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Consequences of GAERC Conclusions for Epas ECDPM

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Consequences of GAERC Conclusions for Epas ECDPM InInNo. 16ABriefBrief- November 2006 EPA Development Support Consequences of GAERC conclusions for EPAs ECDPM This EPA Development Support InBrief series concentrates on the reforms, institutional development, accompanying measures and financial support necessary to enable African, Caribbean and Pacific (ACP) countries and regions to benefit from the potential opportunities that a new trade regime such as economic partnership agreements (EPAs) with the European Union (EU) could offer for their sustainable development. www.ecdpm.org/epasupportinbriefs Context the widespread recognition1 that (financial) The consequences of these decisions by the assistance is needed for developing coun- EU on the EPA talks and on the operational The debate on development support to tries (DCs) to be able to take advantage of aspects of development support to EPA, Economic Partnership Agreements (EPAs) is the potential benefits from liberalized trade however, remain to be determined. In partic- gaining centre stage in the talks between and increased market access and to facili- ular, issues related to the available levels the African, Caribbean and Pacific (ACP) tate their integration into the multilateral and scope of support, the mechanisms for countries and the European Union (EU). trading system. delivery and the process to link A4T with the Continuous divergence between the parties EPA negotiation and implementation should over the merit of additional and possibly Recently, the EU Member States and institu- be clarified and explored further. binding support to finance accompanying tions pledged to step up their efforts on measures to EPA has hampered progress in trade-related development assistance and, Will the A4T resources be in addition to all all other areas of negotiation. as suggested by independent analysis2, existing ongoing trade-related support there has been increasing awareness that provided by the EU to developing countries Despite numerous formal requests from the the debates on development support to EPA or simply constitute a re-labelling of exist- ACP to include development support as part and A4T are closely intertwined. This trend ing aid commitments, or a redirecting of of the EPA negotiations, the EU has argued culminated in Europe with the General development aid towards trade and regional that: Affairs and External Relations Council integration objectives? What delivery mech- • the EPA negotiations as foreseen in the (GAERC) formal decision on 16-17 October anisms and procedures will be employed for Cotonou Agreement were about negotiat- 2006 to address EPA-related adjustment the timely and efficient delivery of such ing trade and trade-related issues only, needs under the broader framework of resources? Will the decision-making process and not development financing; A4T3.Although EU policy-makers decided to implement the EU A4T commitments • development assistance is already covered that there will be no additional financial provide an effective link with EPAs and by the Cotonou Agreement through the envelope specific to EPA, the EU Member involve ACP countries? This Note presents a European Development Fund (EDF); and States agreed to provide bilateral funds for preliminary analysis of the major issues at lastly A4T on top of the EDF administered by the stake assessing the GAERC Conclusions on • the European Commission (EC) does not European Commission (EC) and that a Aid for Trade vis-à-vis the requests made by have the mandate from EU Member States substantial share of this trade-related assis- the ACP in terms of development support to to enter negotiations or agreements on tance (! 1billion by the EC and ! 1billion EPAs, with the objective of presenting some development assistance. collectively by Member States) will be basic facts, clarifying the debate and facili- earmarked for the A4T effort to support the tating dialogue between involved stake- Nevertheless the Aid for Trade (A4T) debate EPAs currently being negotiated. holders. on multilateral trade liberalization at the World Trade Organization (WTO) level led to ation per oo c U European Centre for Development Policy Management E - P C A F 1 2 a g Centre européen de gestion des politiques de développement c n 9 i i 0 l i t t a 8 e t 0 r i l l i 6 a c 6 a c F o o p é r a t i o n A C P - U E Page 2 Consequences of GAERC conclusions for EPAs InBrief 16A November 2006 Facts and figures on the this would lead to conclude that only part grouped in the GAERC language according amount and the scope of the EU Member States’ share of the to an international definition8,is leftto the ! 2billion commitmentwould be targeted independent initiatives by the Member In terms of levels and scope of development to ACP countries and would thus represent States and the Commission9.The fifth cate- support to EPAs, ACP countries repeatedly fresh new resources for EPA-related needs. gory, “trade-related adjustment”, is not even called on the EU to provide additional One element that has to be taken into defined and its support is referred to only resources beyond the 10th EDF, in particular account when assessing the consequences through ‘best endeavour’ language10. to strengthen their productive capacities, to of these conclusions in terms of additional address their supply-side constraints and to resources for ACP countries is that the EU Though it cannot be excluded that “in face the adjustment needs created by EPA- has committed at the G8 Summit in July response to needs as prioritized by ACP”, related economic reforms4.The GAERC 2005 to dedicate half of its external assis- programmes to address supply-side Conclusions confirmed the pledges made by tance increase to Africa (i.e. an increase of constraints may be expanded through sepa- the EC and the EU Member States in 20055 US$ 25 billion a year – a doubling – for Africa rate initiatives by EU Member States and to provide ! 1billion each in Aid for Trade and an increase of US$ 50 billion for the the EC (for instance the potential of the new for developing countries. In addition to the developing world as a whole). Will this prin- EU-Africa Partnership for Infrastructure is decision of addressing EPA-related needs in ciple be applied in the area of aid for trade mentioned in Paragraph 10), the EU Aid for the broader context of A4T and therefore or rather in other sectors? If it were to be Trade commitment of ! 2billion is thus earmarking a substantial share of such applied to A4T, African countries that are limited to trade policy and regulations and funds to ACP countries, the new elements also members of the ACP Group could bene- trade development. agreed by the EU Member States concerning fit from significant additional resources the levels and scope of development addressing EPA related needs. support to EPAs seem to respond only Mechanisms for delivery partially to the ACP requests. In terms of the scope of A4T programmes that could be covered by the increased EU The GAERC Conclusions state that “the In terms of levels, the exact baseline on commitments, it is important to note that in preferred delivery mechanisms for this which to assess ‘additionality’ needs to be the GAERC Conclusions the EU follows the support will be existing nationally and established. Paragraph 9 of the GAERC classification of A4T established by the WTO regionally owned financing mechanisms”. Conclusions on Aid for Trade specifies that A4T Task Force, distinguishing five cate- This seems to indicate that the delivery the ‘collective contribution of the Member gories: mechanisms for EPA support will be the States is additional to EDF resources’ (which National and Regional Indicative the Council agreed in June 2005 to amount (1) trade policy and regulations; Programmes (NIPs/RIPs) already used to to ! 22.7 billion for the 2008-13 period). The (2) trade development; programme the disbursement of the EDF or data reported to the Joint WTO/OECD Doha (3) trade-related infrastructure; existing regional funds with their own Development Agenda Trade Capacity (4) building productive capacity; and procedures for the ACP regions that already Building Database (TCBDB), used as refer- (5) trade-related adjustment. established one (the better known example ence by EU institutions when dealing with is the COMESA Fund for the ESA region). trade-related support, indicate that, for the Paragraph 9 and 10 of the GAERC period from 2001 to 2004, the average Conclusions indicate that the ! 2billion However, the language used in the annual commitments to trade-related assis- commitment refers to the first two cate- Conclusions, and the word “preferred” in tance by the EU Member States6 and the gories only, grouped under the heading of particular, leave room for exploring alterna- European Commission amounted to “trade-related assistance" as classified in the tive options. It could be expected therefore ! 0.3 billion and nearly ! 1billion respec- joint WTO/OECD TCBDB. “Support to produc- that if an ACP region were to propose a new tively. If this were the baseline to be used, tive capacities and infrastructure”, also appropriate mechanism to channel EPA- related support which could deliver funds more effectively than RIPs/NIPs, the EU Table 1: European trade-related technical assistance budgets in 2005 could agree to that. What the EU seems to exclude is the establishment of an EPA source European Community EU Member States special fund (Financing Facility), at least as Budget and EDF an initiative coming from the EU. Given that only part of the EU Member State share of scope For all DCs ACP For all DCs (including ACP) the ! 2billion A4T commitmentis likely to (non ACP) represent fresh new resources for EPA- related needs and the current focus of the TRTA namely: ! 0.7 billion ! 0.3 billion ! 0.3 billion EC on the EDF10 programming exercise, for the EU the debate on the establishment of a Trade policy/regulation 222,920 193,300 new mechanism specific to EPAs should (in 1000 euros) probably only relate to the channelling of Trade development7 471,120 100,680 the bilateral resources of the EU Member (in 1000 euros) States.
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