Building capacity to help Africa trade better

Interim Economic Partnership Agreement between the EU and the Eastern and Southern African (ESA) States: Report by the WTO Secretariat


Interim Economic Partnership Agreement between the EU and the Eastern and Southern African (ESA) States: Report by the WTO Secretariat

Interim Economic Partnership Agreement between the EU and the Eastern and Southern African (ESA) States: Report by the WTO Secretariat
Photo credit: Mauritius Ports Authority

Trade Environment

The Interim Agreement establishing a Framework for an Economic Partnership Agreement between the EU and the Eastern and Southern African (ESA) States (Madagascar, Mauritius, Seychelles and Zimbabwe) is the EU’s 25th RTA notified to the WTO. Among the ESA States for whom the Agreement is in force, for Madagascar it is the 2nd RTA notified, for Mauritius the 3rd RTA, the first for the Seychelles and the 4th for Zimbabwe; the other ESA States the Comoros and Zambia, did not sign the Agreement although discussions with the Comoros on signature are continuing.

The EU is the world’s second largest merchandise trader (excluding intra-EU trade) both in exports and imports with exports valued at 2,415 billion euros and imports at 2,188 billion euros in 2013. Among the ESA States the largest trader is Mauritius, ranked 97th in the world in terms of global exports and 99th in imports, followed by Zimbabwe, ranked 98th in world exports and 108th in imports. Madagascar is ranked as the world’s 107th exporter and 117th importer of merchandise, while the Seychelles was the world’s 138th and 140th exporter and importer respectively.

Trade with the European Union is important for the economies of the ESA States. In 2014 the European Union was the largest destination for merchandise exports from three of the four ESA States (Mauritius, 49.1% of its exports, Madagascar, 49.8% and the Seychelles, 59.3%). It is the third largest export destination for Zimbabwe (5% of its exports). In 2014 the EU was the largest source of merchandise imports for the Seychelles (33.6% of its imports), second largest for Mauritius (20.8%) and Madagascar (15.6%) and third largest for Zimbabwe (albeit representing only 8.6% of its imports). For the EU Mauritius is the 75th largest source of imports, followed by Madagascar at 78th, Zimbabwe at 91 and Seychelles at 109th large source of imports. In terms of EU exports, Mauritius is its 91st largest merchandise export market, followed by Madagascar (112), Seychelles (136) and Zimbabwe (139).

In terms of structure, while the European Union’s exports and imports are dominated by manufactured goods, with the exception of Mauritius whose exports of manufactures account for over 68% of total merchandise exports in 2015 and to some extent Madagascar (29% of exports), agriculture and fuels and mining form a more important share of total exports for the ESA States. Agriculture accounts for 29% of total merchandise exports for Madagascar, 43% for Zimbabwe and as much as 61% for the Seychelles, while fuels and mining exports are important for Madagascar (35%). Imports by the ESA States are dominated by manufactured products, at around 55% of total imports.

Global and bilateral merchandise trade between the EU and the ESA States between 2002 and 2014: The EU has, for much of the period, had a trade deficit in its global exports, which widened steadily between 2004 and 2008. Since 2009 trade has been more balanced. With regards to its ESA partners, however, with the exception of the Seychelles, the EU has maintained a deficit in its trade; the deficit with the Seychelles declined between 2002 and 2006 before moving into surplus until 2013 since when it has been in deficit again. All the ESA parties have also maintained deficits in their global trade during the period; Zimbabwe’s trade in particular has been volatile.

Commodity structure of trade among the Parties and imports and exports to the world in the period 2009-11, on the basis of Harmonized System (HS) sections: Over this period, the EU’s four largest export product categories – machinery, chemicals, vehicles and base metals – made up 73% of its total exports and accounted for 61% of Madagascar’s imports from the EU; 46% of Mauritius’s imports from the EU; 65% of Seychelles’ and Zimbabwe’s imports from the EU. Other key imports by the ESA States from the EU include textiles by Madagascar (12% of total imports), live animal products by Mauritius (17%), while base metals were not a significant import by Zimbabwe. Over the same period, the five largest export product categories from Madagascar – textiles, vegetable products, minerals, animal products, and prepared foods – made up 74% of its total exports and accounted for 89% of the EU’s imports from Madagascar. The two largest export categories from Mauritius – textiles and prepared foods – made up 72% of its total exports and accounted for 81% of the EU’s imports from Mauritius. However, the structure of exports for the Seychelles and Zimbabwe is different globally and with regard to the EU. While the two largest export categories from the Seychelles – textiles and live animals – made up 81% of its total exports, 90% of the EU’s imports from the Seychelles were in prepared foods (fish and fisheries products), while of the four largest export categories from Zimbabwe which made up 70% of its total exports, only textiles and base metals (67%) were key EU imports.

Characteristic Elements of the Agreement

The Agreement was signed by the Parties on 29 August 2009 and provisionally applied since 14 May 2012. It was notified to the WTO on 27 July 2012 under Article XXIV:7 of the GATT 1994 and its Understanding.3 The Agreement aims to contribute to the reduction and eventual eradication of poverty through a strengthened and strategic trade and development partnership consistent with the objective of sustainable development, the Millennium Development Goals and the Cotonou Agreement. Other goals of the Agreement include: to promote regional integration, economic cooperation and good governance in the ESA region and its gradual integration into the world economy; structural adjustment of the ESA economies and diversification; and improved trade policy and trade related capacity (Article 2). Article 3 aims to establish an agreement consistent with GATT Article XXIV and to establish the framework, scope and principles for further negotiations on the basis of proposals already submitted and for potential negotiations on other issues as identified in the Cotonou Agreement and of interest to the Parties.

Article 4 of the Agreement permits ESA LDCs that have not yet submitted tariff reduction offers to do so after signature of the Interim Agreement on the same or flexible conditions and to benefit fully from its provisions. In addition to Zambia and the Comoros, who have made offers (as in Annex II) but have not yet signed the Agreement, the ESA LDCs are Ethiopia, Djibouti, Eritrea, Sudan and Malawi, none of whom have submitted a market access offer yet. All ESA States are eligible to accede to the Agreement (Article 66). Furthermore, the Agreement permits the ESA States to maintain regional preferences among themselves and other African countries and regions with no obligations to extend them to the EU.

The Agreement contains six Chapters and four annexes and two protocols all of which form an integral part of the Agreement.

Chapter V of the Interim Agreement contains a rendez-vous clause to build on the Cotonou Agreement and continue negotiations to conclude a full and comprehensive EPA covering the following areas: customs and trade facilitation; outstanding trade and market access issues, including rules of origin and other related issues and trade defence measures, including outermost regions; technical barriers to trade and sanitary and phytosanitary measures; trade in services; trade related issues (competition policy; investment and private sector development; trade, environment and sustainable development; intellectual property rights; and transparency in public procurement); agriculture; current payments and capital payments; development issues; cooperation and dialogue on good governance in the tax and judicial area; an elaborated dispute settlement mechanism, institutional arrangements; and any other areas that the Parties find necessary, including consultations under Article 12 of the Cotonou Agreement.

Provisions on Trade in Goods

Import duties and charges, and quantitative restrictions

Chapter II of the Agreement covers trade in goods. The Agreement aims to provide full duty free6 and quota free market access into the EU for goods originating in the ESA States on a secure, long term and predictable basis (Article 5). It also aims to promote trade between the parties and export led growth to enable the integration of the ESA economies into the global economy; to progressively and gradually liberalize the ESA goods market as established by the Agreement; and to preserve and improve market access conditions to ensure that all ESA States are better and not worse off.

The commitment to liberalize trade in goods only applies to the signatory ESA States listed in Annex II to the Agreement and to the EU market vis a vis these States. If a signatory ESA State not mentioned in Annex II wishes to join Chapter II, it shall notify its intention to the EPA Committee which has the competence to amend Annex II and may decide on any transitional measures or amendments necessary to facilitate the inclusion of the State under Annex II.

Tariff reductions are to be applied successively on the basic customs duty indicated in the Parties’ tariff schedules to the Agreement. The EU implemented its commitments upon entry into force of the Agreement (2012), while the ESA States will eliminate tariffs in stages by 2022. Fees and charges under Article 10 shall be limited to the approximate cost of services rendered and shall not represent an indirect protection for domestic products or a taxation of imports for fiscal purposes; they will be based on specific rates. Under Annex III the Seychelles had maintained price controls on imports as an exception for 10 years on national treatment on internal taxation and regulation; Seychelles has however indicated that with the promulgation of the Customs Management (Tariff and Classification of Goods) Regulations 2013, it has abolished the price control regime.

The Parties also agree not to increase their applied customs duties on products imported from the other Party (Article 14). Article 16, furthermore, commits the European Union to accord to signatory ESA States any more favourable treatment applied as a result of its free trade agreements with third parties after the signature of the Agreement. With regard to the subjects covered by the Agreement, the signatory ESA States will accord to the EU any more favourable treatment applied as a result of any new free trade agreement with any major trading economy after signing the Agreement. However, the Chapter does not oblige the Parties to extend reciprocally any preferential treatment provided by any Party to third parties through a free trade agreement on the date of signature of the Agreement. The commitments to provide favourable treatment to the EU will also not apply in respect of trade agreements they have with other African countries and regions.

Article 17 prohibits quantitative prohibitions and restrictions on imports between the Parties, other than customs duties, taxes, fees and other charges under Article 7, whether through quotas, import licences or other measures. These shall be eliminated upon the entry into force of the Agreement and no new measures shall be introduced. National treatment shall also be provided for imported products originating in the other Party, which shall not be subject either directly or indirectly to internal taxes or other internal charges of any kind in excess of those applied, directly, or indirectly, to like national products. The Parties will also not apply internal taxes or other internal charges that afford protection to national production (Article 18). Imported products originating in the other Party will be accorded treatment no less favourable than that accorded to like national products in respect of all laws, regulations and requirements affecting their internal sale, offering for sale, purchase, transportation, distribution or use. No Party may establish or maintain any internal quantitative regulation for the mixture, processing or use of products in specified amounts or proportions which requires, directly or indirectly, that any specified amount or proportion of any products which is the subject of the regulation must be supplied from domestic sources. No internal quantitative regulations may be applied so as to afford protection to national production. Article 18, however, does not prevent the payment of subsidies exclusively to national producers, including payments derived from the proceeds of internal taxes or charges applied consistently with the provisions of the Article and subsidies effected through government purchases of national products. The EPA Committee may also authorize a signatory ESA State to depart from the provisions of Article 18 to promote the establishment of domestic production and protect infant industries. In this respect the development needs of signatory ESA States and especially the needs and concerns of ESA LDCs will be taken into account. Annex III lists provisional derogations which are granted to the interested signatory ESA States for the periods of time indicated in the Annex.

Liberalization of trade and tariff lines

Annex I to the Agreement states that the EU will eliminate tariffs on all products of HS Chapters 1-97 except Chapter 93 (arms and ammunition), originating in an ESA State, upon entry into force of the Agreement. Chapter 93 will remain subject to the MFN rate of duty. The EU eliminated duties on products under HS 1006 from 1 January 2010 with the exception of HS 10061010, for which duties were eliminated upon entry into force of the Agreement. Sugar imports from the ESA were subject to the provisions of Protocol 3 of the Cotonou Agreement until 30 September 2009.

In 2012, since when the Agreement has been applied, around a quarter (24.6%) of the EU’s tariff was duty free on an MFN basis.9 This corresponded to an average of 17.2% of its imports from Madagascar, 8.5% from Mauritius, 5.3% from the Seychelles and 24.5% from Zimbabwe for the period immediately preceding entry into force (2009-2011). As of 2012, a further 7,058 lines were liberalized by the EU for imports from these ESA Parties, with 18 lines (0.2% of the tariff) remaining dutiable. As a result of the liberalization, 100% of EU imports from the ESA States during 2009-11 are covered and entered the EU market free of duty.

According to Annex II to the Agreement, tariff elimination by the ESA Parties began in 2013 and is expected to be completed by 2022.

6% (391 lines) of Madagascar’s tariff was duty free for imports on an MFN basis in 2014, corresponding to 10.5% of its imports from the EU during 2011-2013.10 In 2014 Madagascar liberalized 1,331 lines (20.5% of the tariff) for imports from the EU, corresponding to 26.7% of its EU imports during 2011-2013. The remainder of its tariff liberalization is to take place in 2022 with 3,972 lines expected to be liberalized in that year; these correspond to 52.4% of Madagascar’s imports during 2011-2013 from the EU. At the end of implementation, Madagascar will maintain tariffs on 812 lines (12.5% of the tariff) for imports from the EU, corresponding to 10.4% of its imports from the EU during 2011-2013.

88.6% of Mauritius’s MFN applied tariff was duty free for imports from all sources, corresponding to 93.7% of its total average annual imports from the EU during 2009-11. Under the Agreement in 2013 Mauritius liberalized tariffs on an additional 35 lines for imports from the EU, corresponding to 0.6% of its imports from the EU during 2009-11. Further liberalization took place in 2017 (45 lines, corresponding to 0.5% of imports from the EU during 2009-11) and scheduled for 2022 (526 lines which accounted for 3% of Mauritius’ imports from the EU during 2009-11). Once the Agreement is fully implemented, Mauritius will maintain tariffs on 110 tariff lines (1.8% of the tariff), corresponding to 2.2% of its imports from the EU during 2009-11.

Seychelles started to implement its commitments under the Agreement in February 2013. In 2013 around 84.3% of its tariff (4,686 lines) were already duty free on an MFN basis and corresponded to 93.7% of Seychelles imports from the EU during 2010-2012. In 2013 tariffs on a further 180 lines were eliminated for imports from the EU, corresponding to 0.9% of imports from the EU during 2010-2012. Further liberalization took place in 2017 (88 lines), and is scheduled for 2022 (345 lines). At the end of implementation, Seychelles will maintain tariffs on 257 lines (4.63%) of the tariff, corresponding to 3.2% of its imports in 2010-2012 from the EU.

In 2012 Zimbabwe provided duty free access for 663 lines (10.8% of the tariff) on an MFN basis. This corresponded to 33.2% of its total average annual imports from the EU during 2014-2016. Under the Agreement Zimbabwe liberalized a further 37.7% of the tariff (2,307 lines) for the EU in 2012, corresponding to 20.5% of its imports from the EU during 2014-16. A further 2,284 tariff lines are due to be liberalized in 2022, following ten years of implementation, and corresponding to 30.1% of Zimbabwe’s imports from the EU during 2014-16. Once the Agreement is fully implemented, Zimbabwe will maintain duties on 14.2% of its tariffs (868 lines) for imports from the EU; these correspond to 16.2% of its imports from the EU in 2014-16.

Sector-Specific Provisions of the Agreement


Under EU policy its customs duties on imports from the ESA States of products under HS 1701 were eliminated on 1 October 2009. Until that time and in addition to the tariff rate quota (TRQ) under the Sugar Protocol, a TRQ at zero duty of 75,000 metric tonnes was provided for the marketing year20 2008/09 for products under HS 1701, white sugar equivalent, from the ESA States. Import licences were to be granted for the additional TRQ only if the importer agreed to purchase the products at a price at least equal to the guaranteed prices fixed for sugar imported into the EU under the Sugar Protocol.

Under paragraph 5 of the Annex, the EU could during the period 1 October 2009-30 September 2015, raise import duties to the MFN rate for sugar imported in excess of a certain quantity from the ESA States which were deemed to cause a disturbance in the EU sugar market. The EU confirms it has never taken such a measure. UN recognized least developed countries will not be subject to these provisions but imports from these countries will nevertheless be subject to the safeguard clause under the Agreement. Any measure taken pursuant to paragraph 5 shall be notified and subject to periodic consultations in the EPA Committee. The EU indicates that the procedure ended on 30 September 2015. For the period from 1 October 2015, in applying the safeguard measures under Article 21 of the Agreement for products under HS 1701, disturbances in the market were deemed to arise if the EU market price of white sugar fell during two consecutive months below 80% of the EU market price during the previous marketing year. The EU indicates that such measures have never been applied.

Imports of products under HS 17049099, 18061030, 18061090, 21069059 and 21069098 from the ESA States were subject to a special surveillance mechanism from 1 January 2008 to 30 September 2015 to ensure that the arrangements described above were not circumvented. A cumulative increase in imports from the ESA States by over 20% in volume during 12 consecutive months compared to the average annual imports over the three previous 12 months, will be analysed by the EU and if it considers that there is circumvention, it could suspend preferential treatment and impose the MFN tariff. The EU indicates this has never happened. The conditions for granting an import licence for products under HS 1701 between 1 October 2009 and 30 September 2012 were that the importer had to purchase the products at a price not lower than 90% of the reference price set by the EU for the relevant marketing year. The reference price has been replaced by a reference “threshold” and is currently €404 per tonne.


Chapter III recognizes that fisheries constitute a key economic resource for the ESA region, make a significant contribution to the economies of the ESA States and have great potential for future regional economic development and poverty reduction. Fisheries are also an important source of food and foreign exchange. The Parties agree to cooperate for the sustainable development and management of the fisheries sector in their mutual interest, taking into account the economic, environmental and social impacts. They also agree that the appropriate strategy to promote economic growth is through increasing value added activities in the sector.

The objectives of economic cooperation, which covers marine and inland fisheries and aquaculture, are to promote sustainable development and management of fisheries; promote and develop regional and international trade based on best practices; create an enabling environment, including infrastructure and capacity building for the ESA States to cope with stringent market requirements for industrial and small scale fisheries; support national and regional policies aimed at increasing the sector’s productivity and competitiveness; and build links with other economic sectors.

Marine Fisheries

Economic cooperation aims to ensure the sustainable exploitation and management of fisheries resources as a strong basis for regional integration, given that fish species are shared among the ESA States and no individual State has the capacity to ensure sustainability of the resource; ensure more equitable benefit sharing from the sector; ensure effective monitoring control and surveillance (MCS) necessary for combating illegal, unreported and unregulated (IUU) fishing; and promote effective exploitation, conservation and management of living marine resources in the exclusive economic zone (EEZ) and waters in which the ESA States have jurisdiction under international instruments, for the mutual social and economic benefit of all the Parties. Cooperation will include fisheries management and conservation issues, vessel management and post-harvest arrangements and financial and trade measures and development of fisheries and fishery products and marine aquaculture. The EU will contribute to mobilizing resources for these areas of cooperation, including support for regional capacity building as well as areas identified in the section on financial and trade measures and infrastructure for fisheries and marine aquaculture.

Inland fisheries and aquaculture development

Cooperation aims to promote sustainable exploitation of sustainable exploitation of inland fisheries resources, enhance aquaculture production, remove supply side constraints, improve fish and fish product quality to meet SPS standards in the EU, improve market access to the EU, address intra-regional trade barriers, attract capital inflows and investment, build capacity and enhance access to financial support for private investors. The EU will contribute to capacity building and export market development; infrastructure and technology development; legal and regulatory support; investment and financial support; and socio-economic and poverty alleviation measures.


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