9 Economic Partnership Agreement between
the European Community and its Member States and the Pacific Partner
states
| (a)
(30337)
17573/08
+ ADDs 1-14
COM(08) 858
(b)
(30302)
5001/09
+ ADDs 1-14
COM(08) 857
|
Draft Council Decision on the signature and provisional application of the Interim Partnership Agreement between the European Community, and the Pacific States
Draft Council Decision concluding the Interim Partnership Agreement between the European Community and the Pacific States
|
| Legal base | Articles 133 and 300 EC; QMV
|
| Documents originated | (a) 16 December 2008
(b) 16 December 2008
|
| Deposited in Parliament | (a) 14 January 2009
(b) 9 January 2009
|
| Department | International Development
|
| Basis of consideration | EM of 29 January 2009
|
| Previous Committee Report | None; but see HC 16-xxxvi (2007-8), chapter 13 (26 November 2008); HC 16-xxxv (2007-8), chapter 9 (12 November 2008); HC 16-xxxi (2007-8), chapter 10 (15 October 2008); HC 16-xxix (2007-8), chapter 10 (10 September 2008); HC 16-xxi (2007-08), chapters 13 and 14 (14 May 2008); HC 16-iv (2007-08), chapter 3 (28 November 2007); and HC 16-i (2007-08), chapter 1 (7 November 2007)
|
| To be discussed in Council | To be determined
|
| Committee's assessment | Politically important
|
| Committee's decision | Cleared
|
Background
9.1 The Economic Partnership Agreement (EPA) negotiations with
the African, Caribbean and Pacific (ACP) group of countries, which
began in 2002, aimed at redefining the trade regime between the
two groups of countries, thereby replacing the long-standing Lomé
system of preferential access to the European market for the ACP
from 2008. The EPAs are intended to be in conformity with WTO
rules, which require that barriers to trade be dismantled on both
sides, introducing an element of reciprocity into trade relations
between the EU and the ACP states for the first time. This gave
rise to concern that extensive opening of the markets in these
countries to the EU could create strong adjustment pressures,
while European suppliers would be only marginally affected by
free market access for ACP goods and services. The deadline for
negotiation was 31 December 2007.
9.2 The Commission's aim was always "full"
EPAs — which include provisions on trade-related areas,
trade-related rules and trade in services and include appropriate
links to development cooperation, as well as trade in goods —
in accordance with what is outlined in the Cotonou Agreement and
the Commission's negotiating mandate. But not all of the six ACP
negotiating regions were likely to conclude a full EPA by the
set deadline; so, for these regions, the Commission decided to
pursue basic "trade in goods agreements", which provide
for duty free/quota free access and simplified Rules of Origin.
9.3 The difficulty arose in relation to those non-LDCs
not in a position to conclude even a "trade in goods"
agreement by 31 December. They would be offered, as an interim
measure, the Union's generalised scheme of preference, or GSP,
which is less favourable than Cotonou preferences or EPA arrangements.
9.4 Last autumn, the Commission produced, first,
a Communication on EPAs and then a Regulation, based upon Article
133 EC and therefore subject to QMV. At our meeting on 7 November
2007 we recommended the Communication for debate in the European
Standing Committee. Then, on 28 November 2007, we considered the
draft Council Regulation, which set out what the Minister (Mr
Gareth Thomas) said was the minimum necessary structure to establish
a goods-only trade regime as an interim measure until "full"
EPAs were established — when a participating ACP country
had brought forward a WTO-compatible market access offer to the
EU, it would receive all the necessary provisions to apply for
the EPA market access offer (market access regime, safeguards,
institutional arrangements, administrative cooperation, and Rules
of Origin), which it would benefit from on 1 January 2008. However,
the Minister explained, the Regulation was tied to the signing
and provisional application of an EPA; if negotiations on goods
were not concluded, the ACP country concerned would revert to
the Generalised System of Preferences (GSP), which is less favourable
than Cotonou preferences or EPA arrangements, and not receive
the duty-free, quota-free market access offered in the Regulation.
The UK position had, he said, long been that ACP regions should
not receive worse market access than that which they received
under Cotonou preferences, and should not be offered GSP as an
alternative to EPAs. Against this background, we recommended that
the Regulation be debated along with the Communication. That debate
took place on 3 December 2007.
9.5 In chapter 13 of our Report of 14 May 2008, and
the earlier Reports referred to therein,[21]
we set out our consideration of the process in greater detail,
concluding with a letter from the Parliamentary Under-Secretary
of State at the Departments for International Development and
Business, Enterprise and Regulatory Reform (Mr Gareth Thomas)
outlining the general situation as of the end of April 2008.
9.6 In chapter 14 of that same report, we cleared
a Council Decision authorising the signature and the provisional
application, by the Community, of an EPA between the EC and its
Member States and the CARIFORUM states;[22]
and a Council Decision authorising the conclusion of the EPA between
the EC and its Member States and the CARIFORUM states.
9.7 On 10 September we also cleared Council Decisions
authorising the signature and the provisional application, by
the Community, and authorising the conclusion of an EPA between
the EC, Member States and Ghana.[23]
9.8 On 15 October, we then cleared Council Decisions
authorising the signature and the provisional application, by
the Community, and authorising the conclusion of a "stepping
stone" EPA between the EC and its Member States and Central
Africa, which for the time being includes only Cameroon.[24]
9.9 On 12 November 2008, we also cleared the Council
Decision authorising the signature, on behalf of the Community,
and provisional application of a further "stepping stone"
EPA between the EC and its Member States on the one hand, and
Côte d'Ivoire on the other.[25]
9.10 Most recently, on 4 December 2008, we cleared
Council Decisions authorising the signature and the provisional
application, by the Community, and authorising the conclusion,
of a "stepping stone" EPA between the EC and its Member
States and the East African Community States.[26]
9.11 At this meeting, we also consider a similar
Interim EPA with the East and Southern Africa Partner States.[27]
The Council Decisions
9.12 As with these previous EPAs, these Council Decisions
concern the procedures necessary to agree formally and give effect
to the same international agreement; the two step process is not
unusual, since the EC Treaty expressly allows the Community to
apply international agreements provisionally prior to their formal
conclusion, as formal conclusion can be a lengthy process. The
Pacific Partner States concerned by this agreement consist of
the Republic of Fiji and Papua New Guinea. They and the European
Commission and initialled the interim EPA on 23 November 2007.
The Government's view
9.13 In his Explanatory Memorandum of 29 January
2009, the Minister of State at the Department for International
Development (Mr Gareth Thomas) explains that this agreement differs
from previous EPAs in that it is "a goods only agreement
and references to development are limited at the request of the
Pacific states." He goes on to explain that the EPA establishes
a Free Trade Area compatible with WTO rules and will make permanent
the trade preferences granted to Pacific EPA states under the
Market Access Regulation ("except for rice and sugar exports
which are subject to short transition periods"). The agreement
also "commits the Pacific states to open gradually their
markets to EU imports."
9.14 The Minister also notes that:
— Rules
of Origin (ROOs) are included in the Agreement and determine which
exports qualify as originating from Pacific states and are therefore
eligible to EU preferences offered under the EPA;
— the Agreement enables both parties to
take measures to protect their national markets in particular
circumstances;
— these measures include a safeguard clause
which allows both parties (EC and Pacific states) to raise duties
or impose quotas for those sectors and industries that are threatened;
and
— this includes safeguard provisions for
infant industries.
9.15 In addition to the aspects outlined in paragraph
9.12 above, the Minister explains that, in this instance, the
agreement falls within the exclusive competence of the Community,
is therefore being signed on behalf of the Community alone, and
will take effect in UK law automatically.
9.16 He further explains that, unlike the others,
this EPA "contains very minor elements relating to development
assistance and therefore it is not necessary to include a legal
base of Article 181 EC."
9.17 Otherwise, the proposed Council Decision on
signature and provisional application of the EPA is based on Articles
133 (reflecting the trade content of the EPA) and Article 300(2)
EC (which authorises provisional application of international
agreements); and the proposed Council Decision on the conclusion
of the Agreement is based on Article 300(3), which provides for
the conclusion of international agreements.
9.18 The Minister also notes that, although neither
co-decision nor cooperation procedures is applicable, the European
Parliament will consulted in the context of the Council Decision
formally concluding the EPA (the Minister having on previous occasions
explained that this is a procedural requirement for conclusion
of international agreements having an impact on the EU budget
under Article 300(3) EC).
9.19 Finally, the Minister notes that adoption in
the Council will be Qualified Majority Voting (with the other
EPAs, the Minister noted that the matter was likely to proceed
on the basis of consensus, given that those EPAs are mixed agreements
that the Member States are also required to ratify in their own
right before they can take effect).
9.20 The Minister recalls that the Government's policy
on EPAs has centred on a number of key principles, set out in
the in the DFID/DTI Position Paper of 2005, to promote the development
benefits of EPAs, and continues thus:
"This Agreement broadly aligns with these principles;
however there are limited references to development. As this was
at the request of the Pacific States we are content with the position
and the commitment of both parties to move toward a regional EPA
that fully incorporates development issues.
"The agreement states that the parties of the
EPA commit to concluding negotiations for the comprehensive EPA
by 31 December 2008. We are aware that this date has passed but
Commission negotiators confirmed that this deadline was a political,
not a legal commitment. We encourage the Commission and the Pacific
states to move towards a comprehensive agreement that includes
development aspects, at a pace acceptable to the Pacific States.
In the meantime, this interim agreement will ensure WTO compatibility.
"In terms of market access, the Pacific offer
is more ambitious than others where the standard expectation is
for ACP countries to liberalise trade across 80% of the value
of imports within 15 years. Papua New Guinea will eliminate tariffs
across 88% of the value of imports from the EU before 2022 and
Fiji will remove tariffs across 87% of the value of EU imports
by this date. Papua New Guinea and Fiji are excluding between
12 and 13% respectively of goods from liberalisation in order
to safeguard sensitive sectors.
"Fiji and Papua New Guinea chose to agree a
'goods only' interim EPA. Other Pacific states have smaller volumes
of trade with the EU and therefore had less incentive to sign
up at this stage. However, the region as a whole is interested
in negotiating a comprehensive EPA including services, investments
and other trade related and development issues. There is particular
interest in Mode 4 which allows for the temporary migration of
workers to EU member states. We will be working with other Member
States to lobby the Commission to ensure that ACP states are provided
with sufficient time to negotiate an effective agreement that
supports regional integration and development aspirations of the
region.
"We welcome the fact that this agreement includes
Rules of Origin (ROOs) that are more liberal than that offered
under the Cotonou Agreement to export to Europe, particularly
in relation to clothing and fisheries.
"The Agreement contains protective measures
such as safeguards, which will enable Pacific EPA states to apply
or raise duties or quotas on imports if faced with a surge of
imports from the EU. We are pleased that it specifically allows
the use of safeguard measures to protect infant industries. The
agreement also makes certain provisions where either party is
at the threat of, or is experiencing, serious balance of payment
issues and external financial difficulties. We welcome this provision
considering the current economic challenges faced by countries.
"The Agreement, like other EPAs, includes provisions
that are not strictly required for WTO compatibility but are common
in free trade agreements, including the Standstill Clause and
a ban on new export taxes (except in exceptional circumstances).
The Most Favoured Nation clause is also included. We are not aware
of any concerns that have been raised in connection with the inclusion
of these clauses into the agreement."
9.21 As part of the process of concluding this Agreement,
the Minister says that his Department has consulted with the Department
for Business, Enterprise and Regulatory Reform, the Foreign and
Commonwealth Office, HM Revenue and Customs and the Department
for the Environment Food and Rural Affairs; the UK's representatives
in Brussels; Pacific states' officials; and British NGOs.
9.22 Finally, the Minister says that, following translation
into all the EU languages, the EPA will be discussed in Council
and "and processed with a view to ensuring signature and
provisional application of the EPA by the Commission in May 2009."
Conclusion
9.23 No issues arise from the Council Decisions,
which, as the Minister explains, are the standard procedure for
agreements of this nature. We accordingly now clear the documents.
9.24 We are, however, drawing them to the attention
of the House because of the widespread interest in the EPA process.
9.25 We are also, as on previous occasions, drawing
them to the attention of the International Development Committee.
21 See headnote: HC 16-xxi, chapter 13 (14 May 2008),
HC 16-iv (2007-08), chapter 3 (28 November 2007) and HC16-i (2007-08),
chapter 1 (7 November 2007). Back
22
The CARIFORUM states are Antigua and Barbuda, the Bahamas, Barbados,
Belize, Dominica, Dominican Republic, Grenada, Guyana, Haiti,
Jamaica, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and
the Grenadines, Suriname, and Trinidad and Tobago. See HC 16-xxi
(2007-08), chapter 14 (14 May 2008). Back
23
See headnote: HC 16-xxix (2007-8), chapter 10 (10 September 2008). Back
24
See headnote: HC 16-xxxi (2007-8), chapter 10 (15 October 2008) Back
25
See headnote: HC 16-xxxv (2007-8), chapter 9 (12 November 2008) Back
26
See headnote: HC 16-xxxvi (2007-8), chapter 13 (26 November 2008). Back
27
See (30301) 17476/08 and (30350) 5112/09 at chapter 8 of this
Report. Back
| 
