EPAs for development

Workshop “EPAs for development”, 24 October 2008, AFD Paris
Summary of debates

European parliament

AFD organized a workshop on development issues relating to Economic Partnership Agreements on 24 October at the request of the Spanish MEP, Josep Borrell Fontelles, President of the European Parliament Development Committee. The workshop gathered European parliamentarians, representatives from the European Commission and other member States as well as leaders from African regional organizations.

The workshop showed there was a strong will on the part of participants from ACP regions and operational partners to work together on quality development programs in order to support the regional integration of these communities. Constructive proposals were put forward to formalize these programs and better articulate them with future trade agreements. Mr. Jürgen Schröder, the European Parliament’s special rapporteur on EPAs, participated in the discussions along with the French MPs Thierry Cornillet and Pierre Schapira.


SUMMARY OF DEBATES ON THE DEFINITION OF EPA SUPPORT PROGRAMS

The presentations underscored how important trade is in promoting development and how EPAs could consequently be an opportunity for ACP countries, with aid for trade in its different forms, as an element to support this process. Aid for trade, taken in its broadest sense, is an important component of strategies for growth and competitiveness.

The representative from the European Parliament outlined what the situation was in terms of current negotiations and emphasized that EPAs should first and foremost be a development instrument and not a simple trade agreement, and that all bureaucratic procedures had to be excluded in the preparation of this matter. Some concerns remain such as the risk that interim agreements would destabilize existing regional communities if the full agreements were not promptly signed.

ACP representatives pointed out that it was the regional integration process in their regions that pilots the programs to support EPA implementation.

The processes and content of EPA development programs:

After giving background information on the history of aid for trade, the related commitments and the existence of a European strategy on the issue, the animator (ECDPM) spoke about the issues linked to EPAs, whether in terms of public and private adjustment costs or opportunities to be seized (building production capacities and regional integration). If aid for trade is indeed a recognition that trade liberalization in itself cannot bring about development, its additionality has been replaced within the general framework of increasing ODA. The problematic of support was then posed: How can ACP-EU trade discussions be once again made coherent with discussions on development? Is the evaluation of needs the result of a participative process and real institutional ownership? How can the absorptive capacity of ownership be strengthened? How to coordinate the different interventions for distinct categories of aid for trade? How will ACP regions coordinate the national and regional levels by identifying their priorities? Finally, how will donors and ACP regions organize themselves in order to provide a concrete response to these needs?

Progress report on proposals to support EPAs in the different regions:

Presentations of ECOWAS, COMESA and SADC (RIP) draft programs provided insight into the point reached in reflection by ACP regions.

In West Africa CEDEAO’s program involved considerable contribution by non-State actors and is integrated into the West African region community development program. It is based on 5 areas (diversifying and increasing production capacity, developing regional and international markets, regional infrastructure, macroeconomic and social adjustments, EPA implementation and monitoring-evaluation) and provides for support to certain priority sectors (agribusiness, textiles, tourism).

The COMESA program is a component of support to regional integration and gives priority to infrastructure, institutional capacities and upgrading economic structures. The COMESA fund will mobilize financing from the region and donors. It is important for the region to show results in order to legitimate the regional institution: the implementation of the North-South corridor crossing the sub-region’s countries will be a determining factor.

In Southern Africa the SADC’s regional indicative and strategic development plan is supported by donors and covers a 15 year period. It integrates the 2008- 2013 RIP of the 10th EDF. These funds will support two concentration sectors: Regional economic integration and Regional cooperation policy. For the 1st sector the financing (80%) will support the structural reforms of SADC/EPA countries, Economic Integration and Trade in all SADC countries and infrastructure development. For the 2nd sector, financing (15%) will support good governance and the regional pillar of the Pan African architecture for peace and security. The treatment of this plan is characterized by strong coordination among donors (International Cooperating Partners) with thematic working groups. The RIP includes institutional support, a technical cooperation facility and support for NGOs and professional organizations. The low absorptive capacity seen in the past should be dealt with by significantly strengthening the capacities of the SADC secretariat.

The discussions emphasized that it was imperative for the private sector to participate in designing these programs and underscored the considerable amount of work to be achieved in order to build concrete intervention plans from these strategies, particularly at national levels, by using existing mechanisms and procedures.

The issue of regional integration and regional aid for trade packages:

The presentation and debates underscored the stakes regional aid for trade packages represent for ACP countries in supporting EPAs. They are tools that can mobilize support, provide part of the response to demand, are built in a participative and statistical manner and are currently being formalized by ACPs. EPAs have boosted regional construction but it will take some time to build a real regional strategy based on complementarities between countries and where everyone stands to win (defining trade priorities and solidarities). More precisely, LDCs must rapidly identify the role they wish to play in the regional field. Aid for trade can only support endogenous processes. This explains the importance of building the capacities of intermediary entities and structures that represent the private sector or civil society. The quality of programs will depend firstly on the will of countries to implement the development policies and reforms they have decided and, secondly, on their will to work for the interest of the regional community. The latter must not simply be seen as a supplier of funds but as the pilot of a shared vision.

Intervention methods:

Discussions led to a proposal to scale up exchanges and dialogue between the EU and ACPs and also between ACPs and the EC and Member States (coordination and division of labour), to associate stakeholders within the framework of sufficiently concerted processes, to consider and reflect upon regional aspects on the basis of priorities defined by ACP regions by mobilizing a wide range of existing financial instruments, both concessional and non-concessional. At this stage it is consequently important to mobilize both operational staff in development agencies and banks and their correspondents in ACP regions.

Ownership is a key factor for the success of programs and should be integrated more, as shown by the evaluation of EC programs to support regional cooperation. Support via aid should not only be integrated into the internal processes of regions but would be better used helping the different countries that make up these regions to reconcile their divergent interests and define a regional and national vision. The issue of drugs and rice were mentioned: is it better to import or to rely on national/regional production and under what conditions (quality)? Compromises will certainly often have to be reached. In this context, the development of regional infrastructure is an essential issue.

Organizing the response among donors and ACP ownership

Some instruments used at the regional level were presented (Investment Climate Facility, Regional MSME Investment Fund for Africa) and, more specifically, the infrastructure Trust Fund. The latter is piloted equally by 2 times the 27 member States of the EU and Africa. It requires de facto coordination among donors and operates in the energy, transport, ITC and water sectors to finance infrastructure with a regional vocation via grants, technical assistance, loan interest subsidies or insurance premiums. It consequently has a powerful leverage effect on external resources. The interest of these initiatives lies in the use of existing instruments and institutions.

At the regional level the issue is to have procedures to mobilize and delegate funds from internal and external resources (regional funds or EPAs) where the operational aspects still often have to be built. All the different existing tools and instruments will have to be coordinated so that these initiatives can be used in regional programming.

Conclusions and recommendations:

Representatives from the main institutions wished to express their expectations.

ACP representatives wished to receive clear information about resources and intervention methods to finance support for EPAs. It was requested that resources additional to the EDF be indicated region by region. These programs should be included in the texts of the agreement and integrated into the more general regional integration support programs. They want to improve links between market supply and development programs and maybe even to have development indicators identified (production capacities, competitiveness) and monitored. This would lead to greater liberalization as soon as the indicators become green. It will take time for their regions to make proposals in a concerted manner. They are relying on support from the European Parliament in terms of their grievances during negotiations and the definition of these programs.

The representatives from European institutions promise to convey this message. Coordination among donors can sometimes be as difficult as coordination between ACP States within their regions. Considerable efforts must be made within the framework of the European Code of Conduct and aid harmonization, region by region, with a concrete target for the first quarter of 2009. All operational tools must be mobilized. Support is not simply an amount, it consists in helping build channels to finance development in a sustainable manner by mobilizing the internal resources of ACP States.

It may take a long time to build compromises and a vision within these regions, but reasonable deadlines must however be set, especially in view of the fact that competition is global. Today, in the short term, the deadline has been fixed for the implementation of interim agreements. The rendez-vous clauses will be essential in order to adapt trade resolutions and support for the stage of development in the different regions.

Representatives from the European Parliament announced they would ensure that human and financial resources would be made available for programs to restore the EU-ACP relationship that had suffered during past negotiations. They invite ACP regions to directly discuss with them in an enhanced manner.

PARTICIPANTS:

European parliamentarians (3 + 7 assistants), ACP country representatives (1 COMESA, 1 ECOWAS, 1 WAEMU, 1 Madagascar), ACP private sector (1 Cameroon, 1 Madagascar, 1 Benin) and European (1 CIAN), representatives from European aid agencies (2 EC AidCo, 1 EIB, 2 GTZ, 1 KFW, 2 BTC, 1 DFID, 5 AFD), ECDPM (2), CTA (1), UNIDO (2), independent experts (2), French Ministry of Foreign and European Affairs (3), French Ministry of Finance, Industry and Employment (3)