EPA's : tackling the myths, by Peter Mandelson
This is a time of global economic change - and African Caribbean and Pacific countries are at a unique point in their development. Recent growth rates in Africa are encouraging, and they suggest huge potential if we can give freer rein to the genius of African entrepreneurs, attract new investment and build strong regional markets that can compete globally. The Economic Partnership Agreements that the EU is currently negotiating with the ACP regions are designed to help do all three. To take a trading relationship that is currently based on dependency and turn it into one based on economic diversification.
Yet the Economic Partnership Agreements are often criticised, and frequently misunderstood. As we enter the crucial nine final months of the negotiation it is worth tackling some of the myths that surround EPAs.
First, the EU isn't steamrolling ACP regions into having these negotiations completed by the start of next year. That deadline is imposed by the expiry of the legal protection at the WTO for our existing trade agreements which are based on preferential access and break WTO rules. Our goal is to put a new system in place that finally puts an end to preference systems that divide ACP regions with different duties for different countries. If we don't have the new system in place we will have to fall back on alternative with less generous market access. Meeting the deadline is not just about complying with WTO rules. It means not having to go, cap in hand, to other WTO members asking for further concessions - that they are likely to refuse.
So the importance of a new agreement by 2008 is not a threat - it's a reality. That is why both the EU and ACP governments agree we can deliver pro-development agreements on time and have said so publicly. We also agree our real challenge is not signing EPAs on time but signing EPAs that deliver development.
Second, we're not looking for "free trade" with ACP countries from January 1 next year, or any time soon. In fact the Economic Partnership Agreements are not free trade agreements in the usual sense. The EU will completely open its market to ACP exporters. No more duties, no more quotas - full stop. There will be transitions for sugar and rice but for all other products the tariffs and quotas will be eliminated from day one.
The ACP won't be asked to match this offer, and the tariff reductions they do offer will be subject to the flexibility provided by WTO rules which means the right to protect sensitive markets and use long transition times for change. I often hear claims that the EU is looking out only for its own commercial interests with EPAs. But Europe trades very little with ACP countries - we don't have offensive commercial interests in these negotiations. Even in the highly contentious area of investment, the EU's chief concern is putting in place the rules that will help ACP countries attract the new capital they urgently need.
Third, the EU recognises that the real benefits for African Caribbean and Pacific regions are not chiefly in market access. Development means building strong regional economies, based on attracting investment and trade. It means the revision of the EU's rules of origin to help exporters in ACP regions tap the wider productive capacity of their market - something that EPAs will do. It also means development assistance from the EU for building the infrastructure that creates the capacity to trade. The EU is backing EPAs with real money. The EU will support ACP regional EPA funds, help build up ACP industry and help offset short term revenue losses from tariff cuts. With the support of the €23 billion European Development Fund and EU commitments to increase Aid for Trade, EPAs will not fail through a lack of financial support.
Certainly, the EPA negotiations force us to face up to difficult issues. We are rebuilding an economic relationship that has been in place for many years. But that relationship, based on preferences and commodity trade has largely failed to deliver development and it is time to take the bold step to something new.
It is essential that there is strong debate over EPAs but we must not fall into the trap of calling for a halt or a delay. As EU Trade Commissioner, I am acutely aware of Europe's historical links to the ACP and the importance of helping ACP region move beyond vulnerability and dependency into a healthy role in the global trading system. The EPAs are not a threat to this, they are the most valuable tool we have to achieve it.