel: 261 20 22272 17 Fax: 22 257 67 Email: [email protected]

22. STEPHANE ANDRIAMANDRAINIRINA

Secteur Privé, CONECS BP Lot II B 98, TER AA Ambatomainty, Antananarivo 101, Tél.: 261 0320481594, E-mail : [email protected]

23. LEONNEL LEONNEL Directeur de Relations Internationales, Ministère de l’Industrialisation, Commerce et Secterur Privé

Ambolidales, Antananarivo, Tel : +261 20 22 37947, Fax : +261 20 22 28025, Email : [email protected]

MALAWI

24. PATRICK ZIMPITA

Deputy Director, Ministry of Economic Planning and Development

P. O. Box 30136, Lilongwe Tel.: 269 1 788 888, Fax : 265 1 788 432, E-mail: [email protected]

25. ANDREW KUMBATIRA Executive Director, Malawi Economic Justice Network,

P. O. Box 20135 Lilongwe 1, Tel: + 265 1 750533, Fax: +265 1 750098, E-mail: [email protected]















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26. NENAUTHE GRACE MAMIZIGA

Trade Officer, Ministry of Industry, Trade and Private Sector Development

E-mail: [email protected]

27. MUFWA MUNTHALI Assistant Director of Trade P. O. Box 30366, Lilongwe 3, Tel.: 265 1 770 244, Fax: 265 1 770 680, E-mail: [email protected]

MAURITIUS

28. AMB. SUTIAWAN GUNESSEE

Lead Ambassadorial Spokesperson, Agriculture Mauritius Embassy, Brussels

1950 Kraainem 1040 Brussels, Belgium Tel: 003227339988 Fax: 00322 7344021 E-mail : s@[email protected] [email protected]

29. BOODHOO N. Deputy Director, Ministry of Foreign Affairs, International and Cooperation

Fook, Port-Louis, Mauritius, Tel.: 208 16 58, Fax: 212 53 68, Email: [email protected]; [email protected]

RWANDA

30. BASEMERA PEACE

Acting Director of Trade and Industry, Ministry of Commerce, Industry, Investment Promotion, Tourism and Cooperatives

BP 73, Rwanda Kigali Tel.: 250 08574322 Fax: 250 575 465 E-mail: [email protected]

SEYCHELLES

31. VIVIANNE FOCK-TAVE

Principal Secretary of International Co-Operation, Ministry of foreign Affairs and International Cooperation

P. O. Box 656 Tel. : 248 283 500 Fax: 248225374 E-mail : [email protected]

SUDAN

32. BASHIR ELAGILI AHMED

Director of Multilateral Trading Department, Ministry of Foreign Trade

P.O. Box 194 Khartoum E-mail: [email protected]

33. MUSTAFA EL SADIQ Sudanese Businessmen Employers Federation

Africa Avenue, Tel.: 091 23 88016, E-mail: [email protected]

UGANDA

34. CYPRIAN BATALA

Assistant Commissioner Trade, Ministry of Tourism, Trade and Industry

Farmers House, Parliament Avenue P. O. Box 7103 Kampala Tel.: 256 41 252100/ Mob: 256 752 796 537 Fax: 256 41 347 286 E-mail: [email protected]

35. JANE S. NALUNGA Country Director, SEATINI (U) P. O. Box 3138 Kampala Tel.: 256 41 540 856 Fax: 256 41 540 857 E-mail: [email protected]

36. MOSES OGWAPUS Principal Finance Officer, Ministry of Finance, Planning and Economic Development,

P. O. Box 8147 Kampala Tel.: 256 41 707 154 Fax: 25641 342 370/ 256 41 230 163, Email: [email protected]

37. KIRK HAYWOOD Trade Policy Advisor Ministry of Tourism, Trade and Industry

Farmers House, Parliament Avenue P.O. Box 7103 Kampala Tel.: 256 41 252100/ 256 75 2796537 Fax: 25641 347286 E-mail: [email protected]



mailto:s_@[email protected]













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38. EMMANUEL MUTAHUNGA Principal Commercial Officer Ministry of Tourism, Trade and Industry

Farmers House, Parliament Avenue P.O. Box 7103 Kampala Tel.: 256 41 252100/ Mob: 256 752 796 537 Fax: 256 41 347 286 E-mail: [email protected]

39. ROBINAH NYAPENDI

Programme Officer, Trade Oxfam GB in Uganda

P.O. Box 6228 Kampala Tel: 256 41 510 242/3 Fax: 256 41 510 242 E-mail: [email protected]

40. ELLY TWINEYO Executive Director African Centre for Trade and Development

2nd Floor, Fair House, 9 Nasser Road P. O. Box 16452 Kampala Tel.: 256 41 253 967 Fax: 256 41 346 456 E-mail: [email protected]

ZAMBIA

41. BRENDA R. P. MUNDIA

Senior Collector International and Policy, Zambia Revenue Authority, Customs and Excise Directorate

P O Box 35710, Lusaka, Tel. : 260 95434991, Fax : 260 1 222704, E-mail : [email protected]

42. LILIAN SAILI BWALYA A/Chief Economist - Foreign Trade, Ministry of Commerce, Trade and Industry

P. O Box 31968, Tel. : 260 1224115, Fax: 260 1 224115, E-mail: [email protected]

43. CHRISTABEL PHIRI Acting Coordinator, Civil Society Trade Network of Zambia

P. O. Box 50882, Lusaka, Tel.: 260 1 266 234, Fax: 260 1 261 6, E-mail: [email protected], [email protected]

ZIMBABWE

44. ONESMO LOVEMORE

MAZARURA

Economist, Ministry of Industry and Trade

13th Floor, Mukumati Building, Harare, Tel: +263 91 308192, Fax: +263 4 723765, Email: [email protected]

45. TRUST CHIKOHORA Vice President – ZNCC, Zimbabwe National Chamber of Commerce

P. O. Box 47, Gweru, Tel: +263 54 224248, Fax: +263 4 226560, E-mail: [email protected]

46. CHARLES CHIPANGA Senior Economist, Competition and Tariff Commission

P. Bag CY 528, Harare, Tel: +263 4 771126, Fax: +263 4 770175, E-mail: [email protected]

47. ANGELICA KATURUZA Acting Deputy Director, Ministry of Industry and international Trade

Tel: 263 4 793461; E-mail: [email protected]

48. HUMPHREY MUBITA MUBU Chief agricultural Economist, Ministry of Agriculture

Tel: 263-4-797416

49. EDSON MOYO Senior Research Economist Tel: 727 634, E-mail: [email protected]

ACP SECRETARIAT

50. AMB. NYABENDA FERDINAND

Assistant Secretary General ACP Secretariat

Tel: 322 743 0635, E-mail: [email protected]

51. GNASSOUNOU VIWANOU Expert Commodity Issues-Market Access, ACP Secretariat

451 Avenue Georges Henri 120 Brussels Tel: 322 743 0691 E-mail: [email protected]
















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AFRICAN UNION

52. H.E. ELIZABETH TANKEU

Commissioner for Trade, Commission of African Union

Roosevelt Street, Addis Ababa, Ethiopia Tel. 25111551094, E-mail: [email protected]

53. FRANCIS MANGENI Regional Trade Advisor, Trade Department

Roosevelt Street, Addis Ababa, Ethiopia Tel.: 251 115 517700, E-mail: [email protected]; [email protected]

ECA

54. STEPHEN KARINGI

Chief, Trade and International Negotiations Section

TFED, UNECA, Fax: 251 11 551 3038, E-mail: [email protected]

EUROPEAN UNION

55. DIANA ACCONCIA

Administrator, Economic Partnership Agreements

2, European Commission, Directorate General for Trade, European Commission Office Tel.: 32 2 29868, E-mail: [email protected]

56. Harvey Rouse Head, Political and Trade Section, European Commission Delegation of the EC to Kenya

Union House, Ragati Road E-mail: [email protected]

57. Peter Thompson Director General for Trade, European commission

CHAR 09/234-1049 Brussels Tel: 32 2 296 7584. Email: [email protected]

COMESA SECRETARIAT

58. ERASTUS J. O. MWENCHA,

MBS

Secretary General COMESA

COMESA Centre, Ben Bella Road P. O. Box 30051, Lusaka, Zambia Tel.: 260 1 229726/32, Fax: 260 1 225107, E-mail: [email protected]

59. AMB. DR. GERVAIS NKANAGU Brussels Liaison Officer COMESA/ESA

Av. Moliere 186, 1050 Brussels, Tel: +322346 9747, Fax: +322346 9728, Email : [email protected]

60. MOSES TEKERE, Chief Technical Advisor, Economic Partnership Agreement, COMESA Secretariat

COMESA Centre, Ben Bella Road P. O. Box 30051, Lusaka Tel: + 260 1 221 431, Email: [email protected]

61. CALSON MBEGABOLAWE Multilateral Trade Advisor, COMESA Secretariat

COMESA Centre, Ben Bella Road P O Box 30051, Lusaka, Tel.: 260 1 229726/32, E-mail: [email protected]

62. DR. CHARLES CHANTUNYA Director of Trade, COMESA Secretariat

COMESA Centre, Ben Bella Road P. O. Box 30051, Lusaka, Zambia Tel.: 260 1 229726/32, Fax: 260 1 225107, E-mail: [email protected]

63. GEOFFREY W. O. OSORO Senior Trade Policy Expert Department of Trade

COMESA Centre, Ben Bella Road P. O. Box 30051, Lusaka, Zambia Tel.: 260 1 229726/32, E-mail: [email protected]

64. SAMUEL MWAMBAZI Standards and SPS Expert COMESA Secretariat

COMESA Centre, Ben Bella Road P. O. Box 30051 Lusaka, Zambia, Tel.: +260 1 229725/32, Fax: +260 1 225107, E-mail: [email protected]
















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CONSULTANTS

65. ERIK VAN OVERSTRAETEN

COMESA Consultant

Tel. 32 496 880502, E-mail: [email protected]

66. TENDAI CHIGWADA Trade Economist 4199 Sarayi Circle Tynwald North Harare, Tel.: 2634 227030/263 91 457490, Fax: 2634 770175, E-mail: [email protected]

67. MARGARET K CHEMENGICH Consultant, Ministry of Trade and Industry

P. O. Box 50968 00200, E-mail: [email protected]




Documents

Review of the ESA EPA Negotiations with EU (Final Report)