This document discusses the implications of the 2011 EU proposal to amend Regulation 1528/2007, which provided duty-free quota-free market access to countries that had signed or initialed an Economic Partnership Agreement (EPA) with the EU. The key points are: 1) The proposal would withdraw trade preferences from 17 African and Pacific countries by 2014 if they do not ratify their EPAs. This could significantly impact some countries' exports. 2) Legal experts argue the EU does not have the legal right to withdraw preferences in this way under international law. 3) The proposal leaves countries with the choice to ratify EPAs, even if issues remain unresolved, or lose preferences and face

1. Market Access
Regulation
What implications and which way
forward?
Isabelle Ramdoo, ECDPM
African Union, EPA Negotiations Coordinating Meeting
17 – 18 May 2012, Arusha, Tanzania

2. Introduction
Reminder: What is MAR 1528/2007?
• EC MAR Reg 1528/2007 was a temporary, unilateral
instrument of the EU to ensure that, pending
implementation of EPAs, there would be no trade disruption
• It provided DFQF to countries having signed and/or
initialed an (I)EPA
• The Reg required countries to initiate the ratification
process within a “reasonable period of time”.
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3. 2011 MAR 1528 Proposal : In a nutshell
• 30 September 2011 – EC Proposal for a Reg amending
1528/2007 (remove countries from Annex 1)
• Objective: Deadline to the provisional application of EPA
trade preferences for countries that initialed an EPA but had not
signed or taken the necessary steps to ratify it, regardless of
whether contentious issues have been resolved or regional
EPAs completed.
• Result: Countries that had not initialed or taken steps to ratify
would loose trade preferences under EPA as from 1st January
2014
• EC seeking delegated powers from the EP and the Council to
reinstate countries into Annex 1 of MAR should they take the
necessary steps to ratify the EPAs
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4. Who is concerned by the 2011 Proposal?
• By 2011, 36 ACP countries had initialed or signed an
(I)EPA.
• Of those, 18 countries had met the requirement of
ratification (i.e 15 Caribbean countries + Mauritius,
Madagascar and Seychelles)
• In 2012, Zimbabwe ratified its IEPA
• Today, a total of 19 countries are not concerned by EC
proposal of 30 September 2011
• The remaining 17 countries will therefore lose EPA market
access by 2014 if they do not ratify the EPA by then.
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5. a. Countries concerned and regime applicable by
2014
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6. The 17 countries fall into different categories:
• 9 are LDCs – on a pure market access basis, they will
continue to benefit from DFQF under EBA status
• 7 are lower middle income countries and will therefore
fall under the standard GSP Scheme – with higher tariffs for
some products and stricter RoO
• 2 are upper middle income countries and will lose all
preferences if the GSP reform comes into effect in 2014
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7. Who will be affected and by how much?
• Biggest losers:
• Fiji (97.4% exports)
• Swaziland (96.3%)
Both sugar exporters
(€339/tonne)
Kenya and Namibia also
likely to suffer
Source: Bartels L & Goodison P (2011): EU Proposal to end preferences for 18
African and Pacific States : An Assessment – Trade Hot Topics, Commonwealth
Secretariat – Figures are from 2009
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8. Products to be affected
Products with very high tariffs:
• Sugar (€339 – 419/tonne) – Swaziland, Fiji, Kenya
• Fresh and chilled bovine (12.8% + €3034/tonne) – Namibia
and Botswana)
• Fresh bananas (€176/tonne) – Ivory Coast, Cameroun, Ghana
Products with high tariffs
• Tuna (20.4%) – Ivory Coast and Ghana
• Other fish (hake (fresh, chilled, frozen) + monkfish (11.5% -
15%) – Namibia
• Beans – 15.7% - Kenya
• Pineapples – 14.9 – 15.7% - Kenya, Swaziland
• Citrus – 14.9% - Swaziland
• Orange, grapefruits, grapes .. >10% - Kenya, Namibia,
Swaziland
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9. • Beyond worsening market access conditions for some and trade
disruption for others, there will be practical implications of
falling into different regimes:
• For exporters: tariffs will increase; RoO will change
• Cummulation, which was possible among countries which were
benefiting from IEPA within the same region will no longer be
possible – hence implications for regional markets and value
chains
• For regional integration – some countries would give EU
better market access than to their regional partners; implications
for RI agenda in setting up CUs or for the administration of CUs
in place;
• Some countries will face same treatment as developed
countries (Eg Botswana and Namibia will export to EU under MFN
= Japan or US)
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10. Timing
The timing is no coincidence:
• It is the date at which the new GSP is expected to come
into force
• It is also the date at which most countries will start to
implement their respective trade liberalisation
commitments under the EPA, after the 5 years moratorium
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11. A word about the GSP Reform
• EC is reviewing its GSP Scheme, a preference scheme applicable to all
developing countries.
• Reform is quite a comprehensive one. In a nutshell, the EC is proposing
to focus its trade preferences on “countries who need most”, i.e poorer
countries (product coverage will not increase though)
• upper middle income countries (WB classification), will no longer
benefit from the Scheme. The number of beneficiaries cut by half: from
176 to around 85 (at time of proposal)
• Countries mostly affected are Latin American countries, China,
Malaysia, Indonesia. But also Namibia, Gabon and Botswana.
Consequence: More FTAs? More erosion of Preferences, including for
EPAs
• The new GSP is expected to come into force on 1 st January 2014 (with a
2 year moratorium for UMICs).
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12. Legal constraints of EU’s ability to withdraw
preferences
Legal experts (c.f Bartels) have pointed out 2 main legal
flaws in the EC Proposal:
•(i) The relevance of the Proposal itself: MAR 1528/2007
permits withdrawal only if there is a failure to ratify “within a
reasonable period of time” such that there is “undue delay in
entry into force”. The 2011 Proposal will withdraw preferences
on the basis of “failure to take steps to ratify” the agreements.
•(ii) Violation of Art 25 of the VCLT – EC can only withdraw
provisional application if it has notified countries that it does
not intend to become a party to the agreement (and not as it is
proposing to do in its 2011 Proposal)
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13. What next in the EC procedures for
MAR?
• For the moment, this is still a Proposal by the Commission
• It is subject to the approval by the European Parliament and
the Council
• EP: The INTA Committee Rapporteur has recently submitted its
Report, with one amendment (timing). However, he may not
have the majority support of other EPs.
• Council has yet to give its conclusions. Although many member
states (who make up the council) have indicated their support
to the EPA process and shown concerns about the deadline,
unlikely that the Proposal will not go through.
• Final MAR expected before the summer.
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14. Where does that leave us?
As matters stand, Proposal offers only two alternatives:
• (i) Countries who want to benefit from EPA market access,
have to sign and start the ratification of their existing EPA
or conclude a new regional EPA. (Bearing in mind that there is
little chance EC will come up with any flexibility on
contentious issues)
(ii) Otherwise, either they will fall under one of the schemes of
the new GSP (i.e. Everything but Arms, Standard GSP or GSP
Plus) or they will have no preferences (as might be the case
for Botswana and Namibia).
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15. Final remarks: Broader strategic considerations
Beyond the deadline – some broader strategic consideration:
•(i) 2014 is not 2007, although some countries might still be
under “pressure” to conclude by fear of trade disruption
•(ii) In the mean time:
•apocalypse announced after 2007 has not happened after all;
•Africa is in a super cycle, is lot more confident in its economic
prospects and is more attractive than ever;
•Other players have joined, although much driven by demand for
resources, but not only:, FDI is flowing in, but without FTAs);
•Europe: the crisis has weakened EU (countries, institutions and
block as a whole); and at the same time, its economic & political
leverage;
•“Emerging” players are changing geo-politics and the global
balance of power.
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16. Mainly 3 rules of thumbs to be kept in mind in terms of the
deciding the way forward and future options:
1.First, there should at least be a consensus on both sides
in terms of what the EPA is expected to achieve. Is it purely
a trade tool (i.e a FTA)? Or, as stated in the objectives of
some IEPAs, is it a tool for development? Does it genuinely
reflect realities and needs of countries? asymmetry in
economic power?
2.The EPA has to be “win-win”. Will the expected gains in
terms of MA and broader development compensate for the
pain?
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17. 3. Finally, the EPA would have to reinforce rather that limit
the policy space of countries and regions:
- How does this link to national development objectives and
priorities (current and future)?;
- What coherence with objectives (and sequencing) of
regional integration; and
- What room of manoeuvre for future engagements and
negotiations with third countries?
Watch out for other regions EU FTA nego – Asian countries
(interesting – nego done the “Asian way”); Canada –
(another game; other rules); coming up soon – trans-
Atlantic with US…
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18. Thank you
Contact: ir@ecdpm.org
www.ecdpm.org
www.slideshare.net/ecdpm
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