As of June 2016, the Economic Partnership Agreements (EPAs) have been concluded – but not signed and ratified – in three African regions, namely the East African Community, the Southern African Development Community and Western Africa. In addition, two interim EPAs – the Central Africa and Eastern and Southern Africa EPAs – are being provisionally applied by Cameroon since 2014 and Madagascar, Mauritius, the Seychelles and Zimbabwe since 2012.

The EPAs will deliver uneven outcomes with, on the one side, gains for some African countries, mostly those that are not least developed countries, in a few agricultural sectors; and, on the other side, more generalized gains for the EU. Furthermore, studies show that the EPAs may have adverse effects on intra-African trade and could generate significant trade revenue losses for African countries. Nonetheless, efforts are being made throughout the EPAs to address these issues and mitigate the effects of liberalization of revenues, notably through the proposed setting up of EPA implementation funds in most of the African EPA regions.

At this juncture, under the Western Africa – EU EPA a commitment has been made to allocate around 6.5 bn EUR for the period 2015-2020 as aid for trade support to the Western African region.

Policy space for regional integration

Anchored in the economic and trade cooperation chapter of the Cotonou Agreement[1], the EPAs pursue the objectives and principles of the former – as enunciated in the respective preambles – including by aiming “to foster smooth and gradual integration of the ACP States into the world economy, especially by making full use of the potential of regional integration and South-South trade”.

It is to be noted that provisions are laid down under the EPAs to maintain policy space for African States to conclude a free trade area between themselves without necessarily triggering the obligation to extend or deepen preferential treatment to the EU. However, due to significant differences arising from the different negotiations which established different degrees of liberalization commitments and lists of products excluded from liberalization, it may be difficult to align all the commitments when reaching the integration stage leading to an African customs union. At this point, renegotiation may be needed to ensure policy coherence.

Smart sequencing

The 2015 Economic Report on Africa by the United Nations Economic Commission for Africa (ECA) shows that deepening African economic integration in the context of the proposed Continental Free Trade Area (CFTA)[2] prior to the full implementation of the EPAs could offset the negative effects of those agreements on intra-African trade. However, this implies that the transition periods provided for under the EPAs are used to fast-track the regional integration of agenda of the African countries.

Detailed analysis on the impacts of the EPAs within the African context shows that, if fully implemented, not only would the CFTA offset the negative impacts on regional trade but would also boost regional trade with main gains in the industrial sectors. Should the CFTA be complemented by trade facilitation measures, it would further boost the positive effects and improve competitiveness of Africa’s products.

Policy recommendations

Maintaining policy space whilst negotiating international trade and investment agreements is crucial in order not to compromise the structural transformation efforts on the continent. This is especially relevant when negotiating bilateral and regional agreements with developed countries. In this light, Africa may consider adopting and using a continental negotiations template for such extra-Africa negotiations.

This Policy Brief was prepared by the African Trade Policy Centre (ATPC) at the UN Economic Commission for Africa.

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[1] The ACP-EU Partnership Agreement, referred to as the Cotonou Agreement, was signed in 2000 in Cotonou, Benin, by 79 ACP States and the EU. The Agreement was revised in 2005 in Luxembourg, Luxembourg, and in 2010 in Ouagadougou, Burkina Faso.

[2] The CFTA negotiations were launched during the Summit of Heads of State and Government of the African Union that was held in Johannesburg in June 2015. The negotiations aim at establishing a continental-wide free trade area by October 2017.