telecommunications are a critical input into call centers and other business processing activities. Transport is vital to tourism. Finally, higher quality and differentiated products tend to face higher information barriers in accessing overseas markets and are often more dependent on institutions such as those relating to testing and certifying quality and compliance with standards in overseas markets.

# **5. The role of EPAs**

At the end of 2007, having fallen short of successfully negotiating full Economic Partnership Agreements and given a strict deadline by the EU to sign WTO consistent agreements at the point of expiry of the Cotonou Agreement, interim agreements were initialed by 19 Africa countries. Most African non-LDCs, with the exception of Nigeria, Republic of Congo, Gabon and South Africa, concluded interim agreements. South Africa will continue to receive market access in the EU under its TDCA agreement, whilst the others will receive access to the EU market according to the GSP and hence loose preferences relative to Cotonou. Interim agreements were agreed with the EAC and the ESA and SADC groups. No agreement was achieved with Central or West Africa. The LDCs in these regions will receive access to the EU under the EBA. The interim agreements call for the conclusion of more comprehensive EPAs (indicating but not determining some of the issues to be included) “as soon as possible”, meaning by the end of 2008. However, ECOWAS has already decided to request an extension of the deadline until the end of 2009.

The standard partial equilibrium analysis of the trade and welfare effects of reciprocal trade agreements, such as the interim agreements that the EU has signed is presented in Milner et al. (2005). Several studies have provided empirical estimates of the impact of reciprocal tariff reductions under EPAs on trade, revenues and welfare, for example, Karingi et al (2005) and Keck and Piermartini (2008).<sup>14</sup> In this paper, whilst cognizant of these impacts, we look at the opportunities of the EPAs in the broader policy objective of seeking to increase competitiveness and integrate into the global economy.

One of the fundamental challenges that the EPA process has faced is that the negotiations have been undertaken between the EU and the secretariats of regional groupings while to be successful, agreements must be consistent with the trade and development strategies of individual ACP countries. Trade relations with the EU and regional partners are just one element of trade policy that should also encompass unilateral, multilateral and bilateral agreements with other countries.

To improve competitiveness, African countries need to invest in significant domestic reforms and upgrading of infrastructure. But because many of the African countries are small in population and economic size and/or are landlocked, many competitiveness issues are best addressed at the regional level. For example, it is important that the interests of land-locked countries are properly taken into account in motivating reform of ports, customs and transport in the countries that provide access to the global market. EPAs can play an important role in strengthening and moving forward the process of regional 14 The ODI has provided a short summary of the main results of empirical studies of the potential impacts of EPAs: http://www.odi.org.uk/Publications/briefing/bp_june06_epa_bp2.pdf 15