• EU trade policy
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EU trade policy

The Economic Partnership Agreements (EPAs) being negotiated between the European Union (EU) and several regions of the African, Caribbean and Pacific (ACP) mark a fundamental change in the EU-ACP economic relations. Nevertheless, while the reforms proposed by the EPA could benefit ACP countries in the long term, there are short and medium term costs that could overshadow or even offset potential gains. The EU acknowledges these costs, and commits that development aid will be provided to ACP countries to comply with the costs of the EPAs. For ACP governments, however, development cooperation within the EPAs extends beyond the strict costs of implementation of these agreements. Indeed, EU-ACP divergences become apparent as soon as that understanding has to be translated into legal language in the text of EPAs. In fact, all the EPA texts initialled at the end of 2007 only contain vague commitments with respect to development assistance.

Furthermore, the agreement could be severely constrained or even nullified if economic, productive and trade conditions are not favourable. The paper reviews the main types of costs that EPAs are likely to generate for ACP governments:

• tariff reduction and the loss of fiscal revenues
• trade facilitation and improvement of the trading infrastructure
• production and employment adjustment costs
• skills development and productivity enhancement
• domestication, implementation and enforcement of EPAs

Moreover, there remain fundamental problems with the content of the trade-related assistance instruments that will be used. In this context, the EU's Aid for Trade (AfT) strategy and its interface with EPAs has faced a variety of criticisms:

• there is a lack of clarity surrounding the implementation of AfT funds
• there is necessity for greater coordination among EU member states and the commission in the operationalisation of aid objectives
• there is also some uncertainty regarding the capacity of EU member states and the EU commission to honour the commitments announced
• the EU commitment would only cover the trade policy regulations and trade development clusters
• the bulk of EU's trade-related funds are allocated to national governments
• a problem of EU's AfT is the lack of appropriate monitoring and evaluation mechanisms

The paper finally states the following conclusions:

• the EU must recognise that the problems that have arisen as a result of the negotiations is bound to take negotiating time
• more effective financial assistance from the EU is certainly seen by many ACP governments as one of the main value-additions of the EPAs
• it is unfortunate that development cooperation provisions are barely developed
• if development cooperation is not clearly articulated within the texts, ACP countries' fiscal losses will multiply over time and the promise of aid from the EU may not mitigate the costs they bear

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