Welcoming remarks at Commonwealth Secretariat and African, Caribbean, Pacific Secretariat Conference, "Evaluating EPAs: The way forward for the ACP", Cape Town

Sir John Kaputin, Secretary General of the African, Caribbean and Pacific (ACP) group
Hon Ministers from ACP countries
ACP and EP Co-President of the ACP-EU Joint Parliamentary Assembly, Lady Glenys Kinnock
Ladies and gentlemen

It's a great pleasure to welcome you all to South Africa and to Cape Town, to discuss what is undoubtedly one of the most important issues facing African, Caribbean and Pacific countries at the moment.

Although we have since as long ago as 2002 been formally engaged in negotiating a transition from the non-reciprocal trade preferences, and associated development co-operation programmes, provided under successive Lome and then Cotonou agreements, the process gathered considerable momentum towards the end of last year. This was spurred on by the imminent expiry at the end of 2007, of the World Trade Organisations (WTO) waiver for the Cotonou preferences, and the implicit threat that if a WTO compatible alternative did not come into force by 1 January 2008, many ACP countries would find themselves trading with the European Union (EU) on significantly worse terms.

We now meet in the second quarter of 2008, with one ACP region having signed a full Economic Partnership Agreement (EPA) and several other regions and individual countries having initialed interim EPAs. A considerable number of ACP countries, including our own, have however signed neither. Some of these will now trade with the EU under the Everything But Arms (EBA) arrangement applicable to Least Developed Countries (LDCs), some under specific arrangements such as our own Trade, Development and Co-operation Agreement (TDCA), while yet others will be obliged to trade under the far less favourable terms provided for in the EU's general system of preferences. I would venture to suggest that seldom before in the history of EU-ACP relations, have we seen a measure held out as a mechanism to enhance access to the EU market and strengthen development co-operation between the EU and the ACP, becoming so controversial and so divisive.

While there are some of us in the ACP that regard the balance struck in the Interim or full EPAs concluded last year as a reasonable compromise that will create conditions for enhanced trade and development co-operation, there are many others who initialled Interim EPAs reluctantly under the threat of a serious disruption of trade, and there are yet others that have declined to do so. I am sure that there are many participants in this conference who will be better able than me, to give us the overall scorecard across the ACP as a whole, of who has signed or initialled, and who has not. But there can be no doubt that the overall picture is one of a process that has created division.

A recent Working Paper published by the British Overseas Development Institute, argued that liberalisation schedules submitted last year, were constructed in haste without considering whether or not they were in line with those submitted by their neighbours. In Southern Africa, members of the Southern African Development Community have found themselves divided into no less than 5 separate negotiating configurations. Each of these has reached agreements involving somewhat different obligations towards the EU, whose implications we in SADC have yet to examine in detail. Even within the configuration, designated SADC EPA, which consists of the five members of the Southern African Customs Union (SACU) plus Mozambique and Angola, we find that three members of SACU and one other country initialled late last year, whilst one other did so later and under protest, and two have not signed on at all to an arrangement, which, let us not forget, is supposed in the first instance to enhance regional integration.

Distinguished guests, ladies and gentlemen, the question that obviously arises in this context is why is it that the EPA process has become so difficult and so divisive? No doubt we will explore that matter at some length in this conference, and I am sure that there may well be somewhat different issues in each of the various configurations. Let me just say that in the case of the SADC EPA configuration, the difficulties in the end were not fundamentally related to the core issue of moving from a system of non-reciprocal preferences in trade in goods to WTO compatible Free Trade Agreement (FTA) involving reciprocal commitments by both parties. In our own negotiating processes, by building on and adapting the TDCA which South Africa had already signed with the EU in 1999, and which through the mechanism of the South African Customs Union was extended de facto to Botswana, Lesotho, Namibia and Swaziland, we reached substantial agreement with the EU on the substance of a schedule for reciprocal liberalisation of trade in goods.

Under this, most countries would receive duty-free quota-free access into the EU market for all products except rice and sugar, while South Africa would have received some improved access for products which were not favourably treated under the TDCA. In return, South African Custom Union (SACU) would have improved access for EU products in around 500 tariff lines over the arrangements agreed in the TDCA, while Mozambique, despite being an LDC, agreed also to reciprocate to the EU. These matters were substantially resolved well ahead of the deadline at the end of last year.

In our own region, the major problems have in fact arisen from the EU's ambition to move the EPAs beyond WTO compatible FTA covering trade in goods, to agreements also embracing trade in services and new generation issues, involving serious commitments in areas such as investment, government procurement, competition policy and the like. The legal text forming the basis of the Interim EPA, also saw the insertion at the last moment of a series of legal obligations which would allow the European Union to extend its influence into several other issues of economic governance in our countries. Apparently, technical provisions in the Interim EPA legal text relating to the definition of parties, concerning protection of infant industries, export taxes, and a more favoured nation clause, requiring an extension on a line by line basis to the EU of any benefits given to any third party with more than 1% of world trade, have emerged as the major stumbling blocks in the quest for a consensus between all of us in the SADC EPA group and the European Union.

A meeting between the SADC EPA Ministers and Commissioner Mandelson on 4 March, agreed to a two track work process. In terms of this, those countries that have initialled will proceed to sign, ratify and implement Interim EPA's and then move on to the negotiations on trade in services and investment. At the same time, a parallel stream of work will address the concerns which have been raised by the group on a number of the legal provisions in the Interim EPA.

A conference like the one we will be participating in over the next two days can, I would hope, assist us in steering our way through a number of these matters. Among other things, I would hope that the presentations and the discussions which we have will enable us to get greater clarity on the following matters:

* What is the extent of disjuncture in the trade in goods commitments undertaken by different ACP regions and between members of the same regional organisations that may have found themselves divided into different negotiating configurations, and what does this mean for promoting regional integration and closer intra ACP harmonisation?

* Are the concerns and misgivings that a number of us have expressed with the legal text of the Interim EPAs real and valid?

* Are we correct when we argue that the new generation issues, and the issues of economic governance which have been inserted into the Interim EPAs, are not merely there because of some altruistic desire to assist our regions to become attractive investment destinations, but rather are linked to global strategies to promote offensive interest of European companies across the world, by addressing behind the tariff, regulatory issues judged necessary to make market access real?

* If the latter point is correct, why is it that on equivalent behind the tariff issues necessary for developing countries to make access into the EU market real, namely public and private standards, the EPAs envisage WTO only, whereas on the matters of interest to the EU the position is WTO plus?

* In a situation where regional groups and regional organisations had become divided, how do we assert what we all understood to be the priority for the EPA process, viz promoting development orientated regional integration?

Distinguished guests, ladies and gentlemen, I want to congratulate the Commonwealth Secretariat and the ACP Secretariat for organising this important conference and for choosing our country as a venue. We have a programme which brings together a pretty diverse range of opinion involving representatives of a broad range of ACP countries as well as many of the most significant writers, analysts and experts on the EPA process. Our expectations of this conference are high. We are looking forward to two days of intense debate and discussion, and we expect at the end to come out with a richer and deeper understanding of the process we are engaged in.

On behalf of my Minister, Mandisi Mpahlwa, who unfortunately can't be with us, and on behalf of the government of South Africa, let me warmly welcome you to our country. I hope that you enjoy your stay, and above all that we have a productive two days.

Thank you very much.

Issued by: Department of Trade and Industry
7 April 2008