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PricewaterhouseCoopers’ assessment of Economic Partnership Agreements looks at economic, social and environmental impact of trade deals between the EU and ACP countries and makes recommendations for future trade deals
At the occasion of the ACP-EU Joint Parliamentary Assembly hosted by the German EU Presidency in Wiesbaden from 23-27 June 2007, PricewaterhouseCoopers officially releases the “Sustainability impact assessment of the Economic Partnership agreements (EPAs) between the EU and the ACP countries.
This independent study conducted by a consortium* led by PricewaterhouseCoopers at the request of the European Commission not only evaluates the economic impact, but also looks at environmental and social consequences of future trade deals between the EU and the ACP
The report includes the following recommendations:
- The EU should continue to allow ACP countries duty free and quota free access to the EU market and should improve access for products not yet fully liberalised.
- ACP countries should be able to maintain tariff protections on a limited number of “sensitive products”.
- The EU and the ACP should explore policy options to simplify and relax rules of origin, to increase trade in processed products.
- ACP countries should increase liberalisation of trade in services in selected sectors (including environmental, financial, professional, transportation and other services) to improve the business environment.
- The EPAs should encourage foreign direct investment and regional investment that supports sustainability.
- ACP countries should maintain high levels of environmental and social protection and develop national or regional, approaches to health-related and food safety standards.
In this way, ACP countries can improve their competitiveness, encourage economic growth, add value to their exports, diversify their production and create employment.
The study concludes that changes in trade alone, will not necessarily lead to sustainable development. Technical assistance and development cooperation can help the ACP countries position their economies (through infrastructure and logistics) and their workforces (through training and capacity building) to take advantage of the opportunities presented by the partnership agreements.
Finally, the study recommends setting up a permanent mechanism to involve civil society in the monitoring of the implementation of the EPAs.
(* the Consortium also includes Maeander Ltd. and the NGOs GRET and Forum pour l’Afrique)
Understanding the potential impacts of trade agreements
The EU is committed to understanding the impact of its trade agreements on economic, environmental and social sustainability and seeks to ensure that its trading relationships support efforts to pursue sustainable development. To do this, the European Union is the only region in the world to undertake integrated sustainability impact assessment of trade agreements that not only evaluate economic impacts but also look at environmental and social consequences. Sustainability Impact Assessments (SIAs) put forward recommendations to encourage positive impacts of trade liberalisation and mitigate or eliminate potential negative impacts by identifying policies and cooperative programmes to promote economic, environmental and social sustainability. SIAs also aim to promote transparency and are inherently public.
The assessment of the Economic Partnership Agreements (EPAs), undertaken by a consortium led by PricewaterhouseCoopers, was organised in three phases and included developing a methodology, organising public consultations, and undertaking case studies. (() Regional sector studies focused on the agro-industry in Western Africa; tourism services in the Caribbean; fisheries in the Pacific; rules of origin in the Southern African Development Community (SADC) Group; horticulture in Eastern and Southern Africa (ESA); and, financial services in Central Africa.). It took into consideration ways in which the EPAs could support efforts to integrate the economies in the ACP regions and promote South-South trade, as well as trade with the EU.
Economic Partnership Agreements: A tool to promote sustainable development
Trade is not an end in itself, but rather an essential tool contributing to sustainable development. Through the EPAs, the EU wants to encourage trade that brings about development to address challenges facing ACP countries. (() ACP countries are vulnerable at many levels. With a few notable exceptions, they have small economies, low levels of development and economic activity, low levels of diversification, poor transportation networks and other infrastructure, and low levels of capacity to address these challenges. From a social perspective, there are typically, high levels of poverty and unemployment, low levels of human development and no social safety nets. From an environmental perspective, there are few resources to dedicate towards the development and enforcement of environmental laws and natural resource management, and high levels of vulnerability to challenges such as desertification and global climate change.). What makes the EPAs different from other trade agreements is their strong emphasis on development and the linkages to the EU development cooperation.
Sustainability Impact Assessment has already influenced the thinking of EC trade negotiators
Results of the SIAs are available in time for EU and ACP trade negotiators to take them into account before concluding the EPAs, scheduled before 31 December 2007.
According to one EC negotiator, the SIA has already had a positive impact. Discussing the study on rules of origin, the negotiator indicated that the SIA “has provided useful considerations with regard to trade and development that encourages economic, social and environmental sustainability” and that some of these considerations “will feed into the preparation for negotiating rounds”. More broadly, the negotiator indicated that the study has “contributed to increasing the understanding of this very important issue among the stakeholders involved in the negotiating process.”
Recommendations to help ACP countries improve competitiveness
Jochen Krimphoff, who managed the project for PricewaterhouseCoopers, said: “The SIA includes recommendations that, together, can help promote trade and development that supports economic, environmental and social sustainability”. Discussing the trade-related recommendations, he stressed: “The SIA focused on ways in which the ACP countries can improve their competitiveness, encourage economic growth, add value to their exports, diversify their production and create employment”.
Highlights of the recommendations featured in the report include:
- The EU should continue to allow ACP countries duty free and quota free access to the EU market and should improve access for products not yet fully liberalised.
- ACP countries should be able to maintain tariff protections on a limited number of “sensitive products”.
- The EU and the ACP should explore policy options to simplify and relax rules of origin, to increase trade in processed products.
- The ACP should increase liberalisation of trade in services in selected sectors (including environmental, financial, professional, transportation and other services) to improve the business environment.
- The EPAs should encourage foreign direct investment and regional investment that supports sustainability.
- ACP countries should maintain high levels of environmental and social protection and develop national, or regional, approaches to health-related and food safety standards.
Trade-related technical assistance and development cooperation is crucial
However, changes in trade, alone, will not necessarily lead to sustainability. Technical assistance and development cooperation can help the ACP countries position their economies (through infrastructure and logistics) and their workforces (through training and capacity building) to take advantage of the opportunities presented by the EPAs. Significant funds have already been set aside by the Commission to pursue development cooperation and technical assistance related to the EPAs.
The EPAs should be completed by 31 December 2007 and will be implemented between 2008 and 2020. Therefore, this SIA is only a beginning. Experience will show whether the trade engendered by the EPAs encourages economic growth that is sustainable. To chart this experience, the SIA recommends that a permanent, public, and participatory institutional mechanism be developed to monitor economic, environmental and social sustainability of the implementation of the EPAs. The lessons that are learned will be of immediate importance to the prospects for sustainable development in the EU and the ACP countries.
About PricewaterhouseCoopers
PricewaterhouseCoopers (
www.pwc.com) provides industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 140,000 people in 149 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice. “PricewaterhouseCoopers” refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.
This report is a one of a series of Sustainability Impact Assessment (SIA) projects coordinated by PricewaterhouseCoopers’ Sustainable Business Solutions practice. The Sustainable Business Solutions network (
www.pwc.com/sustainability) is a network of more than 400 professionals dedicated to sustainable development and Corporate Social Responsibility (CSR).
The full report and a summary of the recommendations are available in English and French upon request or from the following website:
www.sia-acp.org.
