Europe’s Reflection in the EPA Mirror Dr Christopher Stevens Open Europe Seminar 26 March 2007

Europe's Reflection in the EPA Mirror: Open Europe, 26 March What sort of Europe do we want?  The EPA debate is old and jaded – under way since 1996:  but cannot be resolved until an EPA exists;  hypothetical EPAs can be created which are development friendly;  but will they be agreed?  But the Commission has recently raised the stakes.  Already too late to complete EPAs in 2007 that are:  detailed;  genuinely negotiated with stakeholder buy-in;  apply to regions.  What happens in January will:  the current trade regime be extended temporarily – the usual precedent;  a default regime be imposed – what the Commission threatens?

Europe's Reflection in the EPA Mirror: Open Europe, 26 March Europe as Caesar’s wife  Time runs out because:  Cotonou says so;  the WTO waiver expires, which: does not require action for at least 2 years; but EU claims it must be squeaky clean.  But there is also Cotonou Article 37(6): In 2004, the Community will assess the situation of the non-LDC which, after consultations with the Community, decide they are not in a position to enter into economic partnership agreements and will examine all alternative possibilities, in order to provide these countries with a new framework for trade which is equivalent to their existing situation and in conformity with WTO rules.

Europe's Reflection in the EPA Mirror: Open Europe, 26 March Complying with Article 37(6)  When it signed Cotonou the EU made a promise it could not fulfil at that time.  In 2000 there was no off-the-peg trade regime that was:  equivalent to Cotonou;  clearly WTO conforming.  In 2007 there still isn’t!  Either the EU negotiated in bad faith;  or it must create such a regime.

Europe's Reflection in the EPA Mirror: Open Europe, 26 March Enter the GSP  The Commission’s threat must assume that the GSP fulfils Article 37(6).  ODI research shows that it doesn’t.  Instead it will cause:  tariffs to be raised, not lowered, (in the name of being squeaky clean in the WTO);  ACP exporters to pay taxes to Europe;  the collapse of some ACP exports.

Europe's Reflection in the EPA Mirror: Open Europe, 26 March The ODI research  Analysed all significant ACP exports to EU in 2005 to see the tariff implications of replacing Cotonou with the GSP.  Identified products with: 1.no change; 2.moderate change (tariff jump under 10%); 3.large change (10%+ tariff jump or new/increased specific duty).  Category 2 exports:  some may decline/cease in medium term, but unpredictably;  all will pay trade taxes to the EU.  Category 3 exports:  easier to spot the casualties.

Europe's Reflection in the EPA Mirror: Open Europe, 26 March All non-LDC ACP are affected Proportion of value of total trade represented by exports each accounting for 1% or more of the total which would experience a change in access

Europe's Reflection in the EPA Mirror: Open Europe, 26 March How badly affected?  EU tax take on Category 2 imports:  €156 million p.a. (equals 2.6 time EuropeAid’s 2005 commitments to health projects in all ACP);  assumes no fall in exports because of the tax.  Some ACP exports will cease - with sugar, bananas, beef, rice, horticulture, citrus and processed fruits at most risk.  Because some competitors will have more favourable (often non-reciprocal) access.

Europe's Reflection in the EPA Mirror: Open Europe, 26 March The way out  The Commission threatens:  to impose taxes not levied for 30 years;  without recourse to Member States or Parliament;  in violation of Treaty commitments;  in the name of WTO respectability!  An alternative exists:  the EU can create the regime that did not exist in 2000;  based on the GSP+ (currently available to 15 states);  extended to cover some key ACP exports.  This would:  follow established precedent;  buy time for EPA negotiations to conclude.  But will the Commission do it?

Europe’s Reflection in the EPA Mirror Dr Christopher Stevens Open Europe Seminar 26 March 2007