The chances are that you will have read little if anything about the progress of trade negotiations between the African, Caribbean and Pacific group of nations (the ACP) and the European Union (EU).

What news if any has been obscured by developments in the other two trade liberalisation processes with which the Caribbean is engaged: the negotiations for Caribbean entry into a Free Trade Area of the Americas and those at the World Trade Organisation (WTO).

Despite this, in the last week, negotiations between the ACP and the EU have undergone a change of gear, moving for the first time from generalities to officials preparing on a regional basis to address the detail.

The negotiations relate to the creation of Economic Partnership Agreements (EPAs), known by all involved as ‘eepas’.

EPAs arise from language contained in the Cotonou Convention signed in 2000. This Treaty governs the conduct of political, aid and trade relations between the EU and ACP. In part the Convention states that as at September 2002 trade negotiations would begin to create a new trade relationship compatible with World Trade Organisation rules. Once negotiated EPAs will gradually bring to an end the preferential, non-reciprocal trade relationship that regions such as the Caribbean have enjoyed with Europe for the last forty years.

The objective is that by 2007 there will be new trade agreements between Europe and the individual regions or sub-regions of the ACP. In theory, this is meant to lead over the ten or twelve years after 2008 to something close to free trade between Europe and for example, the Caribbean region. In practice, however, there is a widely held view that it will be impossible for any EPA to cover all aspects of EU/ACP trade and that there will have to be exemptions, safeguard clauses and opt outs. The reason for this is the vast difference between the size and competitiveness of the EU and most ACP markets.

The result is that agreement on any EPA is highly unlikely unless the EC agrees to special and differential treatment, asymmetrical market opening, special provisions that recognise the small size and the fragility of ACP markets and their present reliance on import duties to underwrite social and other programmes. For example, while Trinidad may be able to open its markets to the full force of global competition it is scarcely conceivable that most of the Eastern Caribbean could ever do the same.

From its perspective the ACP believed that it was important to use the first phase to establish a common agreement on what EPAs were about. In its view it was necessary for the EC to confirm that they were about development, the gradual insertion of the ACP into the global economy and the need for mechanisms that enhance regional integration and provide the financial support to achieve this. In contrast most in the EC felt that this first phase was largely unnecessary as in their view most of the general principles that will guide EPA negotiations are contained in the Cotonou Convention.

The result was a year of laborious negotiation that led on October 2, to the ACP and EC issuing in Brussels a joint ministerial declaration indicating that the first phase of the EPA negotiations had been satisfactory and that there was a high degree of convergence on matters of principle.

Despite this, it is clear that while phase one has established what EPAs must be about there has been little agreement on many key issues that not only divide the ACP from the EC but also on some matters, the regions of the ACP itself.

The result in part is that on October 4 in Central Africa and on October 6 in West Africa, phase two of EPA negotiations were launched for two of the six ACP negotiating regions despite phase one not having concluded. This was largely because these regions - with the encouragement of some EU member states and the EC - felt they had waited long enough and wanted to take advantage of the benefits they perceive they might obtain.

This may be easier said than done. Some of the papers on the all-ACP first phase of the EPA negotiations makeclear that there are still substantial areas of divergence between the EC and ACP. For instance there is no agreement on when EPA negotiations on agriculture might begin or the extent to which, if at all, the liberalisation of services should be considered in EPAs. There is also a difference of views over the scope of EPAs and their sequencing in relation to negotiations at the WTO. There remains a fundamental difference about the question of whether and through what mechanism the EC might grant additional financial resources to cover the costs associated with market liberalisation.

Moreover, there is no agreed roadmap as to how the negotiations will now proceed, nor is there any clear sense as to how the ACP realistically will manage co-ordination between the parallel negotiations between the EC and the regions of the ACP.

Towards the end of this year it is probable that the Caribbean will begin to consider starting its own EPA negotiation with the EU. The region has been working for some time now on guidelines that set out its objectives and the specific treatment it requires for sectors, products and on a wide range of other issues.

As 2004 proceeds, the test for all of the regions of the ACP will be to see when it comes to the detail of new trade arrangements whether precedents set in one set of negotiations can or will be applied in others. As such, it will be a part of a much bigger challenge: to see whether in the area of trade with Europe the ACP can remain a viable grouping. (Back to top)

David Jessop is the Director of the Caribbean Council and can be contacted at david.jessop@caribbean-council.org