San Bilal, ECDPM Conference on Global Europe: The New Generation of EU Preferential Trade Agreements European University Institute (EUI) 14-15 May 2012, Florence

1. EU PTAs as a Foreign
Policy Tool
Promoting Regional Integration
and Sustainable Development:
Lessons from EPAs
Dr. San Bilal
Head of Programme, Economic Governance, ECDPM

2. Trade in EU Foreign Policy
• Core element of foreign policy
• Means to secure prosperity, jobs and
growth in Europe
• Proliferation of FTAs in recent years
• Operational FTAs account for approx
30% of EU trade
• And major trading partners (China, US,
Japan, Russia, Australia-NZ)
representing approx 50% of trade, not
covered by FTAs
ECDPM Page 2

3. Increasing number of PTAs
ECDPM Page 3
Source: WTO World Trade Report 2011

4. Membership in PTAs in force, 2010
ECDPM Page 4
Source: WTO World Trade Report 2011

5. EU FTAs: in force and planned
ECDPM Page 5

6. Key challenges: Changing geopolitics
EU’s share of world trade on the decline – expected to be cut by half by 2050
2010 2030
Source: Buiter W and Rahbari (2011): Trade Transformed: The Emerging New Corridors of
ECDPM Trade Power, Citi GPS: Global Perspectives & Solutions Page 6

7. Re-focusing of Trade Policy
• Priorities – FTA negotiations (with emerging) –
India, ASEAN, Mercosur, Andean, Canada, … US?
 Focus on economic interests
• For developing countries:
differentiation and asymmetry
 GSP reform as a means to focus on most needed
 ongoing EPA negotiations
 Focus on development (?)
ECDPM Page 7

8. EPAs and Regional integration
EPA Key Objectives:
• Foster Development
• Building on regional markets
• Stimulating investment
• Locking-in of trade reforms
• Integration into world economy
• Compatible with WTO rules
ECDPM Page 8

9. Regional Integration (RI):
What role for EU trade policy?
• EU belief in Regional integration principles
• EU support to RI (EDF RIP, AfT, etc.)
• Challenges:
• Coherence of regional partners (diverging interests)
• Capacity: low absorptive capacity, few bankable
projects
• Recently, Commissioner Pielbags announced drastic
cuts in regional envelopes for 11th EDF due to low
utilisation. This might undermine some regional
projects (infrastructure)
ECDPM Page 9

10. EPA negotiation process
• 09/2002 – 09/2003: All ACP negotiations
• 10/2003 – 2007: Regional negotiations
 ECOWAS+: West Africa
 CEMAC+: Central Africa
 ESA: East and Southern Africa
 SADC: Southern Africa
 CARIFORUM: Caribbean
 Pacific Forum: Pacific
• End 2007: some (interim) agreements concluded (35
countries out of 79)
• 1 January 2008: end of Cotonou preferences; end of
WTO waiver; MAR 1528 on EPAs (DFQF)
• Since 2008: Continuation EPA negotiations
• September 2011: Proposal for deadline to 2014 for
ECDPM Page 10
MAR 1528

11. Impact on regionalism
• Little coherence between the interim EPAs
concluded and the regional integration processes
in Africa:
 Countries having initialled interim EPAs
 Liberalisation commitments
 Regional integration agenda: problem for CUs
• 4 trade regimes with EU (in one region):
 IEPAs
 EBA for LDCs
 GSP for non-LDCs
 FTAs (e.g. RSA, Egypt, …)
ECDPM Page 11

12. Regional Integration in Africa
• Low level of
intra Africa
trade
• On average:
13.1% in
2010
compared to
more that
60% in
Europe or
35% in
NAFTA
ECDPM Page 12
Source: www.regionswatch.blogspot.com, 2010

13. Key challenges:
Overlapping
membership
Overlapping
mandates
Competing and
conflicting
agendas
Level of
implementation
of commitments
vary
ECDPM Source: www.regionswatch.blogspot.com, 2010 Page 13

14. EPAs: what impact for Regional
Integration and beyond?
Stimulate focus on regional integration dynamics
Boomerang effect
• Although negotiations continue, it is increasingly felt
that timing and sequencing of trade agreements
with third parties should be based on RI agenda and
not the reverse
• Priority therefore given to regional agenda by many
RECs. For EPA, this is particularly relevant for services
and other trade-related issues.
• E.g COMESA services negotiations launched in
September 2009 as a way of preparing a common
stand for EPA services negotiations; EPA competition
clause is based on COMESA competition policy etc.
Increased complexity of RI (spaghetti bowl)
ECDPM Page 14

15. ECDPM Page 15

16. But also broader issues:
• Disillusion between expectations and results
• Lack of interest: Many countries seeking status quo
and little appetite beyond market access
• Lack of incentives:
Flaws in EU’s own trade policies: EBA given to all LDCs in
2001 + improved RoO in 2011; LDCs have no interest to
sign EPAs and some RECs mainly LDCs
On December 2011, at WTO improved market access in
services granted to LDCs. Will have an impact on future
services negotiations
• Lack of political traction on both sides and no
political will to find mutually acceptable agreement on
contentious issues
ECDPM Page 16

17. • Lack of consensus on shared vision:
Not necessarily a consensus on either side on what a good
development policy is or whether EPAs are good for RI and
development or not.
Irrespective of economic merits, arguments from the EC
side had little convincing effects, given differences in
interests and perception of what EPA was and would achieve
• Shifting attention towards emerging players:
China, India, Brazil, etc. increasingly perceived as a
complement or even alternative to EU (economic
interests + win-win rhetoric)
• Political risks: MAR regulation. Deadline is 2014.
Might call political tensions. It might antagonise the
ECDPM entire relationship between EU and Africa Page 17

18. Lessons from EPAs…
• Negotiating at regional level is complex
• Importance of political will, interest, experience and
capacity of regional grouping
• Need for regional leadership (and national champion)
and cohesive regional agenda
• Timing and sequencing of FTA with RI process(es)
• Adjust ambitions to realities: focused agenda
• FTA not just about trade: political dimension key
" importance of economic diplomacy
• Credibility Gap between rhetoric and effective
partnership
• Importance of recognizing mistakes and willingness to
ECDPM Page 18
adjust: not the case in EPAs so far…

19. Thank you
San Bilal (sb@ecdpm.org) and
Isabelle Ramdoo (ir@ecdpm.org)
www.ecdpm.org
www.slideshare.net/ecdpm
Page 19