Evaluation of preferential agricultural trade regimes, in particular the Economic Partnership Agreements (EPAs) : executive summary.
Date: 2015-02-20
Institutions: Directorate-General for Agriculture and Rural Development
Subjects: ACP countries, ACP-EU relationship, agri-foodstuffs, agriculture-trade relationship, economic cooperation, preferential agreement, trade agreement (EU), trade cooperation

Evaluation of Preferential 
Agricultural Trade Regimes, in 
particular the Economic 
Partnership Agreements 
(EPAs) 

Executive Summary 

Written by Kantor Management Consultants S.A. 
November 2014 

AGRICULTURE AND 
RURAL DEVELOPMENT 

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Directorate-General for Agriculture and Rural Development 
Directorate E — Economic analysis, perspectives and evaluation; communication 
Unit E.4 — Evaluation and studies 
E-mail:  AGRI-EVALUATION@ec.europa.eu 

European Commission 
B-1049 Brussels 

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Evaluation of Preferential 
Agricultural Trade Regimes, in 
particular the Economic 
Partnership Agreements 
(EPAs) 

Executive Summary 

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ISBN 978-92-79-41248-6

doi: 10.2762/63834

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EXECUTIVE SUMMARY 

Introduction and background 

The objective of this evaluation is to assess the impact of European Union (EU) preferential trade 
agreements and arrangements (PTAs)1 for agricultural products on the development of agricultural 
trade in countries of the African, Caribbean and Pacific (ACP) region. PTAs have formed an integral 
part of the European Community policy towards developing countries, including the ACP countries, 
since  the  early  1960s.  The  ACP  and  the  EU  have  agreed  to  replace  the  non-reciprocal  trade 
preferences by reciprocal (but asymmetric) Economic Partnership Agreements (EPAs).  

This study aims to provide answers to four core evaluation questions (EQs): 

 Evaluation Question 1: Where and to what extent has the market access under the different

EU preferential trade regimes impacted on agricultural trade?

 Evaluation  Question  2:  Which  were  the  drivers  that  contributed  to  the  impact/absence  of
impact  on  agricultural  trade  under  consideration  of  the  market  access  under  the  different
preferential trade regimes?

 Evaluation  Question  3:  Which  was  the  role  of  non-tariff  measures  (NTMs)  on  composition,
volume  and  value  of  agricultural  trade  between  the  EU  and  the  ACP?  (Including  rules  of
origin, public and private standards, trade defence instruments, etc.).

 Evaluation Question 4: To what extent is the implementation of the preferential agricultural

trade regimes efficient, relevant and coherent with regard to their objectives?

The  relationship  between  the  EU  and  the  now  79  ACP  countries  has  its  origins  in  the  Treaty  of 
Rome, which included provisions for the then colonies of the EU’s founding members to be included 
within  the  customs  union.  In  1963,  the  EU  negotiated  the  first  Yaoundé  Convention  to  provide 
eighteen of them with continued preferential access to the common market. It was followed by the 
first  Lomé  Convention  in  1975,  the  basic  principle  of  which  was  that  ‘products  originating  in  the 
ACP  states  shall  be  imported  into  the  Community  free  of  customs  duties  and  charges  having 
equivalent  effects’.  By  2000,  after  several  renewals  of  the  Lomé  Convention,  the  Cotonou 
Partnership Agreement (CPA) was negotiated and signed in 2000, and entered into effect in 2003. 
This  envisioned  negotiations  of  Economic  Partnership  Agreements  (EPAs)  with  the  seven  regional 
groups  of  ACP  countries,  with  a  view  to  supporting  the  integration  of  the  ACP  countries  into  the 
world  economy  and  their  regions.  As  of  October  2014,  a  full  EPA  was  in  application  with 
CARIFORUM  and  interim  EPAs  were  applied  with  Papua  New  Guinea  and  Fiji  in  the  Pacific,  with 
Madagascar,  Mauritius,  Seychelles  and  Zimbabwe  in  Eastern  and  Southern  Africa  (ESA)  and  with 
Cameroon  in  Central  Africa.  EPA  negotiations  with  the  West  Africa  region,  the  Southern  African 
Development Community (SADC), and the East African Community (EAC) were concluded in 2014. 

For  all  developing  countries,  including  ACP  ones,  the  EU  introduced  its  Generalised  Scheme  of 
Preferences  (GSP)  in  1971,  with  regulations  updated  at  10-year  intervals.  The  EU  adopted  a 
reformed  GSP  regulation  in  2012  (applied  as  of  2014)  with  extensive  changes,  and  focused  on 
fewer  beneficiaries  (90  countries)  to  ensure  more  impact  on  countries  most  in  need.  Within  the 
GSP  a  special  arrangement  for  Least  Developed  Countries  (LDCs)  was  adopted  in  2001  (the 
Everything but Arms, or EBA, agreement), to provide duty-free quota-free access to the EU market 
to all products originating in LDCs, except for arms and ammunitions. Apart from the agreements 
with ACP Countries the EU has made several other PTAs with non-ACP members. 

Agri-food trade between the EU and ACP countries 

In  2012,  the  EU27  imported  EUR  60.7  billion  of  agri-food  products  from  all  developing  countries. 
This  can  be  compared  with  EUR  23.5  billion  imported  by  the  EU12  in  1990,  and  with  EUR  31.3 

1 Preferential trade arrangements refer to unilateral preferential arrangements that the EU has adopted vis-à-
vis developing countries, such as the Everything but Arms (EBA) initiative. Preferential trade agreements refer 
to bilateral or multilateral preferential agreements between the EU and other countries. In this report both are 
referred to as PTAs.  

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billion imported by the EU15 in 2001. In 2012, the ACP countries accounted for EUR 13.3 billion or 
21.9% of all EU27 agri-food imports from  all developing countries, down  from  25.5% in  2001.  In 
1990 four groups of products accounted for 62.5% of all agri-food imports of the EU12 from all ACP 
countries. These were: coffee, tea, spices, 18.9%; cocoa and preparations, 16.7%; edible fruit and 
nuts, 16.1%, and; sugar, 10.9%. In 2012, these product groups still accounted for 64% of all ACP 
agri-food imports into the EU27. There has not been much change in the geographical structure of 
EU  agri-food  imports  from  the  ACP  regions  over  the  past  22  years.  In  1990  the  major  ACP 
agricultural  importer  group  into  the  EU  was  the  geographical  group  of  the  West  Africa  region 
(ECOWAS)  with  26.1%  of  EU12  agri-food  imports  from  the  ACP  region,  with  second  the  SADC 
region (18.3% of EU12 agri-food imports). After more than two decades, namely in 2012, and two 
EU enlargements, ECOWAS still accounted for the bulk of agri-food imports into the EU27 from all 
ACP countries, and with an increased share of 33.8%. 

The majority of EU agricultural imports from ACP countries enter under zero tariffs (60% in 2013) 
under  the  GSP  or  other  preferential  regime.  A  significant  part  of  agricultural  imports  from  ACP 
countries  (33%  in  2013)  enter  under  a  non-preferential  MFN  trade  regime,  and  with  zero  MFN 
tariff. Thus, in 2013 93% of all ACP agri-food imports into the EU entered duty free, compared to 
72% in 2000 and 84% in 2008. Therefore, over the past 14 years, most of the agri-food imports 
from the ACP countries took place at duty-free.  

Methods used for answering the Evaluation Questions  

The methods used for answering the Evaluation Questions posed in the study were the following: 

For Evaluation Question (EQ) 1: 

A.  The  “constant  market  share”  (CMS)  method  was  used  as  a  way  to  attribute  trade 
developments to different underlying developments. CMS analysis is a decomposition technique 
via which export growth is decomposed into a scale effect (based on market growth), a market 
effect (based on dependence on different markets), a commodity effect (based on dependence 
on  different  export  commodities)  and  a  residual  assumed  to  reflect  differences  in 
competitiveness. The basis of CMS analysis is the assumption that a country’s export share in 
world imports should be constant over time.  

B.  The  ‘gravity approach’,  an econometric technique,  was used to  ascertain whether PTAs had 
any impact on agricultural trade, by comparing the  trade performance of the countries with a 
PTA,  with  the  performance  of  a  comparison  group  of  countries  and  products  which  have 
engaged in agricultural trade with the EU but without PTAs.  

For Evaluation Question (EQ) 2:  

The  techniques  applied  here  were  two-fold:  desk  analysis  and  case  study  analysis  of  7  selected 
product/country pairs2: 

A.  The  desk  analysis  focused  on  literature  review  to  identify  major  drivers  of  the  impact  or 
absence of impact on EU-ACP agricultural trade of EU PTAs.  Several of these drivers were then 
examined. 

B.  The methodology followed in the course of the case studies and interviews consisted of analysis 
of  quantitative trade  data  to  develop  an  “events  timeline”  per  country-product  pair  related  to 
various  drivers  which  may  have  affected  trade  over  time,  and  the  evaluation  of  driver 
significance per country-product pair. 

For Evaluation Question (EQ) 3: 

The  methods  used  to  formulate  the  reply  to  this  question  were  a  preliminary  case-specific 
(country-product  pair)  deskwork  investigation  and  the  analysis  of  information  received  from  the 
interviews during the course of the case studies: 

2 The selected country/product case studies were: Cameroon-Bananas, Ethiopia-Cut flowers, Ghana-Cocoa, 
Guyana-rice, Kenya-Green beans, Mozambique-Sugar, and Namibia-beef.   

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A.  The  deskwork  investigation  focused  on  identifying  the  most  important  NTMs  for  agricultural 
products,  actors  involved  in  and  affected  by  NTMs,  NTMs  perceived  as  possible  NTBs, 
competent authorities for NTMs, links between actors involved in a NTM, ex-ante proposals on 
how  the  specified  NTMs  may  be  met  or  overcome,  and  forms  of  assistance  and  support  to 
comply with SPS and NTMs. 

B.  The results of the survey of stakeholders during the case studies were assessed in comparison 

to the desk work analysis associated with NTMs.  

For Evaluation Question (EQ) 4: 

A dual approach was used to answer this question: 

A.  First, the efficiency of PTAs was assessed in terms of the process of product quality upgrading”, 

and is the outcome of the gravity analysis described above.   

B.  In addition, the implementation of each specific preferential trade regime in the course of case 
studies was examined via interviews, focusing on relevance, coherence and efficiency issues. 

Conclusions  

Has  the  market  access  under  the  different  EU  preferential  trade  regimes  impacted  on 
agricultural trade? (Answer to EQ1) 

On  the  basis  of  the  analysis  undertaken,  there  is  clear  evidence  that  the  EU  PTAs  have  been 
positive  and  effective  at  promoting  agricultural  trade  of  the  ACP  countries.  This  general 
conclusion is based upon the following findings: 

1.  Results  of  the  econometric  analysis  (also  denoted  as  gravity  analysis  in  the  sequel) 
indicated  that  in  the  period  1961-2012,  the  EU  Preferential  Trade  Arrangements 
(PTAs) had significant agri-food trade creation effects. On average, to be a member 
of  an  ACP/GSP/LDC  arrangement  with  the  EU,  has  implied  an  increase  in  agri-food  trade 
flows  of  about  45%  in  comparison  with  developed  and  developing  countries  without  an 
ACP/GSP/LDC arrangement with the EU PTAs.  

2.  Results of the econometric analysis indicated that those PTAs with the largest trade effects 
were,  in  decreasing  order  of  importance,  the  1997-2000  GSP  special  arrangement  for 
LDCs, and then the various ACP agreements from 1964-2012 (Yaoundé I - 1964-74, Lomé 
I-Lomé III - 1975-88, Lomé IV-Cotonou - 1989-2007, and EPA since 2008). The positive 
impact  on  agricultural  trade  of  EU  PTAs  seems  to  have  been  larger  in  the  early 
phases of the ACP agreements. 

3.  Results  of  the  econometric  analysis  also  suggested  that  the  positive  aggregated  agri-
food 
from  ACP/GSP/LDC-related  EU  PTAs,  display  strong 
heterogeneity when assessed at sector level. Nevertheless, for the majority of agri-
food sectors EU PTAs display positive and significant trade effects.  

trade  effect 

4.  The  econometric  analysis  revealed  that  overall  the  EU  PTAs  contributed  to 
developing  countries’  export  diversification  (or  extensive  margin,  namely 
increase  of  product  lines  exported).  Furthermore,  in  terms  of  the  composition  of  the 
PTA  effects  on  trade,  the  econometric  analysis  also indicated  that  the  positive  effect  of 
EU  PTAs  on  ACP  agri-food  trade  flows  can  be  mainly  attributed  to  growth  along 
the intensive margin (i.e. increase in the volume of exports for countries/sectors 
that  already  traded  with  the  EU)  and  less  so  to  growth  along  the  extensive 
margin. In addition, the relative importance of the extensive margin, on the positive effect 
of  ACP  PTAs  has  declined  over  time,  and  it  appears  that  in  the  most  recent  period 
examined,  namely  2008-2012  it  has  even  turned  slightly  negative,  implying  that  ACP 
countries in that period experienced a small decline in the agri-food product lines exported 
to the EU. 

5.  The  reductions  of  EU  import  tariffs  following  a  PTA  seem  to  have  led,  for  the 
countries involved, to an increase of both the price received and the quality of the 
exported products, though the price effect was significantly larger.  

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6.  Country  case  study  evidence  supported  the  above  general  conclusions  in  the  sense  that 
trade increases in several of the products examined in the case studies was found 
directly linked to the EU PTAs.  

There are a number of caveats and qualifications to the above conclusions: 

1.  Descriptive overview of trade data revealed that during the period examined, ACP 

countries (including South Africa) have overall lost EU import market share in 
agricultural products. ACP countries have also lost global import market share in 
agri-food products over the period 1997 to 2011. This happened largely because 
of the fast expansion of global exports of the non-LDC developing countries that 
includes BRIC countries (Brazil, Russia, India and China) and not because of a 
slowdown of ACP exports. 

2.  Overall  the  constant  market  share  analysis  in  Chapter  5  showed  that  ACP  exporters  of 
agri-food  products  have  lost  competitiveness  in  the  EU  market  compared  to  all 
other  developing  countries  as  a  group  (which  also  includes  BRIC  countries). 
During 1995-2001 ACP exports fell by more than might have been expected based on the 
fall in overall EU imports. During 2001-2008, which saw significant growth in EU27 imports 
of  agri-food  products  from  developing  countries,  ACP  exporters  continued  to  lose  market 
share  relative  to  other  developing  country  exporters,  and  experienced  both  negative 
structural  effects  (concentration  on  low-growth  commodities  and  markets)  and  a  loss  in 
competitiveness.  Finally  during  2008-2012,  ACP  exporters  experienced  a  further  (small) 
loss in market share while suffering a continuing loss of competitiveness. 

3.  Descriptive  analysis  revealed  that  ACP  countries  have  exported  a  narrow  range  of 
products  to  the  EU.  There  has  also  been  little  geographical  diversification  of  EU 
agri-food imports from ACP regions over the period examined i.e. 1990 to 2012. 

4.  Analysis of global agricultural trade flows has shown that intra-ACP trade still accounts 
for a small portion of their overall trade. In 2011 ACP LDCs export 19.2% of their total 
agricultural exports to ACP countries, whereas non-LDC ACPs export 27.2%. 

5.  At the aggregate level, while there seems to have been a strong positive trade effect from 
PTAs according to gravity model results, the EBA initiative after 2000 does not appear 
to  have  created  additional  positive  trade  effects  for  the  countries  involved.  This 
could  be  the  consequence  of  the  fact  that  most  of  the  EU  agri-food  imports  from  ACP 
countries (that include the majority of LDCs) already entered the EU duty free, before the 
application of the EBA. 

Drivers that explain the trade developments outlined above (Answer to EQ2) 

The literature on preference schemes has identified a number of factors which affect the 
effects of EU-ACP preferences. These factors include the limited coverage of preferences 
offered, CAP support and reforms, preference erosion, domestic supply side constraints, 
and nontariff measures including restrictive rules of origin. The analyses in this report have 
examined the relative  importance  of these  drivers with respect to ACP agri-food exports,  and  the 
conclusions can be summarised as follows. 

1.  Limited preferences do not appear to have been a major constraint on expanding 

ACP agri-food exports to the EU. 

2.  CAP-related  market  price  support,  which  normally  is  combined  with  relevant 
border  measures  to  protect  internal  EU  markets,  has  declined  over  time  for  all 
products, which in turn implies some loss of potential trade benefits of EU preferences for 
the  ACP  exporters  of  CAP  products.  However,  case  study  evidence  (Kenya 
Mozambique,  Namibia)  suggested  that  CAP  reform  has  not  been  an  external 
driver of the observed decline in ACP agri-food share into the EU.  

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3.  Over the past 14 years the EU has proceeded to apply zero duties to progressively most of 
the  agri-food  imports  from  the  ACP  countries.  Zero  duties  have  given  ACP  agri-food 
products easier access to the EU market.  

4.  The  ACP  countries  maintained  their  relative  level  of  preference  over  the  period, 
and  thus  preference  erosion  as  such  cannot  account  for  their  overall 
unsatisfactory  trade  performance  vis-à-vis  other  developing  countries  over  the 
period. 

5.  Trade deflection due to more generous preferences for agri-food imports by non-
EU  countries  did  not  play  a  significant  role  in  influencing  ACP  exports  to  the  EU 
over the evaluation period. 

6.  The analyses revealed that the major factors affecting exports of agri-food products 
from  ACP  countries  to  the  EU  appear  to  have  been  domestic  supply  side  related 
constraints.  Examples 
infrastructure 
(Mozambique,  Kenya  –  especially  for  perishable  produce);  land  ownership  regulations 
(Ghana,  Mozambique);  reduced  grazing  land  (Namibia);  bureaucracy  and  restrictive 
business environment to trade (Ethiopia). The case studies revealed also the importance of 
foreign  direct  investment  (FDI)  in  alleviating  the  supply  side  constraints  in  many  of  the 
success  stories  –  cut  flowers  in  Ethiopia,  sugar  in  Mozambique,  green  beans  in  Kenya, 
bananas in Cameroon, and cocoa in Ghana. 

the  case  studies 

transport 

include 

from 

What has been the role of non-tariff measures? (Answer to EQ3) 

1.  The  case  study  interviews  did  not  perceive  EU  NTMs,  and  particularly  SPS 
measures, as a barrier preventing trade or discriminating between domestic (EU) 
and international (ACP) producers. On the other hand, EU NTMs have affected the 
cost of the traded products in partner ACP countries. 

2.  Non-Tariff Measures (NTMs) seem to have both positive as well as negative trade 
effects.  On  the  one  hand  the  high  costs  of  compliance  with  some  NTMs, 
particularly  SPS  and  MRL  requirements  to  reach  the  EU  market,  have  had  a 
negative  impact  on  the  volume  of  exports.  On  the  other  hand,  the  SPS  and  MRL 
requirements enabled the relevant sectors to modernize and thus produce higher 
value  added  outputs,  supporting  the  development  and  strengthening  of  the 
respective  sectors  over  the  longer  term.  Weak  evidence  was  also  found  that  NTMs 
(particularly  stringent  SPS  measures)  have  led  to  a  shift  in  composition  of  trade  towards 
less demanding products and markets. 

3.  It was found in all case studies that the rules of origin do not play a negative role 

in ACP agri-food exports to the EU. 

Are EU PTAs relevant, coherent, and efficient? (Answer to EQ4) 

The  implementation  of  EU  preferential  agricultural  trade  regimes  was  found  to  be  relevant, 
coherent and efficient with regards to their objectives:  

1.  A  high  level  of  relevance  between  PTA  objectives  and  needs  and  priorities  of 
target countries and beneficiaries, as well as enhancement of supply capacity and 
achievement of high economic growth was found in all case studies. 

2.  In  almost  all  case  studies,  coherence  was  judged  by  respondents  as  particularly 
high,  primarily  in  the  cases  of  the  enhancement  of  supply  capacity,  the  increase 
of  competitiveness  and  poverty  reduction,  and  secondarily  in  the  promotion  of 
investment, and trade creation. 

3.  Case study investigations lead to the conclusion that preferential market access is 
regarded  as  the  most  efficient  and  main  driving  force  behind  the  expansion  of 

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exports  to  both  the  EU  and  other  international  markets  and  the  development  of 
the sectors investigated in this study. 

4.  Additionally, stakeholders interviewed argued that preferential market access was also 
efficient  in  attaining  objectives  other  than  trade  creation;  this  positive  opinion  is 
especially  valid  for  objectives  such  as  poverty  reduction,  promotion  of  investment 
and economic growth and job creation. 

5.  Case study analysis indicated mixed perceptions of stakeholders in regards to the 

efficiency of development actions associated with PTAs. 

6.  The application of PTAs has induced in several ACP countries the organisation  of 
production  and  international  trade  by  economically  large  firms  (e.g.  Mozambique, 
Cameroon), and considerable domestic and international investment. In other cases, 
the organisation of production involved the incorporation of small producers into 
the relevant product value chain, also having significant employment effects and 
spill-over benefits for the local economy.  

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doi: 10.2762/63834