The European Union was finally able to finalize last week a long-negotiated economic partnership agreement with West Africa, which promises more job opportunities and sustainable economic growth for the region.
However, trade experts argue it may be too early to celebrate.
The EPA deal would allow both regions to fully open its markets to both parties, although under the negotiated terms, West African nations are given the flexibility to fully open their market when they deem they are ready. They are also allowed to keep tariffs or put in place safeguard measures on several "sensitive" agricultural products. The EU has agreed to a "partial and gradual opening of the West African market" and "not to subsidize any of its agricultural exports to West Africa."
While the agreement comes with a €6.5 billion ($8.69 billion) development package for West Africa already announced in March, it's unclear from which EU funding instrument this money will come. If it does come from the European Development Fund — and a paper published in 2011 notes most of it will — experts are worried that countries that are nonsignatory to the Cotonou agreement, for which EDF allocations are based, may receive less of this aid for trade package.
All of these issues will be tested out once the deal comes into force, as the final text still needs to be ratified by the EU and the Economic Community of West African States.
Concerns
Quentin de Roquefeuil, policy officer for economic transformation and trade program at European Center for Development Policy Management, said in a statement shared with Devex the agreement remains "deeply unpopular in most countries in the region" and pointed out that the European Commission's track record of handling these negotiations is "not spotless."
The EPA deal was supposed to be closed by 2007, but numerous concerns by several West African countries stretched it for years. Nigeria for instance agreed to sign it, according to De Roquefeuil, but it may have been more due to "sticking" with regional neighbors — it seems the country and several others still have reservations over how the deal could possibly affect the labor market and industrialization process.
Jodie Keane, trade policy analyst and economist at the London-based Overseas Development Institute, explained many EPA deals before the latest one have had problems before. For example, the EU's EPA with CARFORUM remains in the implementation phase and challenges have arisen.
"The process of removing tariffs on EU imports under the EPA is particularly challenging for countries that depend on that tariff revenue for government revenue. If you haven't got an aid for trade package that helps to address revenue shortfalls and adjustments, as well as assist with the design and implementation of necessary regulatory reforms then you might encounter difficulties. That's what we've seen in the Caribbean, and it might happen in West Africa as well," she told Devex.
Such aid for trade packages are usually necessary in these type of deals, but even more so when developing countries are involved, so that they can make sure they benefit and meet the deal's full potential. However, there needs to be detailed scrutiny of the packages, especially where exactly will the money go and how it will be channeled.
Keane said she found it quite difficult in general to get such information on Aid for Trade packages and in ensuring that the package corresponds to country needs.
But there's a way this can be done — or at least get to that level of detail, for instance getting the OECD-DAC to create a monitoring mechanism in place but in this case with beneficiaries informing on aid they received that aligns with their aid for trade needs.
Aid for Trade woes
Aid for Trade is supposed to help developing countries implement their trade commitments under the 2005 DOHA Development Agenda, but over the years it has become a "catch-all phrase," Keane argued.
"If you built a road in a country, it could be part of aid or aid for trade. But donors can call it whatever they want because they are the ones that report it to the OECD-DAC. And the database for aid for trade is part of normal aid," she said.
Keane said she and colleagues have been calling for a central fund for Aid for Trade to be managed by the World Trade Organization, but that idea hasn’t gotten much traction so far.
As for the EPA, the ODI expert suggested both parties conduct regular independent sustainability impact assessments to foster dialogue. This could help all parties deal with challenges as they arrive, and transform the deal into a real partnership — not just in name.
Lastly, to make sure the overall trade reform measures are reaching their goals — whether they be poverty reduction or more trade-focused like improving customs procedures or equal distribution of income — a clear monitoring and evaluation framework should be in place before implementation, Keane added.
Do you think the EPA deal with West Africa will be ratified in its current format, or will it undergo many changes before it’s finally implemented? Please let us know by leaving a comment below or sending an email to news@devex.com.
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