P6_TA(2006)0113

The development impact of Economic Partnership Agreements

European Parliament resolution on the development impact of Economic Partnership Agreements (EPAs) (2005/2162(INI))

The European Parliament,

- having regard to the Partnership Agreement between the members of the African, Caribbean and Pacific Group of States (ACP) of the one part and the European Community and its Member States, of the other part, signed in Cotonou on 23 June 2000 [1] (the Cotonou Agreement),

- having regard to the African Union's Ministerial Declaration on EPA Negotiations made at the 3rd Ordinary Session of the AU Conference of Ministers of Trade, Cairo, 5- 9 June 2005,

- having regard to the Cape Town Declaration adopted by the ACP-EU Joint Parliamentary Assembly at its fourth session on 21 March 2002 [2],

- having regard to the declaration of the 81st Session of the ACP Council of Ministers, Brussels, 21- 22 June 2005,

- having regard to Sir John Kaputin's closing statement at the ACP Regional EPA Negotiators meeting, London, 4 October 2005,

- having regard to the Commission Staff Working Document entitled "The Trade and Development Aspects of EPA Negotiations", of 9 November 2005 (SEC(2005)1459),

- having regard to the Joint Report on the all-ACP-EC phase of EPA negotiations, Brussels, 2 October 2003 (ACP/00/118/03 Rev.1, ACP-EC/NG/43),

- having regard to the United Nations Millennium Declaration of 18 September 2000, which sets out the Millennium Development Goals (MDGs) as criteria established jointly by the international community for the elimination of poverty,

- having regard to the Outcome Document of the "UN 2005 World Summit" (Millennium+5), adopted in New York on 16 September 2005 [3],

- having regard to the report by the UN Millennium Project Task Force headed by Professor Jeffrey Sachs entitled "Investing in Development: a practical plan to achieve the Millennium Development Goals",

- having regard to the Commission Report of 29 October 2004 on the Millennium Development Goals 2000-2004 (SEC(2004)1379),

- having regard to the Communication from the Commission to the Council, the European Parliament and the European Economic and Social Committee of 12 April 2005 entitled "Speeding up progress towards the Millennium Development Goals — The European Union's contribution" (COM(2005)0132),

- having regard to the Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions of 13 July 2005 entitled "Proposal for a Joint Declaration by the Council, the European Parliament and the Commission on the European Union Development Policy — The European Consensus" (COM(2005)0311),

- having regard to the Economic Report on Africa 2004 entitled "Unlocking Africa's Trade Potential" by the UN Economic Commission for Africa,

- having regard to the Progress Report by the G8 Africa Personal Representatives on implementation of the Africa Action Plan, released on 1 July 2005 by the Group of Eight in London,

- having regard to the Gleneagles Communiqué, released on 8 July 2005 by the Group of Eight in Gleneagles,

- having regard to the Conclusions of the General Affairs Council of 23- 24 May 2005,

- having regard to Rule 45 of its Rules of Procedure,

- having regard to the report of the Committee on Development (A6-0053/2006),

A. whereas between 1975 and 2000 the EU's trade relationship with the ACP countries was governed by the Lomé Conventions which granted ACP countries non-reciprocal and preferential access to the EU market,

B. whereas the signing of the Cotonou Agreement in 2000 ushered in a fresh era of ACP-EU relations, including provisions for a new trade relationship,

C. whereas the primary objective of the ACP-EU partnership and the Cotonou Agreement is to improve the social and economic development prospects of the ACP countries;

D. whereas the EU remains committed to the MDGs, they should be seen only as the first step in the eradication of poverty;

E. whereas the goals of the Cotonou Agreement and the EU are clear, yet considering the expected impact of the EPAs as they stand at present on fragile ACP economies and the different levels of development between the EU and ACP economies, the EPAs' role in achieving these goals has been increasingly questioned by various players, including African Ministers, some EU Member States and European and civil society in the developing world,

F. whereas market integration within the EU has been accompanied by cohesion measures in support of economically weaker countries,

G. whereas the Cotonou Agreement underlines the need to build on the regional integration initiatives of ACP States, as the creation of larger regional markets and deeper regional integration will act as an incentive for traders and investors,

H. whereas the Cotonou Agreement sets out the Parties' agreement to conclude new trading arrangements compatible with the rules of the World Trade Organization (WTO), progressively removing barriers to trade between them and enhancing co-operation in all areas relevant to trade,

I. whereas the existing trade arrangements (Annex V to the Cotonou Agreement "Trade Regime applicable during the Preparatory Period referred to in Article 37(1)") are covered by a WTO waiver that is due to expire at the end of 2007,

J. whereas EPAs are supposed to define new trade relationships between EU Member States and ACP countries, yet liberalising trade between unequal partners as a tool for development has historically proven to be ineffective and even counterproductive,

K. whereas the regional aspect of the EPAs is essential in strengthening not only North-South trade, but also South-South trade,

L. whereas ACP Least Developed Countries (LDCs) have been granted market access to the EU under "Everything But Arms" (EBA),

M. whereas Article 19 of the Cotonou Agreement allows the ACP-EU cooperation framework to be tailored to the individual circumstances of each ACP country,

N. whereas in the Conclusions of the November 2005 European Council, the EU Member States agreed on the need to establish and implement an improved monitoring mechanism to measure progress towards development objectives within the EPA process,

O. whereas under Article 37(6) of the Cotonou Agreement, ACP countries have the right to explore alternatives to EPAs,

P. whereas the EPA negotiations are currently in their fourth year, however it seems many hurdles remain if the negotiations are to be concluded by 31 December 2007 as provided for in the Cotonou Agreement; whereas Article XXIV of GATT requires a plan and a schedule for completion of a free-trade area "within a reasonable length of time",

1. Understands that the EPA negotiations stem from the need to make ACP-EU trade relations compatible with WTO rules but calls on the Commission to be vigilant that the issue of compatibility does not take precedence over the overall aim of development; calls on the Commission, not only to focus on compatibility with WTO rules but also, in cooperation with developing countries, to aim to improve the rules of the WTO so that they work better for development;

2. Believes that, appropriately designed, EPAs represent an opportunity to revitalise ACP — EU trading relations, promote ACP economic diversification and regional integration, and reduce poverty in the ACP countries;

3. Welcomes the Commission's repeated emphasis that development remains the primary objective and goal of any EPA forged;

4. Expresses its concern that the EPA/Free Trade Agreement negotiations have been launched and are moving into substantive phases in the absence of real democratic debate in most ACP countries; calls therefore for a real public debate including civil society, legislators and government institutions — and proper feedback and consultation mechanisms to reverse this situation and allow democratic participation;

5. Believes that in order to achieve these developmental objectives EPAs should notably focus on fostering good economic governance, promoting regional integration of ACP economies, and attracting and retaining higher levels of investment within ACP countries;

6. In consequence, calls on the Commission and the ACP regions to design EPAs around the principles of: asymmetry in favour of ACP regions; support for ACP regional integration; implementation of a sound and predictable framework for promoting trade and investment in ACP regions;

7. Notes, however, the lack of a concrete development-friendly result so far in the negotiations, as demonstrated by the increasing concern and dissatisfaction of ACP countries with regard to the failure to deliver the development support measures required for achieving concrete benefits from an EPA, such as binding commitments on development cooperation, concrete adjustment measures to overcome the effects of preference erosion, technology transfer and improved competitiveness;

8. Stresses that the outcome of the EPA negotiations should provide sufficient time for adjustment for ACP producers' domestic and regional markets and allow ACP countries the necessary policy space to pursue their own development strategies;

9. Urges the Commission to act in accordance with the Cotonou objective of poverty eradication and to support the social and economic development of each regional grouping, and in particular the economically weaker countries in each grouping who might otherwise be marginalised, and to accept the necessity of greater flexibility — in terms of the timetable for negotiations regarding progressive trade opening, the length of the transition period and the degree of product coverage — if long-term sustainable development is to be the overall outcome of the EPAs; stresses that EPAs should help ACP countries to integrate in the global economy, by stimulating development through trade and taking into consideration the asymmetry of their economies;

10. Stresses that the Development Policy Statement (DPS), in particular paragraph 36, provides guidance to the EPA negotiators; in this respect urges Directorate-General Trade to adhere to the principle of asymmetry and flexibility, to let "developing countries decide and reform trade policy in line with their broader national development plans", and to fully align its negotiation strategy with the overarching DPS principle of policy coherence for development;

11. Stresses the importance of public services for development and democracy and consequently asks the Commission always to prioritise affordable access for all when considering promoting liberalisation or other options in areas such as water distribution and sanitation, health, education, transport and energy;

12. Recognises the substantially different levels of economic development of the EU and the ACP and is therefore very concerned that too rapid a reciprocal trade liberalisation between the EU and the ACP could have a negative impact on vulnerable ACP economies and States, precisely at a time when the international community should be doing its utmost to support States in their drive to meet the MDGs; and accordingly calls on the Commission to ensure that special and differential treatment is given to ACP countries in the EPAs, pursuant to Article 34(4) of the Cotonou Agreement;

13. Stresses that respect for workers' rights, is an essential element in combating poverty and achieving the MDGs, since it promotes the development of sustainable livelihoods and the social conditions where equality and democracy can be strengthened;

14. Emphasises that the Lomé Conventions failed to stimulate adequate development within the ACP, that improved market access alone is not enough to stimulate development and that preference erosion calls for new instruments; stresses however that EPAs will not be any more successful if they are not wholly targeted at sustainable development and therefore calls for the EPA negotiations to really create new and improved market access opportunities for export of goods and services from ACP countries;

15. Stresses the importance of Commission initiatives to stimulate product diversification and valueadded production;

16. Urges the Commission to support mechanisms for producers to be involved and participate in price determination where feasible, as provided for in the Cotonou Agreement Compendium; calls on the EU to promote fair trade as a mechanism to improve the conditions for small and marginalised producers and poor workers;

17. Urges the Commission to take into account the budgetary importance of tariff revenues in many ACP states, which will be vastly reduced by any agreement for reciprocity with the EU; calls on the Commission to propose and fund comprehensive fiscal reform programmes ahead of full reciprocal market opening; calls for the introduction of WTO-compatible safeguard mechanisms, allowing for temporary import restrictions if a domestic industry is damaged or threatened with damage caused by a surge in imports;

18. Recognises the potential for this loss of revenue to be replaced by other direct taxes or VAT, but stresses the regressive nature of some of these tax regimes which would disproportionately impact on the poor, as well as the technical problems related to their introduction and practical implementation;

19. Calls on the Commission to introduce a safeguard mechanism in the EPAs, in order to provide the ACP with sufficient policy space and, if necessary, the possibility to take measures in the event of balance of payments difficulties or macro-economic shocks;

20. Underlines the importance of the Commission fulfilling the commitment made by Mr Barroso to provide EUR 1 billion in aid-for-trade to developing countries and calls for further money, additional to existing European Development Fund commitments, to be made available if necessary; regrets that inadequate provision has been made both for this and for the suggested EUR 190 million per annum promised for Sugar Protocol countries in the Council's agreement on the next Financial Perspectives;

21. Noting the importance of investment for the economic development of the ACP, urges the Commission to seek changes in the working of the European Investment Bank's investment facility, to enable the facility to promote additional and pro-development investment;

22. Considers the improvement of education and infrastructure to be necessary prerequisites to the opening of ACP markets and therefore asks the Commission to guarantee greater resources and a mechanism that allows early disbursement to ACP countries to address supply-side constraints, the external effects of CAP reform and increasingly demanding EU regulatory standards;

23. Calls on the Commission to pay particular attention to the needs of LDCs and provide adequate support for capacity-building and to address supply-side constraints in order to allow such countries to take advantage of the market access granted under EBA;

24. Asks that the leaders of the ACP countries use resources more effectively, within a framework of greater responsibility, good governance and democracy;

25. Calls for any market opening to be carried out within the framework of EPAs to be made contingent upon the achievement of specific development targets and the provision of adequate resources to address all of the additional costs involved;

26. Stresses the importance of achieving substantial intra-regional integration prior to embarking on a programme of inter-regional integration;

27. Insists that a timely and effective delivery of trade-related assistance should be guaranteed to ACP countries and regions to strengthen their trade capacity in the run-up to the EPA negotiations;

28. Notes that EPA negotiations have led in some cases to the creation of new regional economic groupings, encompassing countries of markedly different development levels, causing difficulties in ACP countries and contributing to overlapping regional economic communities;

29. Welcomes the role of regional integration processes, stimulated by the EPAs and identified as a priority in the Cotonou Agreement, in helping countries develop internal markets, attract investors and address supply-side constraints; however, calls on the Commission to take into consideration the need for transition periods in order to protect strategic products and industries and to introduce WTO-compatible safeguard mechanisms and find compensation for losses in tariff revenues;

30. Reminds the Commission that it might not be feasible for all regional groupings to be in a position to begin gradually implementing an asymetrically reciprocal Free Trade Agreement with the EU by 2008 unless adequate supporting measures are taken;

31. Calls for the Commission to ensure greater coherence and cohesion between the trade-related content of EPAs, the accompanying and adjustment measures and the timely and effective delivery of support; and calls for greater collaboration between Directorates-General Development, Trade and External Relations, and the EuropeAid — Cooperation Office, as well as EU Member States, on how to best deliver EPA development support;

32. Urges the Commission to focus its attention on and prioritise improving production and processing capacities, and national and regional trade within the ACP;

33. Deplores the speed with which the initial all-ACP phase of the EPA negotiations was conducted and regrets the lack of genuine conclusions at that stage;

34. Considers that the role of the ACP Secretariat should be strengthened in coordinating these negotiations if it provided relevant information on the state of negotiations in different ACP regions;

35. Calls on the Commission to respect the wishes of ACP leaders if they wish to reopen the all-ACP phase and resolve any remaining divergences;

36. Calls on the Commission to start developing alternatives so that ACP countries can make an informed choice, and especially to consider a better implementation of a GSP+ regime,

37. Recalls that the Cotonou Agreement provides that in the event that a country or region does not wish to sign up to an EPA/FTA it should not find itself worse off in terms of market access; calls on the Commission to examine all alternative possibilities including non-reciprocal arrangements as stated in Article 37(6) of the Cotonou Agreement, which provision should be respected if ACP countries accepted this;

38. Notes that in order to push for greater flexibility, the Commission and the ACP countries need to work in partnership, in the spirit of the Cotonou Agreement, to press for a development-friendly revision of GATT Article XXIV such that non-reciprocal EPAs might be allowed; for this purpose, calls on the Commission to consider that EU and ACP countries together are a constituency large enough to demand for eventual reforms of WTO rules, to make them more just and suited to the needs of both developing countries and small European producers;

39. Urges the Commission not to pursue investment, competition rules and government procurement within the EPA negotiations before achieving an explicit consensus with the ACP regions;

40. Calls for greater transparency with regard to the progress and the substance of the negotiations as well as the delivery of EPA development assistance, and for greater involvement of ACP civil society players, the private sector, national-level parliaments, local governments, the European Parliament and the ACP-EU Joint Parliamentary Assembly in the negotiations;

41. Welcomes the review of the EPA negotiations due to take place in 2006, as provided for in Article 37 (4) of the Cotonou Agreement, and trusts that it will be perceived as an opportunity to engage in a comprehensive and genuine assessment of the extent to which the EPAs will promote the appropriate conditions for poverty eradication and for long-term social and economic development to flourish;

42. Recalls and supports the Cape Town Declaration, unanimously adopted by the ACP-EU Joint Parliamentary Assembly, which called for the establishment of development benchmarks against which to assess the conduct and outcome of the ACP-EU trade negotiations; and calls for the use of such benchmarks in all reviews of the progress made;

43. Urges the Commission to proceed along these lines, implementing a new monitoring mechanism, with full involvement of parliamentarians and civil society, to ensure political scrutiny and accountability against development objectives or established benchmarks throughout the negotiating process;

44. Instructs its President to forward this resolution to the Council, the Commission, the governments of the EU Member States and of the ACP countries, the ACP-EU Council and the ACP-EU Joint Parliamentary Assembly.

[1] OJ L 317, 15.12.2000, p. 3.

[2] OJ C 231, 27.9.2002, p. 63.

[3] http://www.un.org/summit2005/ See also http://www.un.org/ga/59/hl60_plenarymeeting.html

--------------------------------------------------