FAO Seminar- Riga, 05-06 June 2006
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EPAs and their impacts on ACP agriculture and development
Anne Wagner
FAO Seminar- Riga, 05-06 June 2006
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From Lomé to Cotonou
• A radical change in 2000
• Lomé Convention– an Aid section, the EDF (15 bn €/5 years)– a commercial section, based on non-
reciprocal commercial preferences– 4 product specific protocols
• banana, sugar, meat and rum
FAO Seminar- Riga, 05-06 June 2006
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Reasons for change• WTO non compatible
– discriminatory and non reciprocal– Contrary to MFN clause
• Advantages given to one partner must be given to all
• 2 exceptions– concessions to all LDCS or to all DCs– or reciprocal concessions in the framework of a FTA
(GATT art. 24 )
– EU obliged to ask for a waiver from WTO
FAO Seminar- Riga, 05-06 June 2006
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A mixed outcome for Lomé preferences
• A mixed outcome– A decrease of the share of imports originating from
ACP on the EU market (from 7 in 1976 to 3 % in 2003)
– Exports from ACP that remain very concentrated on primary products (ex: Burkina Faso)
– Exports from ACP very dependant on EU market– Supply side structural constraints
• Some individual success stories (Mauritius, lichee from Madagascar, …)
FAO Seminar- Riga, 05-06 June 2006
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The Cotonou Agreement• Introduction of Economic Partnership
Agreements (EPAs)– Reciprocity : ACP markets opened to european
products, but asymmetry• EU opens at 100 %• ACP open at 80 %
– Negotiation by regional groupings (6), to encourage regional integration
– On a voluntary basis
• A new Aid system– Same amounts (15 bn €)– New mechanisms, not yet defined– Probably linked to EPAs
FAO Seminar- Riga, 05-06 June 2006
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If no EPA
• Different options depending if LDC or not– Non LDC : return to GSP– LDC : EBA Initiative (Everything but Arms)
• Consequence: not in interests of LDCs and risk of regional destabilisation
• Probable consequences on aid mechanisms, not yet fixed
FAO Seminar- Riga, 05-06 June 2006
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Calendar
• Beginning of EPAs : 1st January 2008
• … implementation in a 12 year period
• 2000-08 : preparation period– until end 2003 : Phase 1 at all ACP level– since 2004 : regional negotiations,
specific to each EPA
FAO Seminar- Riga, 05-06 June 2006
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Consequences for ACPWhat impacts on agriculture sectors and development of those regions?
FAO Seminar- Riga, 05-06 June 2006
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Impacts of regional integration
• Will a larger market enable economies of scale?– Yes, if removal of non tariff barriers
(infrastructure, administrative)– But:
• Danger of an accelerated integration process, risk that current processes are destabilized
• Increase of inequalities between costal countries and land-locked countries
• Risk of trade diversion
FAO Seminar- Riga, 05-06 June 2006
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Market opening to european products (1/4)
• Tariff removal: fiscal losses– Between 5 and 10% of fiscal incomes for West
African States– Less public investment– Implementation of a new tax system
• but problem of perception• VAT : effect on consumers
FAO Seminar- Riga, 05-06 June 2006
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Market opening to european products (2/4)
• Increased competition on local products:– Average increase of 15% for imports into W
Africa– Stronger impact on certain products, when
direct competition on local production– Sensitive products : meat, milk, wheat flour,
rice, potatoes, onions, sugar, tomatoes, oils…
FAO Seminar- Riga, 05-06 June 2006
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Market opening to european products (3/4)
• Some European products that are supported by CAP – Cereals
• Direct tranfers to producer • Export subsidies: removed (decrease of internal european price), and
used again beginning 2005 (€/$ parity)– Milk
• High internal price (production quotas)• Export subsidies for milk powder
– Tomatoes• Direct transfers to producer for canning• Export subsidies for tomato concentrate
– Sugar: • Current reform process
– Chicken meat:• dumping
FAO Seminar- Riga, 05-06 June 2006
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Market opening to european products (4/4)
• Threat for ACP agro-processing sector – Decrease of input price – But import competition for processed products– More fiscal pressure on the formal sector
• Advantage for consumers– Decrease of final consumer price, BUT if
intermediaries DON’T transmit the decrease
FAO Seminar- Riga, 05-06 June 2006
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Fast liberalization not advised• Fast liberalization not advised:
– Incremental
• Protection of certain products, among them agro-processed ones
• CET level:– Considered as too low, should be
increased and maintained until 2020
FAO Seminar- Riga, 05-06 June 2006
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• Ex: debate on WAEMU CET– Applied by WAEMU since 01/01/2000– 4 levels : 0%, 5%, 10%, 20%– Insufficient to protect agriculture production – Revision demanded:
• by farmer’s unions first ;• Then by governments
– But without success
FAO Seminar- Riga, 05-06 June 2006
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Access to european market (1/2)• Few new opportunities for LDCs, because EBA• Non-LDCs : removal of remaining tariffs (mainly
processed products)• But :
– Compliance to sanitary norms and standards– Structural supply constraints– Competition with other countries on european market– Danger of preference erosion if no EPA
• Ex: CEMAC
FAO Seminar- Riga, 05-06 June 2006
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Access to european market (2/2)
• Risk of regional desequilibrium:– Favorable to costal countries
• What consequences on natural ressources?
• What consequences on development modell?
FAO Seminar- Riga, 05-06 June 2006
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Recommendations
1. Capacity building
2. Compensation for fiscal losses
3. Negociatiation of commercial agreements that enable development of agriculture and exports
FAO Seminar- Riga, 05-06 June 2006
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Increase political and productive capacity (1/2)
• Capacity of States, to implement necessary reforms– Customs and administrative rules – New tax system– Transport and communication infrastructures
• At regional level– Coordination between members– Sectoral policies
• R&D, training, promote industrial development…
– Investment regulation
FAO Seminar- Riga, 05-06 June 2006
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Increase political and productive capacity (2/2)
• Support civil society stakeholders• Develop exports
– Support competitiveness– Training for economic stakeholders (knowledge
of european markets)– Standards and norms
=>EU must guarantee sufficient and unconditional aid
FAO Seminar- Riga, 05-06 June 2006
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Compensate for fiscal losses
• By the EU, more important for LDCs
• Finance improvement of production capacity
• additional to existing funds
FAO Seminar- Riga, 05-06 June 2006
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Trade dimension
• Market opening to european products– Exclude sensitive products (e.g. meats,
vegetables, wheat flour, oils)– Incremental– Room for manœuvre in EPA must not be more
restrictive than in WTO (SP/SSM), on the contrary
• Exports– Loosening of norms (feasible ?) and rules of origin