Maravi

Zambia to lose K62bn through EPAs

Zambia to lose K62bn through EPAs
By Joan Chirwa
Tuesday June 05, 2007 [08:54]

ZAMBIA is expected to lose US $15.8 million (approximately K62.4 billion) resulting from the elimination of tariffs as suggested by the European Union’s engineered Economic Partnership Agreements (EPAs). According to recent research by different civil society organisations in the Eastern and Southern African (ESA) region, the overall costs of EPAs to African, Caribbean and Pacific (ACP) countries would run into billions of dollars.

Countries in ESA are set to lose US$ 212 million worth of trade with one another, while the EU would increase its exports to the region by US $1.1 billion as a result of the EPAs.
Zambia is predicted to lose over K62 billion-enough to cover the government’s annual spending on HIV/AIDS.

“However in contrast, EU exporters stand to net US $1.9 billion in West Africa alone,” stated civil society organisations in a joint press release issued last week just before an EPA information seminar for ESA countries in Lusaka.

With limited sources of domestic revenue and tax bases, tariffs are one key sources of revenue for African countries.

According to the World Bank, tariff revenues in sub-Saharan Africa average 7-10 per cent of government revenue, thus relying on import taxes to contribute to revenue to finance public services.

The civil society organisations therefore called for an extension of the EPA negotiations, so that critical issues to trade could be agreed upon.
ACP countries have about six months before they can conclude the EPA negotiations with the EU, expected to windup on December 31, 2007.

“We uphold the ESA-EPA review and call upon EU to begin making arrangements for an extension of negotiations,” the ACP have stated. “It is clear that the divergences between the negotiating parties are too huge to ignore or even expect amicable resolutions before the end of the year.”

The European Commission (EC) market access offered to the ACP countries in EPAs consists of duty-free, quota-free treatment for all imports.

This treatment would apply from entry into force of the agreements for all products except for sugar and rice, whose duty-free, quota-free treatment would be phased over a transition period.

And during a seminar on EPAs in Lusaka on Thursday, COMESA chief technical advisor Dr Moses Tekere said the EU’s trade agreement should be seen as a way of presenting opportunities and harmonising programmes in the region.

He said ESA countries were weak and faced similar development challenges, which needed to be taken into account before the EPAs could be signed.

“It is important for countries in ESA to pull resources together and see if we can engage other countries such as China, India and the USA beyond the EC,” said Dr Tekere.
EC director general for Trade Diana Acconcia said the EU still thinks an agreement regarding the EPAs could be reached if both parties worked hard before the conclusion date of December 31, 2007.

Earlier during a civil society meeting on Trade Policy and Development, former commerce minister Dipak Patel said least developed countries (LDCs) would only sign the EPAs if they see value addition in the development component.

Patel said LDCs need to be convinced that it is in their short and long-term interests to sign the EPAs, and only in a phased way that the EU has opposed.

The Trade Policy and Development conference discussed key issues of the EPAs between the African, Caribbean and Pacific (ACP) countries and the European Union (EU).

“If the LDCs see a value addition in the development component, then an EPA can be signed but only in a phased way,” said Patel, an internationally recognised trade negotiator who once coordinated LDCs in a campaign for a fairer global trade regime.

“For an EPA to be WTO compatible, at least with Article XXIV of the WTO agreement, then the Eastern and Southern African (ESA) Group will need to negotiate a tariff phase-down by the end of this year,” Patel said.

“This could take the form of a grace period of a few years and then a phase-down from an agreed common external tariff. The European Commission (EC) could be persuaded to agree to this type of arrangement.”

Article XXIV, in part, establishes that the period of time that countries have to liberalise their trade should be a “reasonable length of time”.

The key provision of this Article is the principle of reciprocity - that all parties to a Regional Trade Agreement (RTA) must liberalise trade between them.

In effect, they must enter a “Free Trade Agreement (FTA) with the two main aspects to gauge reciprocity in a RTA being liberalisation of substantially all trade and the implementation of concessions over a reasonable length of time.”

An understanding of Article XXIV was established between World Trade Organisation (WTO) members on 15th April 1994 and it was agreed that “reasonable length of time” should be interpreted as no more than 10 years, although a longer period of time may be applied in exceptional cases.

ACP countries in April 2004 submitted a proposal to the WTO that developing countries be granted a minimum transition period of 18 years, however, this has not been accepted.

Patel further said additional components of the trade agreements such as services, investment and rules of origin, could be negotiated after December 31, 2007 as part of a revision clause.

Labels: EPAs, TARIFFS

posted by MrK @ 4:27 AM