Textiles and Clothing Trade: What Perspectives for Africa?

Trade Negotiations Insights Vol.3 No.6 From Doha to Cotonou November 2004

Contents Textiles and Clothing Trade: What

1 Textiles and Clothing Trade: What Perspectives for Africa? By Matthias Knappe* Perspectives for Africa? Market access in relation to textiles and clothing trade in 2005 will 4 Pacific ACP States - EC Launch EPA be free of quota restrictions for WTO member countries. However, Negotiations trade in textiles and clothing will not be free from 2005 as high tariffs will remain as a trade policy instrument. While it will be an 6 EPA Negotiations Update unprecedented achievement to incorporate the Textiles and Clothing (T&C) sector into the normal GATT 1994 rules and regulations - 8 Calendar & Resources ensuring long term global benefits - short term adjustment costs could be severe in some vulnerable countries heavily specialized in producing clothing.

On a global level, consumers, as well as “lesser-developed countries” are allowed those exporters that are prepared to to use Asian fabrics until September withstand competitive pressure from 2007 and clothing exports still qualify In This Issue countries that have been constrained for duty-free entry. under the quota system will benefit. However, market share of SSA countries Those countries which were protected in the US was only around 2.2% in 2003, On 1 January 2005, the restrictive by the quota system, however, will face with 95% of all exports being clothing. quota system that currently major challenges unless they gear up Out of this, 84% were made out of third governs the world’s textile and their competitiveness. clothing trade will be phased out country (Asian) fabric and only 16% and replaced by the liberal rules This article analyses the T&C trade from African fabric. In addition, only six of the multilateral trading system. pattern of Sub Saharan African (SSA) countries actually benefit from AGOA What are the implications of the countries and looks at the major challen- in a meaningful way. Lesotho, Swaz- iland, Madagascar and Kenya as “lesser phase-out for Africa’s textile and ges ahead for developing countries. It developed countries”, in addition to clothing industry? This also provides an outlook of the options South Africa and Mauritius (who do not development is examined in the available to African countries to improve competitiveness. qualify for the AGOA third country lead article. special sourcing provision and thus have Vulnerable Trade Patterns to use African fabric in order to export On the EPA front, the Pacific clothing duty-free to the US), occupied became the final ACP regional African trade in T&C is dominated by 96% of AGOA exports in 2003. bloc to launch the second phase exports to the US under the African of negotiations with the Growth and Opportunity Act (AGOA). Moreover, a closer look at the export European Union. Our second While African Least Developed Coun- profile reveals that cotton trousers article looks at the negotiating tries (LDCs) under the Everything-But- accounts for 41% of all clothing exports structure of the region and its Arms (EBA) initiative have duty-free under AGOA, synthetic fibre trousers for priorities and challenges. Finally, access to the European Union (EU) another 8%, while cotton knit shirts and the EPA update recaps market, the stringent rules of origin synthetic fibre shirts account for another developments across the ACP. requirements of the EU (double trans- 19% and 8% respectively in 2003. Thus, Among the highlights of this formation requirement) hardly allow for 76% of all African clothing exports update are issues arising from a its use. Therefore, almost all African under AGOA are based on two products: 27 October joint ACP-EU countries regard the US as its major knit shirts and simple trousers. These are Ministerial Trade Committee clothing destination. Under AGOA, basic articles, which are under tight quota meeting in Brussels.

Available online at: www.ictsd.org/tni & www.acp-eu-trade.org/tni.html TNI | November 2004 constraints in Asian countries. Despite will be eroded for those countries, which “GSP+” system introduced, providing this protection and the quota-free and benefit from preferential market access. tariff preferences to countries with duty-free market access, African special development needs. In addition, major importing countries producers could not develop a have granted improved market access Finally, product graduation principles diversified export range of products. under bilateral and regional free trade will be simplified. The EU has proposed With the removal of quotas, African agreements that provide selected countr- to withdraw GSP benefits for countries producers will have difficulties to ies with competitive advantages. This that have more than 12.5% EU market compete with Asian competitors, despite tendency has resulted in regionalisation share, which, in T&C, is the case for their duty-free advantage. of trade in textiles and clothing and a China and could soon be the case for Finally, the enterprise structure of the complex patchwork of international India.2 This means that African sector in Sub Saharan Africa is trade agreements. As quotas are phased competitors will have to pay full duty characterised by large investments from out, there may be more concessions and thus, the relative protection of Asian manufacturers, which invested to granted than before, rendering trade Africa producers in the EU will increase. avoid quotas and to benefit from duty- even more complex. Overall, more than The threat of antidumping and free market access. Investors in these 280 regional trade agreements have “foot-loose” industries could leave any been notified to the GATT/WTO. countervailing duty measures time if business was no longer lucrative. A third challenge is the likely rise in For the future export performance of African countries would need to find antidumping (AD) and countervailing LDCs to the major markets, non- sustainable means to link local industries duty measures (CVM), which will pose reciprocal preferential market access to foreign investors in long-term partner- a real threat to successful developing conditions, including easy to fulfil rules ships. Moreover, African countries are country exporters. As there is a risk of a of origin requirements, are important facing six major challenges to sustain sudden downward pressure on export elements to assist these countries in essentially clothing exports after 2004 prices following the removal of quotas, maintaining their clothing exports. as detailed below. due to the fact that quota prices (rents) Highly flexible rules of origin as will disappear, many developing The removal of quotas: ensuing foreseen under the Canadian preferential countries fear that major importing challenges for developing countries scheme for LDCs or the “third country countries could use this to invoke anti- The first challenge is directly related to fabric sourcing provision” under AGOA dumping cases. 1 the removal of quotas and post WTO are good examples. The use of antidumping measures could Agreement on Textiles and Clothing sharply reduce the benefits of liberali- (ATC) issues affecting trade flows. While zation, as they are non-transparent and it is difficult to paint a precise picture of unpredictable. Just the announcement of the global textiles and clothing market “Developing countries that possible antidumping investigations can after 2004, the use of quotas, the exploi- make buyers hesitant to place future tation of already liberalised categories, are not under quota export orders because of uncertainty and the existence of a critical export mass constraints will face over whether antidumping duties will be are some indicators of the potential winners intense competition, imposed in the future, an effect known and losers of the quota phase-out. which they have not as ‘trade chilling’. Developing countries that are not under The consequences for developing quota constraints will face intense experienced previously” countries, however, will depend on the competition, which they have not status of the countries and industries. experienced previously. Major interna- While such trade remedies are likely to tional buyers are unlikely to source from be targeted at large countries with a country, which has no vertically The proposed change in the Genera- integrated T&C industries such a China, integrated industry and cannot offer a lised System of Preferences (GSP) of the India, Pakistan, Indonesia, etc., smaller full service approach, including logistics EU could cushion the expected countries could benefit from some and supply management solutions. negative effects of the quota phase-out. protection against these countries, if Preference erosion and trade in While the US GSP scheme does not trade remedies are used. textiles and clothing provide any additional duty reductions Since its WTO membership in December for T&C imports, the EU provides duty While T&C are not immediately negotia- 2001, China has very successfully reductions of up to 20% for eligible ted under the Doha Development penetrated major T&C markets, to an countries. Agenda (DDA), the outcome of the Non extent that many countries fear that Agricultural Market Access (NAMA) In addition, the EU is presently revising China will dominate all major markets. Negotiations will have implications for The only hope many small supplying T&C trade. The DDA states that its current GSP system, to introduce a countries feel they have is that new particular emphasis should be given to new one as from January 2006. The EU reduce high tariff, tariff peaks and tariff Commission proposes to target GSP quotas are being introduced against escalations. This is exactly the situation benefits to countries most in need such China, which is temporarily possible that one presently finds in T&C trade. as LDCs. The system, including regional under the special safeguard provisions Thus, depending on the applied formula cumulation and rules of origin require- stipulated in the China’s WTO accession and subsequent tariff cuts, preferences ments, will be simplified and a new protocol. Two different safeguards could

2 November 2004 | TNI be applied i.e. (i) T&C specific duction of new standards, which could a strategic approach to face the safeguards valid until December 2008, have a negative effect on the market challenges ahead. Moreover, due to the and (ii) product specific safeguards, access possibilities for developing small size of the industry in almost all which can be utilised for all kinds of countries and economies in transition. countries, a regional or sub-regional products, including T&C, valid until 10 One example for a possible trade-restri- approach might seem necessary to December 2013. However, these China- ctive TBT/SPS non-tariff barrier is a new improve the competitiveness of the T&C specific safeguards can only be applied system called REACH (Registration, sector in the region. by an importing country if the country Evaluation and Authorization of Some African countries, in particular can show that there is “existence or Chemicals) that the EU is considering SADC countries, are looking into the threat of market disruption and the role to introduce and implement. Moreover, feasibility of de-veloping an integrated of products of Chinese origin in that eco-labelling requirements as well as value chain from cotton towards disruption”.3 corporate codes of conduct to ensure clothing production. Cotton growers, social responsibility are likely to ginners, fabric manufac-turers and increase in importance after 2004, as clothing manufacturers in different parts buyers, due to their increased bargaining “Cotton growers, ginners, of the continent need to collaborate to power, can enforce these rules more do business along a regional value chain fabric manufacturers and stringently. clothing manufacturers in to be finally able to penetrate the major The development of the African clothing markets. different parts of the cotton sector This sub-regional, or regional, approach continent need to The fifth challenge is the development is needed in order to help African collaborate to do of the cotton sector in Africa and countries comply with the rules of origin possibly value added products along the for market access of clothing products business” T&C value chain. Due to the initiative imposed by the world’s major markets of West African cotton producing and thus benefit from business countries to challenge cotton subsidies opportunities. The likelihood of strict enforcement by mainly developed countries, the issue This would not only increase trade within of other rules of cotton has become an integral part of Africa but would also facilitate access The fourth challenge is the imposition the agricultural negotiations under the DDA (market access aspect). In addition, to the major clothing markets, especially of new rules by importing countries at in light of major changes expected from the trade policy and enterprise level. African cotton producing countries received the commitment of developed 2005 onwards when textiles quotas are While these rules were developed phased-out. To facilitate such an independently from the quota system, countries to assist them in developing this sector (development aspect).4 approach, the above considerations their enforcement is likely to increase could be factored within the framework with the quota phase-out. Under While many African countries envisage of already existing regional integration preferential market access agreements, the development of an entire value chain initiatives. e.g. under AGOA, it is the role of the US for T&C from cotton fibre production to Customs and Border Protection (CBP) clothing, numerous experts doubt that to ensure that no transhipment of third it would be feasible. Many African country apparel takes place. In order to countries do not seem to have a Endnotes ensure this, CBP verifies, at the comparative advantage in the very * Senior Market Development Officer, Market enterprise level, whether declared capital and technology intensive textile Development Section, International Trade productions have actually taken place. sector. Centre UNCTAD/WTO Geneva, Switzerland This increases the transaction costs of 1 UNCTAD, Assuring Development Gains those enterprises that benefit from Challenges posed by the second-hand form the International Trading system and preferential treatment such as under clothing industry Trade Negotiations: Implications of ATC AGOA. Finally, second-hand clothing imports have hindered the development of local Termination on 31 December 004, September US CBP Trade Partnership Against T&C industries in many African 2004. p 17 Terrorism can also have a negative effect countries. From the T&C perspective 2 on competitiveness for manufacturers See http://europa.eu.int/comm/trade/issues/ second-hand clothing imports should be located in countries that have difficulties global/gsp/index_en.htm abandoned as they destroy already to comply with new security measures. 3 vulnerable domestic markets. However, WTO WT/MIN(01)3 Report of the working This will be the case in many LDCs. it is a political decision whether to party on the accession of China. Buyers will discriminate against those support a domestic T&C industry or to 4 See for instance the Council Conclusions enterprises that do not have approved provide access to inexpensive clothing (adopted on 27 April 2004) on Agricultural security, as they want to know that their to the vulnerable part of the population. Commodity Chains, Dependence and Poverty goods will be cleared through customs and an EU-Africa Partnership in Support of on a timely basis. Some Recommendations for Africa Cotton Sector Development, http://trade- Environmental standards are likely to be From the above analysis it becomes clear info.cec.eu.int/doclib/docs/2004/may/ more enforced including the intro- that SSA counties would need to develop tradoc_117087.pdf

3 TNI | November 2004

Pacific ACP States – EC Launch EPA Negotiations By Dr Jim Gosselin*

The Pacific ACP (PACP) States1 and the European Commission (EC) launched their Economic Partner- ship Agreement (EPA) negotiations and held their first ministerial-level negotiating session in Nadi, Fiji, on 10 September 2004. A joint road map2 was agreed between the two parties that will set the course for negotiations under the Cotonou Agreement over the next several years. According to the road map the following principles, among others, are to guide EPA negotiations; the Pacific ACP-EC EPA must be an instrument for development, complement regional integration, preserve the PACP’s existing preferential market access arrangements into the EC, and take account of the different needs and levels of development among the PACP states.

The Pacific ACP States Fisheries, Investment, Services) and investment, services, tourism, trade in consultations conducted by the Pacific goods, and capacity-building requirements. The region’s overall approach to the Islands Forum Secretariat in each PACP EPA negotiations can best be under- State to promote understanding of key stood in the context of a number of The Launch of Phase II Negotiations issues and facilitate formulation of special characteristics of the 14 PACP national positions on those issues. At the launch of the negotiations, PACP States. These include their small size, Leaders stressed that the challenge geographical dispersion, isolation from PACP States also agreed on both a road facing both sides in building the new major markets and sources of supply, map to guide preparations for and partnership is to translate the goals of vulnerability to natural forces such as participation in Phase II negotiations as the Cotonou Agreement into a practical cyclones, and limited land-based natural well as procedural guidelines for Phase instrument of enduring economic and 3 resources. II negotiations. A key feature of the road trade co-operation. This required recog- map is an outreach programme co- At the same time, however, PACP States nition that partnership building is a ordinated by the Pacific Islands Forum have long shared common cultural links long-term process and that PACP States Secretariat, the PACP States’ region and historical traditions. These affinities have different capacities and capabilities. integration organisation, to ensure have translated into broad regional co- They highlighted the unique challenges regional information-sharing and operation in various spheres including, facing the PACP States, including the encourage policy development and in 2000, the Pacific Island Countries need for EC support for Fiji’s sugar harmonisation throughout the negotiat- Trade Agreement (PICTA) that estab- industry, and the importance of the EU- ion process. lishes a free trade area (FTA) among ACP relationship for the PACP States. them. Articulating shared values, Pacific Under the procedural guidelines, PACP They also stressed the synergies between Leaders in a Special Retreat in April Trade Ministers together constitute the the EPA and the above Vision articula- 2004, adopted a regional ‘Vision’ and a primary EPA policy and decision- ted by Pacific Leaders in April 2004, course of action towards a Pacific Plan, making body. The Regional Negotiating including the critical link between trade including seeking partnerships with Team (RNT) has central responsibility and development. neighbours and beyond to develop the for the conduct of negotiations and The EC Commissioner for Trade Mr region’s knowledge, improve its com- comprises Ministers from the Cook Pascal Lamy re-emphasised that EPAs munications and ensure a sustainable Islands, Fiji, PNG, RMI, Palau, Samoa, do not fall within the logic of classical 4 economic existence for all. Tonga and Tuvalu. Ministers from Fiji, bilateral trade negotiations but are about PNG, Samoa, Tonga and Tuvalu will be regional integration and development. leading spokespersons for the negotiations. Phase I and Preparations for Phase Market access issues would only be The overall lead spokes-person is the discussed towards the end of the II EPA Negotiations Hon. Kaliopate Tavola, Minister of negotiations and, where necessary, PACP States participated actively in Foreign Affairs and External Trade of maximum flexibility would be applied Phase I EPA negotiations and supported Fiji; the alternate lead spokes-person, the decisions taken by the ACP Council of Hon Hans Joachim Keil, Minister of concerning, for example, asymmetry or Ministers in October 2003 to continue Commerce, Industry and Labour of Samoa. transition periods. He ensured PACP negotiations on diverse issues and States that the very special circum- Supporting the RNT are PACP Ambassadors establish an ACP-wide follow-up stances of the region would be factored in Brussels and the Pacific Trade Experts mechanism for Phase II.5 into the final equation when jointly Advisory Group, the latter charged with establishing the EPA. Rather than launch Phase II negotiations advising the RNT on EPA policy matters soon after the Second ACP-EC and establishing technical working First Negotiating Session Ministerial Meeting, however, PACP groups to formulate draft concrete nego- States opted to defer their launch in or- tiating positions on specific EPA issues. The first negotiating session, held der to concentrate on preparatory Under the RNT will be negotiating following the formal launch, featured activities. A Regional Action Plan was groups (comprising of senior trade broad policy statements by the PACP approved that included undertaking officials and experts) that will address States’ Lead Spokesperson, Minister numerous key sectoral studies (e.g. specific issues such as fisheries, Tavola, and the EC’s Commissioner 4 November 2004 | TNI

Lamy, and approval of the road map within the group, mirroring existing Negotiators levels, with preparatory which followed the same general flexibility mechanisms under the PICTA. talks and drafting taking place at the structure as similar documents adopted Both sides agreed that WTO-compatible technical level. Negotiations will be in other ACP regions.6In his remarks, new trading arrangements should held in two stages: substantive nego- Minister Tavola observed that the PACP encompass a variety of forms of S&DT, tiations (October 2004 – December 2006) Group had consistently supported the not just relating to longer transitional and final negotiations, including legal overall ACP approach to the EPA periods and technical assistance but also drafting (January-December 2007). Both negotiations, including deci-sions on including provisions effectively addressing sides agreed to establish a Regional continuation of all-ACP-EC discussions. the PACP States’ critical constraints of Preparatory Task Force to reinforce the He also outlined the region’s main small size, dispersed land masses and close link between EPA negotiations and positions on the various issues populations, and isolation from major development cooperation as mandated considered of importance for the markets and sources of investment and by the Cotonou Agreement. negotiations.Based on the Cotonou supply for important economic inputs. Agreement and the outcomes of the all- Enhanced cooperation Preparations for the Next Phase of ACP – EC Phase I to date, it was agreed that the overall objectives of PACP-EC It was agreed to co-operate closely in Negotiations: Some Considerations economic and trade co-operation would identifying and furthering their common With the Launch completed, PACP States be the sustainable development of the interests in international economic and are intensifying their efforts to finalise PACP States, their smooth and gradual trade co-operation, especially in the WTO detailed national negotiating positions and integration into the global economy and and all areas relevant to the EPA nego- to incorporate them into a broad regional contributing to poverty eradication in tiations. For the PACP States, key areas strategy on wide-ranging issues for EPA the PACP States. To achieve the negotiating form the nucleus of the WTO’s Small negotiation. While the potential benefits objectives, a number of key principles Economies Work Programme concerning from that exercise and the conclusion of were identified, including the following: which they are co-operating with CARICOM an historic EPA might be significant, the and the Indian Ocean Commission. task will nevertheless tax stretched PACP EPA: a development tool Adjustment measures administrations with limited res-ources to First, the EPA must be an instrument for deal simultaneously with multifarious development and the developmental The joint road map recognises the PACP trade-related issues. In this context, it is dimension must be reflected in all areas States’ need for resources to assist them important that constructive regional of negotiations. An EPA would take into in meeting EPA adjustment costs. Thus, cooperation, facilitated by the Pacific Islands account the specific, special economic, both sides have agreed on the need to Forum Secretariat, help reap enormous social, environmental and structural seek financial assistance for projects and benefits and contribute to the realisation constraints of the PACP States, as well programmes to accompany EPA of the Pacific Vision endorsed by leaders. as their capacity to adapt their economies implementation in all of its facets. Endnotes to the EPA process. Coherence in trade negotiations The EPA should build on regional inte- A number of PACP States have oblig- * Multilateral Trade Policy Advisor, Pacific gration initiatives and the negotiations ations under the Pacific Agreement on Islands Forum Secretariat.The views expressed designed and sequenced to complement Closer Economic Relations (PACER), an are those of the author and should not be attributed and support regional integ-ration economic and trade co-operation treaty either the Secretariat or to any Pacific ACP State. processes and programmes, the including both Australia and New Contact author at [email protected]. Zealand, to enter into consultations with harmonisation of region trade rules and 1 The PACP States comprise the Cook Islands, the latter States with a view to commencing the consolidation of the regional market. Federated States of Micronesia (FSM), Fiji, Kiribati, The pace of liberalisation of trade bet- FTA negotiations should the PACP Nauru, Niue, Republic of the Marshall Islands (RMI), ween PACP States and the EC would be States commence FTA negotiations with Palau, Papua New Guinea (PNG), Samoa, Solomon “a function of the degree of regional the EC. Three PACP States8 also have Islands, Tonga, Tuvalu and Vanuatu. economic integration and realised in a most-favoured-nation obligations towards flexible and asymmetrical manner”. the US that might be triggered by an EPA. 2 Text of the Joint Road Map (hereinafter ‘road Attention would also be paid to possible Given the significance of imports from map’) and subsequent documents mentioned in modalities for French Pacific Territories those developed countries for their tariff this article can all be found at www.forumsec.org.fi (French Polynesia, New Caledonia and revenues, PACP States are concerned 3 Wallis and Futuna) to participate in the about the potential negative implications of These are summarized in The Pacific ACP – EPA should they wish to do so. If the ‘triggering’ those obligations. Both sides EU Partnership: The Way Forward (2004). Pacific EPA is well designed and agreed in the road map, therefore, that at www.forumsec.org.fj. properly implemented it could make a those implications would need to be 4 footnote 2 above significant contribution to the successful reflected in all areas of the negotiations so establishment and operation of the that the EPA, “both as a stand alone 5 See Joint Declaration of the Second ACP-EC region’s FTA under the 2000 PICTA. Partnership Agreement as well as in the Meeting at Ministerial Level, dated 2 October 2003 context of the [PACP] States’ other (www.acpsec.org/gb/press/jtdecla2oct.htm) Special and differential treatment trading commitments, cons-titutes a 6 See europa.eu.int/comm./trade/issues/ It was also agreed that special and significant net contributor to the differential treatment (S&DT) under an development of the [PACP] States”. bilateral/regions/acp/regneg_en.htm EPA should be provided to all PACP 7 The Negotiation process The 14 PACP States are all members of the States in a way that takes account of the Pacific Islands Forum particular vulnerabilities of Smaller Under the road map negotiations will Island States of the Forum7 and LDCs take place at the Ministerial and Senior 8 The FSM, RMI and Palau, see footnote 1. 5 TNI | November 2004

EPA Negotiations Update By Melissa Julian, ECDPM

All-ACP-EU Level Discussions Held needs. Lamy acknowledged ACP Technical Level Discussions Begin in The Joint ACP-EU Ministerial Trade concerns about the complexity and Central Africa timeliness of EDF procedures, but urged Committee (MTC) met in Brussels on The first Regional Preparatory Task 27 October preceded by the first meeting the ACP to use the existing flexibility within current procedures. Force (RPTF) and a joint Contact Group of the ACP-EC Technical Monitoring meeting took place in Douala, Cameroun Committee and the second ACP The parties reviewed the state of play in on 16 September, preceded by a meeting 1 Technical Follow-up Group. Com- WTO negotiations. ACP Ministers exp- of CEMAC’s Regional Negotiations missioner Lamy and ACP Ministers ressed concern that negotiations on trade Committee (RNC). Discussions focused endorsed a joint report prepared in the facilitation might be fast-tracked at the on the working methods of the first technical level meetings on the state of expense of issues that are paramount to specialised technical groups - SPS and progress in economic partnership the group’s developmental agenda. TBT measures customs procedures, agreements (EPA) negotiations which They also highlighted the need to border protection and trade facilitation. shows that regional integration is the deepen the level of co-ordination of the Participants formulated an action plan current focus of all regional discussions. G90 Group. There are plans to convene which includes the creation of a regional A European Commission (EC) information joint ACP/AU/LDC Ministerial in early market to ensure the effective movement note on the EPA process distributed at 2005. of goods and a reference framework for the meeting also identifies the following the bilateral commitments for all trade as current challenges; the need to In the MTC meeting which preceded the joint meeting, the ACP Secretariat measures. Technical work will be consolidate ACP regional negotiating undertaken on all trade related issues and structures; strengthening dialogue with reported that due to the fact that urgent priority had to be given to the Cotonou on trade in services. CEMAC called for stakeholders; the need to better integrate the reinforcement of production trade and regional integration into Agreement Review now underway, the only all-ACP level work which has capacities to be included in the EPA national development strategies and negotiations. The EC reaffirmed that this cooperation activities; and to improve progressed is that on rules of origin. There have been two ACP expert level issue is not an area for negotiation, but and accelerate capacity building can be discussed in the RPTF. The issue measures so that ACP countries can meetings and an initial study is expected to be undertaken in early 2005. will be examined at the next joint participate and benefit from EPA meeting in Brussels. negotiations.2 There has been no follow-up with the EC on initial discussions on dispute The ACP stressed that ensuring West Africa Also Starts Technical adequate, timely and effective EC settlement procedures and the non- 3 Level Discussions support to strengthen their negotiating execution clause. There has also been capacity, to build effective regional no discussion to date with the EC on At the first technical meetings held in integration infrastructures and to offset trade related (non-Singapore issues) nor Abuja, Nigeria on 21 and 22 September, the cost of adjustment were pre- on the issues agreed for all-ACP level it was decided to structure negotiations 4 requisites to implementing trade discussions. according to the following technical liberalisation under EPAs. They called Two further issues were identified for groups: on the questions connected to for an increase in future ACP funding consideration at an all-ACP level: regional integration of the West African and simplified implementation pro- market (free trade area, customs union, Ensuring that the WTO definition of cedures to meet these broader needs. • trade facilitation, SPS and TBT measures); the level of “substantially all trade” Commissioner Lamy restated the EC on trade-related issues (in particular product coverage to be liberalised and position that current European Development competition, investment and intel- liberalisation transition periods are Fund (EDF) resources are fixed with little lectual property rights); on services; on flexible enough to ensure EPAs are a likelihood of EU Member States agriculture and fisheries; on non-agriculture tool for ACP development. agreeing to increase these, though there products; and on development questions. was the possibility of re-orienting the •Ensuring effective and improved EU This first phase of negotiations will focus of these resources. Lamy agreed market access at remunerative prices; examine the elements necessary to make that the question of EPA-related funding providing support to build ACP progress in the regional integration should be taken into account during the capacity to comply with strict EU process in West Africa. It will also negotiations of the future financial measures on sanitary and include the definition of the general instrument for the Cotonou Agreement phytosanitary measures (SPS) and to objectives to be achieved in the EPA and should be reflected in future ACP overcome other technical barriers to negotiations in terms of trade measures allocations and programming. The EC trade (TBT) which would otherwise and necessary supporting measures. Commissioner stated his concern that limit effective ACP market access the ACP erroneously placed too much given constantly eroding tariff Joint technical meetings will take place in Brussels in December 2004. Senior emphasis on seeking EC public funding. preferences. Instead he viewed EPAs as leading to an officials will also meet in December improvement in the economic policy It is anticipated that the ACP Technical 2004 to detail the work programme of environment of ACP regions that would, Follow-up Group will soon meet to 2005. These meetings will also report inter alia, result in increased flows of discuss EPA issues of all-ACP concern on the status of capacity building private investment to tackle infrastructural in April 2005. activities in the region. 6 November 2004 | TNI

Pacific Region Still Preparing for will focus on institutional arrangements At the second meeting of the joint RPTF, Detailed Discussions5 concerning the functioning of that body ESA presented its Fisheries Framework and an exchange of views on EPA Agreement (FFA) proposals. The EC The priority for 2004 will be to reach negotiations with the CARIFORUM and sought clarity on the nature of the paper agreement on basic principles and EC Principal Negotiators.A CARIFORUM- and on the relationship between the EPA elements to be integrated into an EPA. EC Technical Session on Regional and the FFA and the link to development Regional integration issues will be given Market Access Issues is scheduled to be co-operation. Technical discussions on particular attention as they relate to the held in Jamaica in December. the Adjustment Facility and Infras- various subjects discussed under an EPA. tructural Fund are on-going with the EC The Terms of Reference for the nego- SADC Continues the Process of as are discussions on regional integration tiations will be formulated once studies and the Toolbox. The next ESA RNF are completed and a mandate given to Establishing its Priorities meeting will be held in the Seychelles negotiators based on these studies. An informal joint technical meeting was in March/April 2005. Substantial negotiations can then begin held in Brussels on 1 October which initiated Endnotes in February 2005. discussions on priority areas for negotiations. Concrete proposals on priori- 1 The mandate and composition of the MTC is The Caribbean Moves to Phase 2 of ties are anticipated soon which will be set out in the Cotonou Agreement’s Article 38 Negotiations discussed at the first Ambassadorial-EC and the October 2003 Joint ACP-EC Ministerial senoir official level negotiators meeting report on All-ACP Phase of EPA negotiations. Negotiations are now in their second in Brussels the first week of December. 2 All documents are available at http://trade- phase, which runs to September 2005, That meeting will seek to develop a gene- info.cec.eu.int/doclib/cfm/ and seeks to attain convergence on the ral understanding of the framework for doclib_section.cfm?sec=148&lev=2&order=date strengthening of CARIFORUM regional the negotiations, define the list of priorities, integration to be supported by an EPA. develop an indicative schedule for the 3 See TNI Vol. 3, no. 4, July 2004. Both sides have agreed that the specific negotiations and agree on the terms of 4 Issues agreed at the first meeting of the ACP aim of EPA negotiations during this reference and members of the RPTF. second phase will be to establish a com- Technical Follow-Up Group in January 2004 - mon understanding on the priorities for adjustments costs of fiscal, balance of payments, support of Caribbean regional inte- ESA Negotiations Continue economic and social implications of EPAs; flanking gration, identification of sources of The ESA Regional Negotiating Forum measures for regional integration; financial support; assistance required for CARIFORUM met in Madagascar from 18-20 October. trade-related issues (Singapore issues only); capacity building and the targets to be The meeting concentrated on issues Commodity Protocols; data protection; current attained by the commencement of imple- related to the development cluster of the payments and capital movements. mentation on January 1, 2008 and beyond. EPA negotiations. It considered future 5 See lead article in this issue of TNI. funding requirements for the ESA region, The first meetings of the CARIFORUM 6 accessibility of EDF funding and future http://europa.eu.int/comm/trade/bilateral/acp/ and CARIFORUM-EC RPTF will be perspectives for this linked to the impact toolbox_en.htm held on November 10 and 11. Modalities the EU external policies will have on on the functioning of these bodies will the EU ACP relationship be formally considered. The recom- Trade Negotiations Insights mendations of the joint meeting will be The COMESA Secretariat presented a presented for adoption at the second paper on regional integration and EPAs, Published by meeting of the CARIFORUM-EC which also addressed EPAs in relation - International Centre for Trade Principal Negotiators which will take to the WTO, the EU’s Everything But and Sustainable Development place in Barbados on November 12. This Arms (EBA) initiative for LDCs, and the Tel : + 41 22 917 84 92 E-mail : [email protected] meeting will focus on identifying the EU’s Toolbox.6 A detailed discussion Web : www.ictsd.org priorities of CARIFORUM regional followed, which included the efficacy integration to be supported by EPA of negotiating an EPA as ESA or as - European Centre for negotiations. The meeting will begin COMESA. It was agreed that this should Development Policy addressing the following clusters of also be raised as an agenda item at the Management issues: regional market access, services next ESA Council of Ministers meeting. Tel: + 31 43 350 29 00 and investment, and trade-related areas. E-mail: [email protected] The COMESA Secretariat presented Web: www.ecdpm.org The second meeting of Principal papers on the Adjustment Facility, the Negotiators will be immediately Infrastructure Fund and use of Intellectual Editorial Team: followed by the launch on November 13 Property Rights as a development tool. - Christophe Bellman, Ricardo Meléndez-Ortiz of the Caribbean Network of Non-State This was followed by a paper from ECDPM and Yvonne Apea: ICTSD Actors (NSAs) on EPA negotiations on funding arrangements for ACP. It was - Sanoussi Bilal and Sophie Houée: ECDPM embracing private sector umbrella also agreed that the National groupings, trade unions, farmers and Development and Trade Policy Forums This bimonthly publication is made possible consumer groups, NGOs, academics and (NDTPFs) would work on these issues through the financial contribution of the parliamentarians. This body will provide (inland fisheries, development issues, Government of the United Kingdom (DFID) and a policy forum for the region’s non-state agriculture and SPS and IPRs) so that the Swiss Development Cooperation (SDC). actors to feed their positions into the they could also contribute to the EPA negotiations. It is anticipated that discussions and possibly also present Trade Negotiations Insights © the initial meeting of the NSA network papers at the RNF. ISSN 1682-6744 7 TNI | November 2004

Calendar Resources WTO Events Global Economic Prospects 2005: Trade, Regionalism and Development, November 2004. http://web.worldbank.org/ WBSITE/EXTERNAL/EXTDEC/EXTDECPROSPECTS/ 29 November Council for Trade in Services – Special Session GEPEXT/EXTGEP2005/

29 November Committee on Balance-of Payments Various documents on the High-Level Brainstorming Meeting for African Trade Negotiators in Tunisia, UNECA, 30 November Council for Trade in Services November 2004. http://www.uneca.org/trid/

30 November Council for Trade-Related Aspects of Intellectual Looking beyond Averages in the Trade and Poverty Debate, Property Rights – Special Session World Bank, November 2004. http://econ.worldbank.org/ view.php?type=5&id=40221 1-2 Dec. Council for Trade-Related Aspects of Intellectual Property Rights The TDCA, EPAs and Southern African Regionalism, by Christopher Stevens and Jane Kennan, SAIIA-ECDPM 2 December Integrated Framework Steering Committee Conference Paper, November 2004. http://www.saiia.org.za/ modules.php?op=modload&name=News&file=article&sid=441 3 December Committee of Participants on the Expansion of Trade in Information Technology Products Variable Geometry - What Future for Southern African 3 December Council for Trade in Services – Special Session Integration?, By Mark Pearson, COMESA Secretariat, SAIIA- ECDPM Conference Paper, November 2004. http:// 6 December Negotiating Group on Market Access www.saiia.org.za/modules.php?op=modload&name=News&file

8 December Negotiating Group on Market Access Changes in EU Foreign Policy - Implications for Southern Africa and the ACP, by Geert Laporte, SAIIA-ECDPM 9 December Textiles Monitoring Body Conference Paper, November 2004. http://www.saiia.org.za/

9 December Trade Negotiations Committee Information Note to the College from Commissioners Lamy and Nielson on Progress in EPA negotiations, the European 10 December Working Group on Trade, Debt and Finance Commission, October 2004.http://trade-info.cec.eu.int/doclib/html/ 120003.htm 13-14 Dec. General Council The WTO July (2004) Framework Agreement: Some 14 December Negotiating Group on Rules (AD/SCM, incl. Observations, by Paul Kalenga, tralac Trade Brief, October 2004. Fisheries Subsidies) www.tralac.org/scripts/content.php?id=3014 16 December Committee on Government Procurement World Development Report 2005: A Better Investment 16 December General Council Climate for Everyone, World Bank, September 2004. http:// web.worldbank.org/WBSITE/EXTERNAL/EXTDEC/ 17 December Dispute Settlement Body EXTRESEARCH/EXTWDRS/

17 December Committee on Agriculture – Special Session Economic Report on Africa 2004 - Unlocking Africa’s Trade Potential, by UNECA, September 2004. http://www.uneca.org/ ERA2004/ All WTO meeting take place in Geneva. Please contact the Secretariat for confirmation of dates (also available at http://www.ictsd.org/cal/). New Preferential Arrangements for Developing Countries: The EU GSP in 2006, by Carol C. George, Commonwealth Trade ACP-EU Events Hot Topic– Issue 40 – 2004. http://www.thecommonwealth.org/ Templates/Internal.asp?NodeID=36519

29 Nov.-3 Dec. ACP Council of Ministers Meeting, Brussels Special and Differential Treatment or Divide and Rule? 30 November Seminar on Cotonou and the Conflicts in the Pacific, European Union Trade Policy Towards Developing European Centre on Pacific Issues (ECSIEP), Countries, by Sheila Page, CDS research briefings 2004 No. Brussels 3.http://www.edc2010.net/pubs/pdf/cds_page.pdf#zoom=100

3 December ACP-EC Ministerial Conference on the Review of Addressing the Impact of Preference Erosion in Bananas on the Cotonou Agreement Caribbean Countries, By NERA Economic Consulting and Oxford Policy Management, August 2004. www.dfid.gov.uk/pubs/ 9 -10 Dec. ACP Fisheries meeting - Economic Affairs Division, files/impactpreferenceerosion.pdf Commonwealth institute, Brussels. Unless specified, meetings take place in Brussels. The Impact of Preferential Rules of Origin in the Textile Contact ACP Secretariat, tel: (32 2) 743 06 00, fax: 735 55 73, and Clothing Sectors in Africa, edited by Roman Grynberg, the e-mail: [email protected], Internet: http://www.acpsec.org/ Commonwealth Secretariat, May 2004.

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