Trade State of Play and Future Perspectives

Economic Partnership Agreement (EPA) negotiations are currently experiencing a stalemate. The European Commission's attempt to give new momentum to the negotiations last autumn has not produced the desired outcome. The negotiations with the two regional groups that seemed closest to signing an agreement last autumn - Southern Africa (SADC) and the East African Community (EAC) - have come to a standstill and it is not clear at the moment if and when they are going to resume. The negotiations with the other three regional blocks - West Africa (ECOWAS), Central Africa (CEMAC) and Eastern and Southern Africa (ESA) had already stalled last year.[1]

It is currently not possible to predict how the Commission will react if the stalemate persists over the next months. The most vulnerable countries are the non-Least Developed Countries (LDCs). Unlike the LDCs they do not benefit from the Commission’s ‘Everything But Arms’ (EBA) scheme which allows for duty free exports to the European Union. Therefore there is a risk of duties being slapped on their exports which would make them more expensive and as a result less attractive for European consumers. As it has little leverage to force the LDCs to sign an agreement, the European Commission is likely to focus its attention on the non-LDCs where it is easier to increase the pressure. It is therefore necessary to be ready for such an event and to counter the Commission's proposals.

At World Trade Organization (WTO) level there are attempts to re-launch the Doha Round negotiations. These stalled in 2008 over a series of major issues such as agriculture, industrial tariffs and non-tariff barriers, and services. The most significant differences were between developed nations, first and foremost the United States and Japan and the major developing countries led and represented mainly by Brazil, China, India and South Africa. The plan is now to conclude the negotiations by the end of 2011. However, one can remain sceptical about the possibilities of success as no compromise has yet been reached on any of the contentious issues, and the single working groups are already behind schedule in presenting first draft documents.

With the Doha negotiations stalled, other issues which were meant to be addressed during the negotiations, such as agricultural subsidies in developed countries, remain unresolved. In March 2011 UEMOA (Union économique et monétaire ouest-africaine) launched its Cotton Initiative to draw attention to the damage which subsidies for the cotton sector in the European Union, and even more in the United States, cause to the cotton sector in Africa, in particular in Mali, Benin, Burkina Faso and Chad. In these countries cotton is a vital agricultural product, but cotton from these countries has great difficulty in competing on world markets against cotton coming from farmers in developed countries, who can sell theirs at lower prices due to the subsidies they receive. If the Doha Round fails, such cases are likely to become for frequent in the future.

Thomas Lazzeri