EPA Text has been refined
The current content of the draft EPA was early this year refined and improved ahead of the envisioned conclusion before 31st December 2007. A Technical meeting held from 25th January - 3rd February in Kigali Rwanda also discussed draft Protocols on Rules of Origin, Sanitary and Phytosanitary Measures, Safeguards, Regional Sensitive list and COMESA Common Investment Area (CCIA) and its relationship with EPA.
Eastern & Southern Africa (ESA) countries of which Kenya is a member are lobbying the European Commission (EC) to provide simple to use, workable, realistic, development and user-friendly rules of origin which can provide meaningful market access for our products in EU markets for both agricultural and non-agricultural products. The criteria for value addition, change-in-tariff heading (CTH) and wholly obtained product have been incorporated in the draft Protocol for discussion with EU. CTH Sub- Heading is at 6 digit level based on HS 2007 version.
Where CTH does not apply, value added criteria has been recommended to apply. Further work is required on the list of Working/Processing to be carried out on non originating materials in order for those products manufactured in ESA member states to obtain originating status. ESA shall negotiate lower threshold (e.g. 25%) for value addition for ESA products exported to EU and higher threshold (e.g. 75%) of value addition for products imported from EU to ESA countries, lower threshold in raw material content for ESA products and CTH from HS 4 to 8 digit level for EU products in line with the principle of the asymmetry in Cotonou Agreement. KAM will undertake a dialogue forum soon after the 10th RNF.
The issue under SPS measures is for ESA countries to have the capacity to comply and implement SPS measures and standards. ESA countries face difficulties regarding the export of their products to EU market due to questions relating to SPS monitoring, testing and infrastructures. EU standards are generally more stringent and difficult to meet than internationally accepted standards. The session examined the draft protocol which will now be presented to 10th RNF.
There are differences between ESA and EC in regard to Articles in the EPA text on Objectives( Article 31 b and 31 f), Sovereign Rights and Obligations(Article 33.2); Harmonization( Article 34.2); Equivalence(Article 34.4); Areas of Cooperation( Article 36.1) and a few other Articles in the EPA text. The key recommendations were; the Protocol should deal with the implementation aspects of the EPA text on SPS issues; EU private sector standards on ESA exports be clearly addressed in the Protocol; need to improve the draft protocol to avoid duplicating areas already covered in the EPA text; areas of development cooperation be elaborated in the EPA text and a link be established with the Protocol; regional experts on SPS be included in the joint EU-SPS sub-Committee and member States to establish national committees of SPS.
Safeguards are particularly important for ESA in view of the trade distortion effects of the Common Agriculture Policy of EU. Safeguards are required to protect industries where there is a cause or threat of serious injury. The draft Protocol main focus is to provide a mechanism to trigger or adopt safeguard measures within the EU ESA and WTO context. The meeting observed that safeguards go hand in hand with other trade remedies to address dumping, subsidies, and countervailing duties. COMESA Secretariat is to revise the protocol to incorporate all trade defence instruments into one single consolidated protocol and to provide conditions for the invocation of trade defence instruments. The procedures for invoking safeguards should be defined to ensure unnecessary litigation and corrective measures and time limits should be defined. A revised draft will be presented at the forthcoming RNF.
The main challenge facing the ESA countries is to come up with a regional list of products to be excluded from liberalization, which would be compatible with WTO's article XXIV principle of "substantially all trade coverage". EU has been known to interpret the term "substantially all trade" to mean 90% of trade to be liberalized between two negotiating parties over an agreed transitional period. The region is advocating for 80% aggregate total liberalization allowing ESA to liberalize 60% and exclude 40% as EU liberalizes 100%.
The current 2nd draft of ESA sensitive list constitutes of 2609 international six digit tariff lines out of possible 5115 total six digit tariff lines using Harmonized System HS 2002. A few countries are yet to submit their lists and the revised list will be submitted to RNF for approval and use for negotiations. EAC member States were urged to provide a common and harmonized list of sensitive products.
The key issues for discussion was reviewing salient provisions of the Draft Investment Framework Agreement for COMESA Common Investment Area (CCIA) which is based on 3 principles namely, liberalization, promotion and protection of investments and options for inclusion of the investment provisions in the Economic Partnership Agreement. The CCIA draft framework aim by 2010, to have investors qualifying as COMESA investors being treated as if they were national investors of the host country ("national treatment") meaning all investors will be treated the same. In addition to national treatment for COMESA investors, all industries/economic sectors in a COMESA host country would be open to investment for any COMESA investor.
The main concern by many countries is that in the CCIA frame work, ESA countries have unilaterally undertaken to open up their regional investment regimes by 2015 to third parties. It was felt that there was need to trade off ESA investment regime with EU with something in return. There was a proposal to include rules under investment in EPA but the ESA mandate on negotiations does not include rules.
This proposal will be debated at the 10th RNF. The current EPA draft text has investment promotion and does not include binding obligations on investment liberalization and protection. The meeting agreed to consider only the development cooperation of the EPA text pending the decision of RNF on the treatment of rules.
The meetings recommendations will be approved by the 10th Regional Negotiation Forum (RNF) in Bujumbura in Burundi from 21st to 23rd February followed by a decision making meeting between the lead Ambassadors and EC officials in Brussels.
Expert Opinion: The ESA region has made a lot of progress in preparing the EPA text and the draft protocols that will facilitate ESA trade with EU. The various draft protocols have incorporated issues of concern to the private sector. However, a lot of work is still in the draft form. We need to track progress on the issues where there is consensus in the EPA draft text with EU especially on market access and trade related issues. Our representation is critical at the national and regional negotiation meetings since it is only this year when the agreement will be finalized.
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This report was compiled by Walter N. Kamau, on February 12th 2007, following Technical Meetings on Economic Partnership Agreements (EPAs) that took place in Kigali, Rwanda, on January 25th - February 3rd, 2007.
Source
Eastern & Southern Africa (ESA) countries of which Kenya is a member are lobbying the European Commission (EC) to provide simple to use, workable, realistic, development and user-friendly rules of origin which can provide meaningful market access for our products in EU markets for both agricultural and non-agricultural products. The criteria for value addition, change-in-tariff heading (CTH) and wholly obtained product have been incorporated in the draft Protocol for discussion with EU. CTH Sub- Heading is at 6 digit level based on HS 2007 version.
Where CTH does not apply, value added criteria has been recommended to apply. Further work is required on the list of Working/Processing to be carried out on non originating materials in order for those products manufactured in ESA member states to obtain originating status. ESA shall negotiate lower threshold (e.g. 25%) for value addition for ESA products exported to EU and higher threshold (e.g. 75%) of value addition for products imported from EU to ESA countries, lower threshold in raw material content for ESA products and CTH from HS 4 to 8 digit level for EU products in line with the principle of the asymmetry in Cotonou Agreement. KAM will undertake a dialogue forum soon after the 10th RNF.
The issue under SPS measures is for ESA countries to have the capacity to comply and implement SPS measures and standards. ESA countries face difficulties regarding the export of their products to EU market due to questions relating to SPS monitoring, testing and infrastructures. EU standards are generally more stringent and difficult to meet than internationally accepted standards. The session examined the draft protocol which will now be presented to 10th RNF.
There are differences between ESA and EC in regard to Articles in the EPA text on Objectives( Article 31 b and 31 f), Sovereign Rights and Obligations(Article 33.2); Harmonization( Article 34.2); Equivalence(Article 34.4); Areas of Cooperation( Article 36.1) and a few other Articles in the EPA text. The key recommendations were; the Protocol should deal with the implementation aspects of the EPA text on SPS issues; EU private sector standards on ESA exports be clearly addressed in the Protocol; need to improve the draft protocol to avoid duplicating areas already covered in the EPA text; areas of development cooperation be elaborated in the EPA text and a link be established with the Protocol; regional experts on SPS be included in the joint EU-SPS sub-Committee and member States to establish national committees of SPS.
Safeguards are particularly important for ESA in view of the trade distortion effects of the Common Agriculture Policy of EU. Safeguards are required to protect industries where there is a cause or threat of serious injury. The draft Protocol main focus is to provide a mechanism to trigger or adopt safeguard measures within the EU ESA and WTO context. The meeting observed that safeguards go hand in hand with other trade remedies to address dumping, subsidies, and countervailing duties. COMESA Secretariat is to revise the protocol to incorporate all trade defence instruments into one single consolidated protocol and to provide conditions for the invocation of trade defence instruments. The procedures for invoking safeguards should be defined to ensure unnecessary litigation and corrective measures and time limits should be defined. A revised draft will be presented at the forthcoming RNF.
The main challenge facing the ESA countries is to come up with a regional list of products to be excluded from liberalization, which would be compatible with WTO's article XXIV principle of "substantially all trade coverage". EU has been known to interpret the term "substantially all trade" to mean 90% of trade to be liberalized between two negotiating parties over an agreed transitional period. The region is advocating for 80% aggregate total liberalization allowing ESA to liberalize 60% and exclude 40% as EU liberalizes 100%.
The current 2nd draft of ESA sensitive list constitutes of 2609 international six digit tariff lines out of possible 5115 total six digit tariff lines using Harmonized System HS 2002. A few countries are yet to submit their lists and the revised list will be submitted to RNF for approval and use for negotiations. EAC member States were urged to provide a common and harmonized list of sensitive products.
The key issues for discussion was reviewing salient provisions of the Draft Investment Framework Agreement for COMESA Common Investment Area (CCIA) which is based on 3 principles namely, liberalization, promotion and protection of investments and options for inclusion of the investment provisions in the Economic Partnership Agreement. The CCIA draft framework aim by 2010, to have investors qualifying as COMESA investors being treated as if they were national investors of the host country ("national treatment") meaning all investors will be treated the same. In addition to national treatment for COMESA investors, all industries/economic sectors in a COMESA host country would be open to investment for any COMESA investor.
The main concern by many countries is that in the CCIA frame work, ESA countries have unilaterally undertaken to open up their regional investment regimes by 2015 to third parties. It was felt that there was need to trade off ESA investment regime with EU with something in return. There was a proposal to include rules under investment in EPA but the ESA mandate on negotiations does not include rules.
This proposal will be debated at the 10th RNF. The current EPA draft text has investment promotion and does not include binding obligations on investment liberalization and protection. The meeting agreed to consider only the development cooperation of the EPA text pending the decision of RNF on the treatment of rules.
The meetings recommendations will be approved by the 10th Regional Negotiation Forum (RNF) in Bujumbura in Burundi from 21st to 23rd February followed by a decision making meeting between the lead Ambassadors and EC officials in Brussels.
Expert Opinion: The ESA region has made a lot of progress in preparing the EPA text and the draft protocols that will facilitate ESA trade with EU. The various draft protocols have incorporated issues of concern to the private sector. However, a lot of work is still in the draft form. We need to track progress on the issues where there is consensus in the EPA draft text with EU especially on market access and trade related issues. Our representation is critical at the national and regional negotiation meetings since it is only this year when the agreement will be finalized.
************
This report was compiled by Walter N. Kamau, on February 12th 2007, following Technical Meetings on Economic Partnership Agreements (EPAs) that took place in Kigali, Rwanda, on January 25th - February 3rd, 2007.
Source
