EU 'aid for trade' deals to be replicated with UK after Brexit

Flags of the European Union and the United Kingdom. Photo by: freeimage4life

LONDON — Twenty-nine developing countries have agreed to replicate the European Union’s Economic Partnership Agreements with the United Kingdom after it exits the EU, according to a government source.

EPAs grant 29 African, Caribbean, and Pacific countries duty-free, quota-free access to EU markets. In return, those countries commit to gradually reducing duties on 75-80 percent of EU imports over a period of up to 25 years.

A government source confirmed to Devex that all countries currently party to the EPAs through the EU have expressed a desire to see them continued with the U.K. after Brexit. However, the same source would not confirm whether some of the EPA terms would be renegotiated. That could include more controversial aspects, which critics argue do not go far enough toward reducing poverty and encouraging economic development.

The Department for International Trade’s white paper on EU trade, published in October last year, sets out the U.K. government’s intention to replicate the “development-focused” EPAs, claiming the “reciprocal, but asymmetrical” agreements “help to grow economies, raise incomes and reduce poverty across the globe, helping countries to be less dependent on aid.” The commitment was confirmed in the Department for International Development’s annual report, published last week.

The EU describes them as World Trade Organization-compatible instruments that “go beyond conventional free-trade agreements, focusing on ACP development.” According to a document published on its website, benefits include the creation of new business opportunities and jobs; the ability to attract more investment; and protections for local producers and regional value chains.

But Matt Grady, senior policy adviser at Traidcraft, a fair trade organization, told Devex that “lots of countries do want to renegotiate on the terms … It’s still to be seen whether those ACP countries agree to replicate the EPAs as they stand, or whether there will be some degree of negotiation.”

Grady said Traidcraft “[does not] think the government should be replicating EPAs,” claiming they have been resisted by many developing country governments for working against regional and continental priorities. “This is particularly clear in the East and West African regions, where so-called ‘stepping stone EPAs’ have inappropriately divided existing customs unions and caused tensions amongst members,” Grady said.

Least developed countries “are already eligible for duty-free, quota-free market access to the U.K. on a nonreciprocal basis” but may be pressured into participating in EPAs by stronger neighbors, even though the reciprocal reduction of duties on EU goods could stall economic progress, he said.

“For example, Ghana is in a customs union with other West African countries. If it wants to sign up to an EPA with the U.K., then it will need to convince the other members of the customs union to do so; this includes LDCs that are already receiving market access into the U.K. through the [EU’s] Everything But Arms arrangement. The same is true in East Africa with Kenya.”

The U.K. government has already said it will replicate the Everything But Arms arrangement for LDCs after leaving the EU.

There are also technical issues with EPAs around rules of origin and cumulation of goods that, if duplicated through the U.K., could hurt regional trade, he argued. “EPAs limit the ability of countries to take goods from other developing countries, process them to add value, and then export to the U.K.,” Grady said.

DFID and the Department for International Trade had not responded to requests for comment on these concerns at the time of publication.

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    Molly Anders

    Molly Anders is a U.K. Correspondent for Devex. Based in London, she reports on development finance trends with a focus on British and European institutions. She is especially interested in evidence-based development and women’s economic empowerment, as well as innovative financing for the protection of migrants and refugees. Molly is a former Fulbright Scholar and studied Arabic in Syria, Jordan, Egypt and Morocco.