What are the costs of a non-EPA?

What are the costs of a non-EPA?

TIPS Workshop, Pretoria 4-5 March

Dr Mareike Meyn

Alternatives to EPAs. TIPS workshop March 2008 2

Overview

What are the alternatives to EPAs for Developing African countries For Least Developed Countries (LDCs)

What costs occur for1. Non-EPA signatory LDCs2. Non-EPA signatory developing countries3. Signatory LDCs that will not ratify an EPA4. Signatory developing countries that will not ratify an

EPA

Differentiation of these 4 types is important since the countries face different costs when not joining an EPA


What are the alternatives to EPAs?

Art. 37.6 Cotonou: EU will provide trading regime that is ‘equivalent’ to Cotonou provisions

Only ‘alternatives; were and are the EU’s GSP system:1. Standard GSP (open to most developing countries)

2. Everything But Arms - EBA

3. GSP+ (expanded GSP system linked to respect of core labour and human rights principles)

All ‘alternatives’ are problematic – WHY? Standard GSP … EBA … GSP+…


What are the alternatives to EPAs?

1. Standard GSP 267 products would face tariff jumps of over 10 percent ad

valorem. Most affected products are beef, processed fruit, sugar, rice, bananas, citrus and horticulture.

2. EBA Cotonou equivalent market access but only open for

LDCs

3. GSP+ does not comprise all products (such as beef and sugar)

but would be an alternative for some countries Only open in 2009; Nigeria’s and Seychelles’ request was

rejected in 2007.


1. Non-EPA signatory LDCs

Biggest group of non-EPA signatory states 24 in Africa, 5 in the Pacific, 0 in the Caribbean

ESA: Djibouti, Eritrea, Ethiopia, Malawi, Sudan, Zambia

SADC: Angola

Direct monetary costs: limited EBA fallback position

But: ‘Cotonou plus’ RoO do not apply

Indirect costs: non-quantifiable but can be substantial


2. Non-EPA signatory developing countries

3 in Africa (Nigeria, Congo, Gabon) and 7 in the Pacific Direct monetary costs: limited

Africa: only one item (raw sugar cane) for one country (Congo) accounts for more than 1% of total exports and

faces ad valorem tariff jumps of more than 20%

Indirect costs: lower than for group 1

items accounting for 1% or more of the total which would experience a change

in access

1.7%

3.3% 4.1%

16.3% 56.5%

Country Number of items with change of: 10<20% 20%+ spec.

duty Total

Nigeria 32 1 24 57 Congo Rep. 5 4 9 Gabon 5 1 6 Ghana 28 6 33 67 Kenya 42 4 16 62


3. Signatory LDCs that will not ratify an EPA

Currently 8 in Africa (none in West and Central), 1 in the Caribbean, 0 in the Pacific

ESA: Comoros, Madagascar EAC: Burundi, Rwanda, Tanzania Uganda SADC: Lesotho, Mozambique Direct monetary costs for all: limited (EBA) BUT: is it feasible for them to leave the EPA?

Motivation to join the EPA for• Lesotho and all EAC LDCs?

• Mozambique?

• Madagascar?


4. Signatory developing countries that will not ratify an EPA

Currently 10 in Africa, 2 in the Pacific, 14 in the Caribbean ESA: Mauritius, Seychelles, Zimbabwe EAC: Kenya SADC: Botswana, Namibia, Swaziland

items accounting for 1% or more of the total which would experience a change

in access

56.6% 61.5%

86.6% 35.6% 30.5% 69.1% 1.5%

Country Number of items with change of: 10<20% 20%+ spec.

duty Total

Kenya 42 4 16 62 Mauritius 21 10 16 47 Swaziland 28 1 11 40 Zimbabwe 27 2 9 38 Namibia 15 6 5 26 Seychelles 8 12 20 Botswana 1 3 4


4. Signatory developing countries that will not ratify an EPA

Number of products affected and monetary costs that would occur from being downgraded to GSP vary largely

Traditional commodity exporters and horticultural producers are affected worst

However, also Botswana (1.5% of EU total EU exports affected) would face costs:

Beef exports would face tariff increases worth 80% of 2006 export revenues;

Risk to lose other remunerative market niches when no longer being able to proof that it meets EU standards;


Main messages

The costs of a non-EPA depend very much on the ‘status’ of the African country

Developing countries agricultural exporters are affected worst

A non-EPA is not feasible / does not seem desirable for all LDCs

The non-signatory EPA states have either equivalent market access (EBA); or comparatively little too loose.


What should a country consider when opting for or against an EPA?

What would be the best strategy for your country?

What are the costs of a non-EPA?

TIPS Workshop

5-6 March 2008

What are the costs of a non-EPA?

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