Economic Partnership Agreement is EU's Current Model Framework

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Thursday, August 04, 2016 9:07am /FBNQuest Research

The economic partnership agreement (EPA) is the EU’s current model framework governing trade, investment and cooperation with developing countries on a reciprocal basis. It is the successor to the Cotonou Agreement of 2000 with African, Caribbean and Pacific (ACP) countries.

Only the Caribbean has signed an EPA. The EU has sought to negotiate with African regional groups. This has proved challenging since the membership of the bodies are at different stages of development.

The Economic Community of West African States (ECOWAS) provides a good example. Nigeria and The Gambia have declined to sign an EPA for the community.

The opposition in Nigeria is led by the manufacturers’ lobby. Nigerian manufacturing may be advanced within the context of ECOWAS but is dominated by consumer goods and light industry.

Its representatives fear that the reciprocal access granted to EU member countries under an EPA would jeopardise attempts to create a regional manufacturing powerhouse with a heavy industrial component. We have some sympathy for this argument.

EPAs may be accepted by the many small African economies for the lack of an alternative. It may be asked why South Africa has signed up to an agreement with five members of its regional body (SADC).

We would say that it has achieved critical mass in manufacturing. Exporters of tropical products such as Côte d’Ivoire are also supportive because they have established markets in the EU and are familiar with the non-tariff requirements.

ECOWAS is not the only regional organization in sub-Saharan Africa which has been divided on an agreement. The East African Community (EAC) is the best example of regional integration on the continent so it was particularly disappointing for the EU that the planned signing of an EPA on 18 July had to be abandoned due to the withdrawal of Tanzania and Uganda.

An EPA provides quota free and duty free access. An alternative would be an everything but arms (EBA) trade arrangement, which is duty free and yet frees the signatories from having to open up their markets on the scale required under an EPA.

However, this is not available for middle-income countries such as Kenya, which is now vulnerable to restrictions on its sizeable exports to the EU unless it signs its own bilateral EPA.

This could be the way forward for the majority in ECOWAS unless somehow the community is able to reach the agreement that has been beyond it to date. Côte d’Ivoire and others could try to negotiate a bilateral EPA.

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