What are the costs of a non-EPA?

1
What are the costs of a non-EPA?

• TIPS Workshop, Pretoria 4-5 March
• Dr Mareike Meyn

2
Overview

• What are the alternatives to EPAs for
• Developing African countries
• For Least Developed Countries (LDCs)
• What costs occur for
• Non-EPA signatory LDCs
• Non-EPA signatory developing countries
• Signatory LDCs that will not ratify an EPA
• Signatory developing countries that will not
  ratify an EPA
• Differentiation of these 4 types is important
  since the countries face different costs when not
  joining an EPA

3
What are the alternatives to EPAs?

• Art. 37.6 Cotonou EU will provide trading regime
  that is equivalent to Cotonou provisions
• Only alternatives were and are the EUs GSP
  system
• Standard GSP (open to most developing countries)
• Everything But Arms - EBA
• GSP (expanded GSP system linked to respect of
  core labour and human rights principles)
• All alternatives are problematic WHY?
• Standard GSP
• EBA
• GSP

4
What are the alternatives to EPAs?

• 1. Standard GSP
• 267 products would face tariff jumps of over 10
  percent ad valorem. Most affected products are
  beef, processed fruit, sugar, rice, bananas,
  citrus and horticulture.
• 2. EBA
• Cotonou equivalent market access but only open
  for LDCs
• 3. GSP
• does not comprise all products (such as beef and
  sugar) but would be an alternative for some
  countries
• Only open in 2009 Nigerias and Seychelles
  request was rejected in 2007.

5
1. Non-EPA signatory LDCs

• Biggest group of non-EPA signatory states
• 24 in Africa, 5 in the Pacific, 0 in the
  Caribbean
• ESA Djibouti, Eritrea, Ethiopia, Malawi, Sudan,
  Zambia
• SADC Angola
• Direct monetary costs limited
• EBA fallback position
• But Cotonou plus RoO do not apply
• Indirect costs non-quantifiable but can be
  substantial

6
2. Non-EPA signatory developing countries

• 3 in Africa (Nigeria, Congo, Gabon) and 7 in the
  Pacific
• Direct monetary costs limited
• Africa only one item (raw sugar cane) for one
  country (Congo)
• accounts for more than 1 of total exports and
• faces ad valorem tariff jumps of more than 20
• Indirect costs lower than for group 1

7
3. Signatory LDCs that will not ratify an EPA

• Currently 8 in Africa (none in West and Central),
  1 in the Caribbean, 0 in the Pacific
• ESA Comoros, Madagascar
• EAC Burundi, Rwanda, Tanzania Uganda
• SADC Lesotho, Mozambique
• Direct monetary costs for all limited (EBA)
• BUT is it feasible for them to leave the EPA?
• Motivation to join the EPA for
• Lesotho and all EAC LDCs?
• Mozambique?
• Madagascar?

8
4. Signatory developing countries that will not
ratify an EPA

• Currently 10 in Africa, 2 in the Pacific, 14 in
  the Caribbean
• ESA Mauritius, Seychelles, Zimbabwe
• EAC Kenya
• SADC Botswana, Namibia, Swaziland

9
4. Signatory developing countries that will not
ratify an EPA

• Number of products affected and monetary costs
  that would occur from being downgraded to GSP
  vary largely
• Traditional commodity exporters and horticultural
  producers are affected worst
• However, also Botswana (1.5 of EU total EU
  exports affected) would face costs
• Beef exports would face tariff increases worth
  80 of 2006 export revenues
• Risk to lose other remunerative market niches
  when no longer being able to proof that it meets
  EU standards

10
Main messages

• The costs of a non-EPA depend very much on the
  status of the African country
• Developing countries agricultural exporters are
  affected worst
• A non-EPA is not feasible / does not seem
  desirable for all LDCs
• The non-signatory EPA states have either
• equivalent market access (EBA) or
• comparatively little too loose.

11

• What should a country consider when opting for
  or against an EPA?
• What would be the best strategy for your
  country?

12
What are the costs of a non-EPA?

• TIPS Workshop
• 5-6 March 2008