13 Economic Partnership Agreement with
the West African region
| Committee's assessment
| Legally and Politically important |
| Committee's decision | Not cleared from scrutiny; further information requested; drawn to the attention of the International Development Committee
|
| Document details | (a) Signature, provisional application and conclusion of Economic Partnership Agreement with sixteen West African states,,[71] (b) the Economic Community of West African States (ECOWAS)[72] and the West African Economic and Monetary Union (WAEMU)[73]
|
| Legal base | (a) Articles 207(3), 207(4), 208 and 218(5) TFEU; QMV; (b)Articles 207(3), 207(4), 208, and 218(6)(a) TFEU; QMV
|
| Department | International Development
|
| Document numbers | (a) (36339), 13217/14 + ADDs 1-18, COM(14) 576
(b) (36341), 13263/14 + ADDs 1-18, COM(14) 578
|
Summary and Committee's conclusions
13.1 The Commission has proposed a Council Decision authorising
the EU to sign and provisionally apply the EPA (Document 13217/14),
and a proposal for a Council Decision for the EU to conclude the
EPA (Document 13263/14).
13.2 The EU has negotiated an Economic Partnership Agreement (EPA)
with 16 West African states,[74]
the Economic Community of West African States (ECOWAS) and the
West African Economic and Monetary Union (more commonly knonw
by its French acronym, UEMOA).
13.3 EPAs date back to the signing of the Cotonou Agreement in
2000; are "tailor-made" to suit specific regional circumstances;
and go beyond conventional free-trade agreements, focusing on
ACP (Africa, Caribbean and Pacific) development, taking account
of their socio-economic circumstances and include co-operation
and assistance to help ACP countries implement the Agreements.
EPAs are currently in various stages of implementation with Central
Africa, Eastern and Southern Africa, the Eastern African Community,
the South African Development Community, the Caribbean and the
Pacific.
13.4 This EPA is, accordingly, a mixed trade and development agreement
between the EU and its Member States and the West African region
which aims to promote trade between the two groupings. Through
trade the EPA will support development, sustainable growth and
poverty reduction in West Africa. It contains standard safeguards,
e.g., infant industries, with 25% of products excluded from liberalisation
altogether (see paragraphs 13.14-13.27 below for full details).
13.5 For Member States, the financial impact would be negligible
(the UK could expect to lose around €860,000 in revenue from
tariffs each year). The EU has pledged to provide development
assistance to implement the EPA, with €6.5 billion promised
from 2015-19, with this spending split between the European Commission
and the Member States.
13.6 The Minister (Lynne Featherstone) strongly supports the Commission's
proposals to sign, provisionally apply and conclude the agreement,
as well as the promised €6.5 billion to facilitate implementation.
13.7 The Minister explains that all EU Member States and at least
two-thirds of West African countries need to ratify the agreement
before the EPA would enter into force, and this is likely to take
over a year to complete. She notes that:
— following
signature, the EPA and the draft decision to conclude will be
transmitted to the European Parliament for their consent to conclude
the agreement; and that after that process and ratification by
Member States, the Council will then adopt the final decision
to conclude; and
— as
a mixed agreement, the UK will also need to sign and ratify the
EPA, which will provide an opportunity for both Houses to debate
and vote on the elements of the EPA to be assumed by the Member
States if they wish.
13.8 The Minister also notes that:
"We will shortly be discussing with the Commission/EEAS/other
Member States the exact scope of the provisional application of
the EPA. Given the subject matter, much of the agreement is likely
to be provisionally applied by the EU. However, in line with previous
practice on other agreements, the Government will continue to
rigorously oppose the provisional application of Articles which
are properly within the competence of the Member States".
13.9 We have no wish to hold up unnecessarily
what is a very welcome development. However, we would first like
the Minister to clarify this statement, and to explain:
— in
what ways this process would be "in line with previous practice
on other agreements"; and
— the
articles and aspects of the EPA being proposed for provisional
application by the Commission that the Government regards as "properly
within the competence of the Member States" and whether they
fall within the exclusive competence of
the EU.
13.10 Given that the Minister notes that the Commission
wants to sign and provisionally apply the agreement at the end
of 2014, "quicker than might be usual, in support of our
developing country partners", which will require Council
approval in late October or early November, we look forward to
an early response.
13.11 In the meantime, we shall retain the documents
under scrutiny.
13.12 We are also drawing this chapter of our
Report to the attention of the International Development Committee.
Full
details of the documents:
(a) Draft Council Decision on the signing and provisional application
of the Economic Partnership Agreement (EPA) between the West African
States, ECOWAS and the UEMOA and the European Union and its Member
States: (36339) 13217/14 COM(14) 576 + ADDs 1-18; (b) Draft Council
Decision on the conclusion of the Economic Partnership Agreement
(EPA) between the West African States, ECOWAS and the UEMOA, of
the one part, and the European Union and its Member States: (36341)
13263/14 COM(14) 578 + ADDs 1-18.
Background
13.13 On its website, the European Commission notes
that Economic Partnership Agreements:
· date
back to the signing of the Cotonou Agreement in 2000;
· are
"tailor-made" to suit specific regional circumstances;
· go
beyond conventional free-trade agreements, focusing on ACP (Africa,
Caribbean and Pacific) development, taking account of their socio-economic
circumstances and include co-operation and assistance to help
ACP countries implement the Agreements;
· opened
up EU markets fully and immediately (unilaterally by the EU since
1 January 2008), but allowed ACP countries 15 (and up to 25) years
to open up to EU imports while providing protection for the sensitive
20% of imports;
· provide
scope for wide-ranging trade co-operation on areas such as services
and standards; and
· are
also designed to be "drivers of change that will kick-start
reform and help strengthen rule of law in the economic field,
thereby attracting foreign direct investment, so helping to create
a "virtuous circle" of growth".[75]
13.14 In her Explanatory Memorandum of 6 October
2014, the Parliamentary Under-Secretary of State at the Department
for International Development (Lynne Featherstone) explains that
this EPA will provide 16 developing countries in West Africa[76]
with long-term duty-free access to the EU market, and highlights
the points below.
13.15 To ensure the EPA is compatible with the rules
of the World Trade Organisation (WTO), tariffs on 75% of products
imported to West Africa from the EU will be phased out incrementally,
every five years, over a twenty-year period. This reciprocal liberalisation
would not happen until full entry into force of the EPA. The 25%
of products considered most sensitive to competition from imports
in West Africa are excluded from this liberalisation — mostly
agricultural products (meat, fish, cereals, vegetables, sugar,
cocoa), beverages (alcoholic and non-alcoholic), cotton, textiles,
and some light manufacturing products (such as cement, paint,
glues). The liberalisation schedule is based on the ECOWAS Common
External Tariff which is due to come into force on 1 January 2015.
13.16 The EPA has a strong development focus. The
EU made a separate commitment in Council Conclusions on 17 March
2014 to provide at least €6.5 billion (approximately £5.4
billion) to support implementation of this West African EPA from
2015-19. Support will focus on trade, agriculture, infrastructure,
energy and capacity for developing civil society.
13.17 The EPA contains a number of protections for
West Africa's domestic economy.
— Export
taxes: existing ones can be maintained and new taxes introduced
for infant industries, revenue needs and environmental protection
on a limited number of products after consultation with the EU.
— Bilateral
safeguards: can be imposed if imports from the EU threaten to
damage domestic industries, a certain sector of the economy, or
a market of agricultural products in West Africa.
— Food
security: A bilateral safeguard may be applied if West Africa
has difficulty securing adequate amounts of agriculture products.
— Infant
industry: A specific clause allows the use of a safeguard if imports
from the EU threaten West Africa's infant industries.
— Agriculture
subsidies: Commitment from the EU not to use agriculture subsidies
on exports to West Africa.
13.18 The EPA contains a "Most Favoured Nation"
clause, which means that where West Africa grants a major developed
trading economy with greater access to West African markets than
is provided to the EU in the EPA, that the EU will be upgraded
to the same treatment.
13.19 The EPA contains a clause agreeing that either
side may take measures deemed appropriate under relevant articles
of the Cotonou Agreement, which governs the relationship between
the EU and Africa, Caribbean and Pacific countries. In effect,
this reaffirms the right of either side to suspend trade arrangements
in cases of serious breaches to obligations on human rights, democratic
principles, the rule of law, anti-corruption, and counter-proliferation
(there being an established process of dialogue before responsive
measures are taken).
13.20 The EPA contains a number of other provisions
such as:
— Customs
administration and exchange of information to facilitate trade.
— Technical
barriers to trade, including sanitary and phytosanitary measures.
13.21 The EPA contains a "rendezvous clause",[77]
to continue negotiating on issues such as services, intellectual
property, capital movement, investment, competition, sustainable
development and public contracts.
The Government's view
13.22 The Government strongly supports the Commission's
proposals to sign, provisionally apply and conclude the agreement.
13.23 The Minister describes this EPA as "a
development-friendly trade agreement which will support trade
and regional integration with the ultimate aim of reducing poverty",
noting that it includes flexibilities (such as excluding 25% of
products from liberalisation) for which the Government pressed
during the negotiations.
13.24 She continues her comments thus:
"The EPA provides long term certainty on
the provision of duty-free, quota-free market access to the EU
for West African countries. This is of particular relevance for
Nigeria, Ghana, Cote d'Ivoire and Cape Verde, who would not receive
duty-free access to the EU market without an EPA.[78]
This will make provisional application particularly beneficial
for them. As other West African countries' economies grow in the
future they would also become ineligible for trade preference
without an EPA."
13.25 The Minister also highlights the Government's
strong support for provisional application by the EU as it will
allow the developing countries to benefit from the provisions
of the EPA as soon as possible, going on to say:
"We will shortly be discussing with the Commission/EEAS/other
Member States the exact scope of the provisional application of
the EPA. Given the subject matter, much of the agreement is likely
to be provisionally applied by the EU. However, in line with previous
practice on other agreements, the Government will continue to
rigorously oppose the provisional application of Articles which
are properly within the competence of the Member States."
13.26 Upon entry into force, the Minister then notes:
— the
EPA's twenty-year period of liberalisation will allow West African
governments and businesses to plan in advance for the changes
to tariff levels;
— being
based on the previously agreed ECOWAS Common External Tariff,
the EPA will also reinforce progress on regional integration in
West Africa;
— the
safeguards available in the EPA will allow West Africa to protect
vulnerable industries and mitigate negative impacts from liberalisation;
— the
commitment from the EU not to use export subsidies on its agricultural
trade with West Africa will protect West African producers from
unfair competition;
— in
the spirit of a partnership, the EU has made a strong commitment
to provide development assistance to implement the EPA, with €6.5
billion promised from 2015-19, with this spending split between
the European Commission and the Member States: which commitment
the Government supports;
— the
Government is content that an EPA was agreed on trade in goods
only at this stage; and
— a
roadmap to continue negotiations on the other areas such as services
and investment is expected within six months of the conclusion
of the agreement.
13.27 With regard to the Commission's Legislative
Financial Statement, the Minister says:
— the
EPA will cause a loss of revenue of €4.3 million per year
to the whole EU, which will be caused by the removal of tariffs
on EU imports from Nigeria and Cape Verde; and
— in
2012, the UK received around 20% of Nigeria's exports to the EU,
and on this basis the UK could expect to lose around €860,000
in revenue from tariffs each year.
Previous Committee Reports
None.
71 Benin, Burkina Faso, Cape Verde, Côte d'Ivoire,
Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mauritania, Mali,
Niger, Nigeria, Senegal, Sierra Leone and the Togolese Republic. Back
72
These 16, minus Mauritania. Back
73
Members of the West African Economic and Monetary Union (also
known by its French acronym, UEMOA) are Benin, Burkina Faso, Cote
d'Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo. Back
74
Benin, Burkina Faso, Cape Verde, Côte d'Ivoire, Gambia,
Ghana, Guinea, Guinea-Bissau, Liberia, Mauritania, Mali, Niger,
Nigeria, Senegal, Sierra Leone and the Togolese Republic. Back
75
See http://ec.europa.eu/trade/policy/countries-and-regions/development/economic-partnerships/.
Also see http://trade.ec.europa.eu/doclib/docs/2009/september/tradoc_144912.pdf
for an overview of the EPA negotiations with Central Africa, Eastern
and Southern Africa, the Eastern African Community, the South
African Development Community, the Caribbean and the Pacific. Back
76
Benin, Burkina Faso, Cape Verde, Côte d'Ivoire, Gambia,
Ghana, Guinea, Guinea-Bissau, Liberia, Mauritania, Mali, Niger,
Nigeria, Senegal, Sierra Leone and the Togolese Republic. Back
77
A "rendezvous clause" is included in a legal text when
agreement cannot be reached on particular issues; the clause marks
formal agreement that negotiators will return to such issues at
a later date. Back
78
Other countries in West Africa are Least Developed Countries and
can currently benefit from duty free access to the EU. Back
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