David Jessop
On October 23, the European Commission published a new communication or policy paper setting out what it planned to do if economic partnership agreement (EPA) negotiations cannot be completed on time.
In effect, its publication means that Europe has begun to put in place a contingency plan if negotiations with the regions of the African, Caribbean and Pacific group (ACP) fail.
For months, Europe has been cajoling ACP groupings to conclude an EPA in time to have a legal text in place by December 31 - the date that the World Trade Organisation (WTO) waiver on the trade provisions in the Cotonou Convention expires.
If they did not, it suggested, the significantly less beneficial generalised scheme of preferences (GSP) tariff regime would be imposed in place of the present tariff-free entry that ACP nations enjoy for most of their exports to Europe.
But now, as the deadline nears, a full EPA may only be possible with the Caribbean and Central Africa and a limited-scope trade arrangement with the Pacific.
In the other EPA negotiations, agreement is unlikely.
Clea needed
Faced with such uncertainty in all six regions, the EC has had to recognise that it urgently needs to have a legally clea position to deploy at the WTO.
Speaking about this to the Committee on International Trade of the European Parliament on October 22, EC Trade Commissioner Peter Mandelson told its members he was concerned that ACP partners were taking the market access negotia-tions "to the edge."
Early November was the final negotiating deadline, and even this would stretch European procedures to their limits.
To avoid trade disruption where a full EPA is not yet complete, he said, an agreement with a goods market-access arrangement at its core was required.
Put more simply, what the EC is now formally proposing for nations unable to reach agreement on a full EPA would be a arrangement that reduces, over an agreed period, tariffs on goods (as opposed to services), as long as it leads to a free trade area in which duties and other restrictive regulations are eliminated on substantially all trade.
In his remarks, the EC trade commissioner accepted that even thi arrangement might not be easy to achieve. WTO rules require ACP nations to liberalise more than 80 per cent of trade and many ACP regions are still struggling to try to achieve a tariff reduction schedule that has this level of coverage.
Goods-only arrangement
The seven-page communication published the following day spelt out the details.
Where achieving a comprehensive EPA cannot be achieved by the year's end, the EC, it seems, will regard a goods-only arrangement as a step towards an eventual full EPA. It adds that "where possible" the text of any such goods-only agreement would include all other language that would have been agreed.
In order that the negotiations continue after any such arrangement is in place, the EC will propose that all goods-only agreements must include binding commitments to continue negotiations in areas where agreement was not possible and contain rendezvous clauses setting out when and how such negotiations would be taken forward.
The EC document proposes that in ACP regions where some countries are unwilling to join an EPA, Europe should be prepared to reach an agreement with subregions while holding out the possibility of eventually opening to those nations not signing on immediately
Serious differences remain
Where a full EPA or a goods-only trade agreement is not achievable, the communication states unequivocally that EU customs authorities will apply the GSP trade regime.
Europe is also proposing that new EPA rules of origin, the details of which remain contentious in almost all negotiations, should apply in any goods-only arrangement while accepting that these will come into force some time after an agreement comes into force.
Tucked away in the text is also the suggestion that the EC will probably establish implementing regulations for transitional arrangements for sugar and rice as a part of its market-access offer of earlier in the year to abolish quotas and duties on all ACP products other than these two commodities.
What all this amounts to is further pressure on the Caribbean to try to complete a comprehensive EPA on time.
The final Caribbean negotiating session is due to take place in Kingston between October 31 and November 5 it is understood that a concluding meeting could be added if necessary in Brussels a week or so later. As matters stand, intensive exchanges continue over existing and new text but serious differences remain in a number of areas ranging from sugar, through services to the quantum, source and destination of development assistance.
Acp outmanoeured
There is also a concern in some Caribbean business quarters about the time left for consultations with stakeholders in the industries most affected and the extent to which their concerns are fully understood.
In his remarks to European parliamentarians, Mandelson made clear that there were also other imperatives driving the EU's desire to complete the new trade arrangements.
"We are right to remain firmly on a course that will replace our current trade regime with new agreements which can underpin a process of economic reform, regional integration and progressive trade opening."
"But," he noted, this (arrangement) "cannot operate anymore at such variance with WTO rules and in defiance of the interests of non-ACP developing countries."
What all this seems to mean is that the EC has comprehensively outmanoeuvred the ACP. Only those nations that are the least developed or can afford a GSP relationship with Europe for their agricultural commodities or manufactured goods can now walk away.
For the Caribbean and others, the choice is limited. It is between a full EPA or goods-only market access arrangement before the year's end.
David Jessop is director of the Caribbean Council. Email: david.jessop@caribbean-council.org.
