1. ECONOMIC PARTNERSHIP AGREEMENTS IN AFRICA: A cost-benefit analysis
Peter Lunenborg

2. South Centre: think tank of developing countries
To promote South solidarity, South consciousness and mutual knowledge and understanding among the countries of the South.
Developing points of view of the South on major policy issues, and to generating ideas and action-oriented proposals
Responding to requests for policy advice, and for technical and other support from developing country groupings (G77, NAM, African Group) and member states
South Centre: think tank of developing countries

3. Main policy areas GGDP: climate change, global finance
IAKP: IP, technology transfer, traditional knowledge, WIPO
TDP: trade (agriculture, NAMA, services) at WTO as well as in bilateral/regional settings

4. Costs vs benefits of EPAs

5. Costs of EPA Tariff revenue loss
Major source of government revenue for countries in process in development
In the US, tariffs were the largest source of federal revenue from 1790s to World War I, until it was surpassed by income taxes

6. Costs of EPA – Estimates of tariff revenue losses
UNECA 2005 study: most comprehensive
Between then and now more imports
More imports = more tariff revenue loss

7. Tariff revenue loss for Sub Saharan Africa: USD 3.4 billion
Region
Tariff revenue loss
(UNECA 2005)
Import from EU, 2003
Import from EU,
Correction factor
(D / C)
Revenue loss, based on imports
(B x E) A B C D E F
West Africa
980.2
12,317
21,483
1.7
1,804.4
Central Africa
389.8
3,479
4,925
1.4
570.5
EAC
162.6
1,543
2,905
1.9
301.1
SADC EPA
121.0
2,488
6,010
2.4
302.7
ESA EPA
318.2
3,356
3,993
1.2
406.5
Sub Saharan Africa
1,971.8
23,183
39,316
3,385.2

8. Top 10 losers (tariff revenue)
Country
Estimated revenue loss based on imports , in USD million
Nigeria
857.2
Ghana
374.4
Angola
273.2
Kenya
193.8
Congo
173.5
Cote d'Ivoire
159.2
Cameroon
154
Senegal
149.5
Sudan
117.8
Ethiopia
88.7

9. Benefit of EPA (1)
Avoidance of duties for African exports to the EU compared with the arrangement without an EPA
So, if an African country falls back to a less favourable market access regime, how much additional duties would EU importers pay for African exports?

10. Benefits of EPA is assumed to accrue to African exporters for 100%: overstates benefits
EU importers also benefit
Costs of EPA will be borne by African governments, and the people affected by cuts in government incomes
Hospitals
Schools
Roads

11. Benefits of EPA differ per country
LDCs: Everything But Arms
From market access perspective, no benefit from EPA
South Africa: TDCA
Incremental benefits (already at 95%)
Republic of Congo, Gabon, Nigeria: not listed as beneficiaries under EU’s MAR 1528/2007, already trading under EU GSP
For other non-LDCs: EU’s GSP
For example fresh or dried pineapples ( ) = 0.7%

12. For each country: Calculation of duties payable under EU GSP
Top 30 exports
Eurostat trade data, EU imports from African countries
Three year average
Applicable EU GSP duty
MFN rates: European Commission, Taxation and Customs Union
Mixed / specific duties: ad valorem equivalent (ITC Market access map)
EU GSP regulation
. In all non-LDCs, the thirty most important exports to the EU constitute more than 90% of total exports to the EU, with Botswana, Congo, Gabon, Nigeria, Seychelles and Swaziland reaching 98% or more. The only exception is Mauritius (79%), due to the fact that textile tariff lines are extremely specific in the EU’s tariff schedule.

13. Only 127 products would not be duty free under EU GSP
Description
Total exports by non-LDCs (excl. RSA)
Total duties under EU GSP, EUR mln
Raw Cane Sugar
223.31
109.2
Bananas
348.98
74.82
Prepared Or Preserved Tunas And Skipjack
299.91
61.48
Fresh Or Chilled Bovine Meat
54.43
34.96
White Sugar
54.53
32.95
150.11
30.77
Fresh Cut Roses And Buds
282.92
24.05
Cocoa Paste (Excl. Defatted)
331.68
20.23
Fillets Known As "Loins" Of Tunas Or Skipjack
77.55
15.9
Cocoa Butter
356.78
14.98
Other
1,770.54
151.74
Total
3,950.74
571.08

14. Cost of EPA higher than benefit of EPA
 Country
GAINS OF SIGNING EPA
COSTS OF SIGNING EPA
Cost of EPA higher than benefit of EPA
Duties under GSP (USD mln)
Tariff revenue loss (USD mln)
Botswana
37.7
5.4 No
Cameroon
56.7
154.0
Yes
Congo -
173.5
Cote d'Ivoire
124.5
159.2
Gabon
3.1
88.1
Ghana
51.9
374.4
Kenya
87.1
193.8
Mauritius
193.2
50.3
Namibia
60.6
7.1
Nigeria
8.4
857.2
Seychelles
46.2
30.0
Swaziland
73.6
1.4
Zimbabwe
39.2
15.4
Non LDCs
782.2
2,110.0
LDCs
1,275.2
All Sub Saharan Africa
3,385.2

15. Costs of EPAs higher than benefits?
Yes:
No:
LDCs
Botswana
Cameroon
Mauritius
Congo
Namibia
Cote d’Ivoire
Seychelles
Gabon
Swaziland
Ghana
Zimbabwe
Kenya
Nigeria

16. GSP reform does not change the story
Fall back option less attractive for some countries
GSP reform is a way to increase the benefits /gains of signing EPA
However does not change the story except if Cote d’Ivoire would be pushed back to MFN

17. Cost of EPA higher than benefit of EPA
 Country
GAINS OF SIGNING EPA
COSTS OF SIGNING EPA
Cost of EPA higher than benefit of EPA
Duties under MFN (USD mln)
Tariff revenue loss (USD mln)
Botswana
37.8
5.4 No
Cameroon
61.5
154.0
Yes
Congo
1.3
173.5
Cote d'Ivoire
163.4
159.2
Gabon
10.6
88.1
Ghana
69.2
374.4
Kenya
121.8
193.8
Mauritius
212.8
50.3
Namibia
73.1
7.1
Nigeria
19.3
857.2
Seychelles
54.2
30.0
Swaziland
74.6
1.4
Zimbabwe
47.0
15.4
Non LDCs
946.5
2,110.0
LDCs
1,275.2
All Sub Saharan Africa
3,385.2

18. AU common position paper highlights other risks
EPA’s potential impacts on
Food security and rural livelihoods
EU Ag subsidies
Regional trade and integration
Industrial development
Export taxes
Governments’ Support of Local Enterprises and Industries
Tighter Intellectual Property Disciplines

19. AU common position paper
Despite the resources and efforts devoted to EPA negotiations by African countries, many of these critical issues have still not yet been addressed.
Nevertheless, Africa continues to seek an improved relationship with Europe to address the impediments to development and to strengthen its productive capacities.

20. Thank you