WEST AFRICA EUROPEAN UNION ECONOMIC PARTNERSHIP AGREEMENT (EPA) Lagos Business School Breakfast Club 7 October, 2015
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1 WEST AFRICA EUROPEAN UNION ECONOMIC PARTNERSHIP AGREEMENT (EPA) Lagos Business School Breakfast Club 7 October, 2015
2 Content Background: WHY an EPA? Timeline and Phases: WHEN AND HOW was it negotiated? Key elements of the EPA: WHAT is it about? Conclusion: WHAT NEXT? 2
3 Rationale & Objectives Cotonou Agreement (2000) replaced 40 years of EU unsuccessful "unilateral preferences" Former system was not WTO compatible No growth in ACP exports to EU no supply side: necessity to diversify ACP economies Encourage Regional Economic Communities to create their own common markets - CET - free movement of goods, people, capital and services Encourage reforms in economic governance to attract FDIs: business environment, customs rules and cooperation 3
4 WA exports to EU 4
5 Nigeria exports to EU 5
6 EU exports to WA 6
7 EU exports to Nigeria 7
8 Need to rationalise trade relations Currently EU-WA trade is regulated by three different Trade Regimes 12 Least Developed Countries (LDCs): Everything but Arms (EBA) - DFQF Ghana and Ivory Coast: Special temporary - Market Access - DFQF Nigeria and Cape Verde: unilateral system of Duties and Quotas (GSP), reduced for CV (GSP+) 8
9 How and When: the negotiations EPA negotiations started in 2004 with ECOWAS/WAEMU October 2013 adoption of the CET by ECOWAS February st round of negotiations, immediately closed by Chief Negotiators Agreement from EU and ECOWAS Commissions 10 July 2014, Accra Final adoption by the Conference of ECOWAS Heads of State Signed by all 28 EU Member States and 13 WA Member States Signature from all WA countries, and ratification from two-thirds needed for the EPA to enter into force for those countries who have ratified 9
10 Asymmetric removal of custom duties Export to EU: immediate 100% removal of custom duties and quotas as of the entry into force of EPA Imports from EU: Dismantling over 20 years of 75% tariff lines, essentially inputs & machinery 10
11 Timeline of WA market opening Group CET T T+5 T+10 T+15 T+20 D Exclusion (i.e. no change) 35 C B A Group D: exclusion (25% of tariff lines) of "sensitive" products that WA produces or can produce in the future, ranging from most agro-food products (tomatoes, poultry, yogurt, etc.) to textiles, soaps, cars Group C: mainly final consumption goods not produced in WA, e.g. watches, cameras, etc. Group B: mainly inputs and intermediate goods Group A: essential goods, basic necessities, basic raw materials, capital goods 11
12 Advantages / Safeguard measures Improved rules of origin: WA countries will be able to produce goods using materials sourced from other countries without losing free access to the EU inclusion in global value chains Financial and technical support will be provided to help WA farmers meet the EU s sanitary and phytosanitary (SPS) standards Safeguard measures: If there are threats to domestic production, for fledging / infant industries, or for food security, WA can: suspend tariff reductions increase tariffs introduce tariff quotas No EU export subsidies: The EU has also agreed not to subsidise any of its agricultural exports under the EPA 12
13 The EPA Development programme The EU has pledged 6.5 bn for to achieve the EPA development objectives similar amounts until 2035 i.e. during the entire transition The EPA Development Program will provide funding for projects linked to trade, industry, energy and transport infrastructure in the region, institutional reforms (e.g. tax reforms), capacity building of relevant stakeholders The Program will play a crucial role in ensuring the EPA promotes trade and attracts investment to West African countries to benefit from the WA common market 13
14 Foreseen impact on Nigeria - World Bank study (2014) Limited fiscal impact: -0.8% of total fiscal revenue over 20 years NB: fiscal transition needed! Slight decrease in consumption prices: -0.3% Slight increase of imports: between +0.8% and +1.8% Increased profitability for 63% of companies only 0.5% become unprofitable (in 2035) Productivity shocks > EPA impact 14
15 What Next? Signature: Nigeria and The Gambia Ratification: 2/3 Institutional Framework: EPA Council, Implementation committee, Parliamentary committee, civil society forum, Custom and statistical cooperation 15
16 Thank you for your attention For more info: Filippo AMATO Counsellor Head of Trade and Economics Section European Union. E: 16
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