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Implications for Africa
Isabelle Ramdoo
Deputy Programme Manager
Trade and Economic Governance
ECDPM
25 – 26 July 2013
Lib...
1. EU Trade Policy
• With whom and where?
• For What?
2. New geopolitics of EU Trade Policy
3. Implications of EU trade po...
State of play: EU in a changing world
1.1 Changing geopolitics and centres of gravity moving East
a. Share of GDP is decli...
• Participation of developing countries in global services
trade rose from 19 to 24% during the same period.
• The rise of...
Today EU and US dominate the world Tomorrow China and the emerging countries will dominate
a. Share of EU GDP is declining...
Share of World Trade in 2010 Share of World Trade in 2030
b. Still a major trading block BUT share is also declining
ECDPM...
• After imposing a moratorium on negotiating new PTAs from
1999-2006, the EU in 2007 began negotiating a new generation
of...
EU will:
1. Pursue and conclude current negotiations;
2. Deepen strategic partnerships;
3. Take trade policy forward, incl...
Some Facts:
EU current FTAs – Where?
ECDPMPage 9
But EU’s Major markets NOT covered yet!
ECDPM Page 10
Neither are EU Major investment partners!!
ECDPM Page 11
Status of EU FTAs and their share of EU trade (%),
2009: What is really covered?
ECDPM Page 12
EU Trade with main trading partners, 2009
ECDPM Page 13
Strategy differ if
EU is next
exporter OR not
importer
Fuel and
minerals: net
importer: that’s
why they push for
fair acce...
EU’s trade policy is grouped into four categories :
1. FTAs with strategic partners:
Countries where EU’s objective is to ...
3. Agreements designed primarily to foster stability around the EU
borders – Mediterranean countries, Gulf States, Ukraine...
Economic Partnership Agreements:
Today, 36 ACP countries have some sort of EPA. They are:
16 Caribbean countries (Haiti di...
• To date, EU has signed the following agreements:
• A customs union with Turkey
• A European Free Trade Agreement (EFTA) ...
• US: Negotiations for a Transatlantic Trade and Investment Partnership
(TTIP) started in July 2013
• India – a high poten...
3. Overview of EU FTA’s with key partners
How will Africa be affected?
ECDPM Page 20
Africa/ACP countries are covered by multiple (5) regimes:
1. LDCs are covered by EBA: DFQF with stricter RoO compared to c...
1. Erosion of preferences:
Europe has tariff peaks on a number of products of interest to Africa. This
is expected to be e...
Erosion of preferences: Main exports from African regions to EU
ECDPM Page 23
ECDPM Page 24
But also beef, tobacco, furniture
EPA Market Access: duty free and quota free
EBA Market Access: duty free a...
1. EU Med Agreements
Coverage: Algeria, Egypt, Israel, Jordan, Lebanon, Morocco,
Tunisia, Palestine, Turkey, Syria (not si...
1. Textile and clothing (shirts, tshirts, pulls, trousers, yarn)
• Tunisia, Morocco and Egypt are important producers of T...
Key products which will where margins of preferences will be eroded
Preference erosion
ECDPM Page 27
Oranges Mandarines gr...
4 Agreements:
1. EU - Mexico (1st generation – not full FTA) – entered into
force in 2000
2. EU – Chile (1st generation – ...
• EU – Mexico: does not cover all agricultural products but covers
goods. Mex is an important producer of textiles
• EU – ...
Preference erosion
ECDPM Page 30
Fish fillets, fresh,
frozen, chilled
Tuna, skip jack
fish prepared and
preserved
Mexico 0...
ECDPM Page 31
4. Cocoa and cocoa products (origin mainly Ecuador, Peru)
Cocoa beans (18.01) Cocoa paste (18.03) Cocoa butt...
6. Other potential exports to EU
ECDPM Page 32
Cut flowers Roses (06.03.11) Carnation (06.03.12) Orchids (06.03.13) Others...
• South Korea signed an FTA with the EU in 2011. This FTA is
considered as the most advanced trade agreement the EU has
si...
ECDPM Page 34
• Textile products: South Korea is not a major exporter of textiles to the
EU. Main markets are in Asia – Mainly Japan and...
Beef, fresh, chilled and frozen (no DFQF, but 50% lib)
ECDPM Page 36
Meat of bovine animals,
fresh and chilled
Carcasse / ...
EU current FTA negotiations and
potential impact on Africa
ECDPM Page 37
US represents 16% of the total trade of EU, mostly in industrial pdts
1. EU–US Trans-Atlantic Trade & Investment Partnersh...
Composition of trade and tariffs
ECDPM Page 39
Key issues to watch out for Africa
1. Discussions on agriculture:
- EU regulations against GMO crops;
- Restrictions on im...
2. Other EU trade partners: Which regimes apply?
ECDPM Page 41
India
Thailand, Philippines,
Malaysia, Vietnam
Pakistan
Reg...
a. India: currently negotiating an FTA
Why?
- An important partner for the EU, a high potential emerging economy
- Middle ...
• EU not expected to provide DFQF – will liberalise 95% of its market
(with an exclusion list of 226 products, mostly chem...
India exports under the Generalised system of preferences. Big producer of
textiles
Rate of duty applied to Indian textile...
b. Viet Nam
EU signed a Partnership and Cooperation Agreement with Vietnam in June
2012. This is a political agreement.
Ne...
c. Thailand and Philippines
Important producer of numerous textile products and fisheries
ECDPMPage 46
Pull Cotton
T Shirt...
ECDPMPage 47
Rules of origin
1. Fish fillets: Wholly obtained
2. Tuna, skipjacks and prepared fish: all materials from fre...
d. Pakistan (Special arrangement)
• Pakistan is an important partner for the EU, although trade and
investment remain belo...
ECDPMPage 49
With the exception of wool pullovers, Pakistan’s main market for textiles products
is in fact the US, with th...
What then for Africa?
ECDPM Page 50
1. Strengthen and stimulate internal (i.e intra and inter-regional)
demand:
a. Boost intra-Africa trade;
b. Support and en...
Thank you
www.ecdpm.org
www.slideshare.net/ecdpm
Page 52
ECDPMPage 53
Cumulation explained:
Bilateral cumulation: Applies to members of a single FTA, operated between 2
partners.
...
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EU Trade Policy with third countries: Implications for Africa

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Isabelle Ramdoo
Deputy Programme Manager
Trade and Economic Governance, ECDPM
25 – 26 July 2013,
Libreville Gabon

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Transcript of "EU Trade Policy with third countries: Implications for Africa"

  1. 1. Implications for Africa Isabelle Ramdoo Deputy Programme Manager Trade and Economic Governance ECDPM 25 – 26 July 2013 Libreville Gabon EU Trade Policy with third countries
  2. 2. 1. EU Trade Policy • With whom and where? • For What? 2. New geopolitics of EU Trade Policy 3. Implications of EU trade policy with third countries on EU-Africa relations • Agreements signed • Current negotiations 4. What then for Africa? Structure of Presentation Page 2ECDPM
  3. 3. State of play: EU in a changing world 1.1 Changing geopolitics and centres of gravity moving East a. Share of GDP is declining and projected to be dwarfed by emerging countries b. Share of global trade is still important, but is also projected to decline c. Exacerbated by the 2008-09 financial and economic crisis Trade patterns moved from a country specialisation (primary commodities for the South and manufactures for the North) to intra-firm/network specialisation in tasks, giving the South considerable advantage in the production of manufactures 1 Overview: Where EU is going and why? Page 3ECDPM
  4. 4. • Participation of developing countries in global services trade rose from 19 to 24% during the same period. • The rise of the emerging economies: Brazil, Russia, India, China, and South Africa– now economic and political actors (members of G20). Together, they account for more than 40% of the world population (market) and approximately 17% of the value of world GDP (purchasing power). • THEREFORE: URGENT need of growth to preserve its industries and growth. For this change in logic and change in focus. Trade is core component of Europe 2020 strategy. ECDPM Page 4
  5. 5. Today EU and US dominate the world Tomorrow China and the emerging countries will dominate a. Share of EU GDP is declining and projected to be dwarfed by emerging economies ECDPM Page 5
  6. 6. Share of World Trade in 2010 Share of World Trade in 2030 b. Still a major trading block BUT share is also declining ECDPM Page 6
  7. 7. • After imposing a moratorium on negotiating new PTAs from 1999-2006, the EU in 2007 began negotiating a new generation of more ambitious or comprehensive FTAs. • 2006 Global Europe strategy: the EU targeted a number of larger countries and regions for negotiations, including South Korea, India, Canada, and the Association of South East Asian Nations (ASEAN). • 2010 Trade, Growth and World Affairs: Renewed policy to strengthen EU’s institutional setting to make EU’s trade voice louder and clearer. Purpose: complete trade deals on the table and engage in ambitious negotiations with strategic partners 1.1 Change of logic and change of focus. ECDPM Page 7
  8. 8. EU will: 1. Pursue and conclude current negotiations; 2. Deepen strategic partnerships; 3. Take trade policy forward, including by supporting its SMEs in going global Its trade agreements are expected to be: 1. Big enough to have an impact on EU economies; 2. Have to be big enough NOW because need for growth is urgent (hence the rush to sign PTAs with main partners) 3. PTAs must be BOLD to trigger changes in Europe (to trigger regulatory reforms in key sectors) Key objectives of 2010 renewed strategy: ECDPM Page 8
  9. 9. Some Facts: EU current FTAs – Where? ECDPMPage 9
  10. 10. But EU’s Major markets NOT covered yet! ECDPM Page 10
  11. 11. Neither are EU Major investment partners!! ECDPM Page 11
  12. 12. Status of EU FTAs and their share of EU trade (%), 2009: What is really covered? ECDPM Page 12
  13. 13. EU Trade with main trading partners, 2009 ECDPM Page 13
  14. 14. Strategy differ if EU is next exporter OR not importer Fuel and minerals: net importer: that’s why they push for fair access Manuf and services net exporter: that’s why they push for aggressive MA (extensive trade liberalisation) Now: Clear market access outreach strategy ECDPM Page 14
  15. 15. EU’s trade policy is grouped into four categories : 1. FTAs with strategic partners: Countries where EU’s objective is to neutralise potential discrimination against EU exports and investments: • Signed so far: South Korea (2011), Chile, South Africa. • Completed with Singapore in Dec 2012 • Nego started with Trans-Atlantic Agreement with US (June 2013), Canada (2009), Japan (March 2013); Thailand (May 2013) • No discussions yet with China and Russia. 2. Agreements with geographically close neighbours for which the EU is prepared to offer accession or some slightly looser relationship. These include EFTA, Turkey, Central and Western European countries and West Balkans (Association Agreements for potential future EU countries) 2. The new geopolitics of EU Trade Policy ECDPM Page 15
  16. 16. 3. Agreements designed primarily to foster stability around the EU borders – Mediterranean countries, Gulf States, Ukraine 4. Agreements with a historical and development focus – this is the case of EPAs In addition, EU provides autonomous preferences to developing countries and LDCs under its Generalised System of Preferences (GSP) and Everything but Arms (EBA). The current GSP covers 176 countries. GSP: number of countries have been reduced to about 80. All high income and upper middle income countries (eg. China, Brazil, Malaysia, Gulf states) removed. New GSP will start in 2014. ECDPM Page 16
  17. 17. Economic Partnership Agreements: Today, 36 ACP countries have some sort of EPA. They are: 16 Caribbean countries (Haiti did not sign); 2 Pacific countries (Fiji and Papua New Guinea) 2 West African countries (Ivory Coast and Ghana) 1 Central African country (Cameroun) 5 Eastern and Southern African countries (Mauritius, Seychelles, Madagascar, Zambia, Zimbabwe) 5 SADC countries (Mozambique, Botswana, Lesotho, Swaziland, Namibia) 5 East African countries (Kenya, Burundi, Rwanda, Uganda, Tanzania) All of them have duty free and quota free market access to EU. But MAR1528 Deadline on 1st October 2014. Only countries that sign, ratify and start implementing their EPAs will continue to benefit from EPA Market Access conditions. ECDPM Page 17
  18. 18. • To date, EU has signed the following agreements: • A customs union with Turkey • A European Free Trade Agreement (EFTA) with neighbouring European countries, which are not part of the EU (Switzerland, Liechtenstein, Iceland, Norway). • Stabilisation and Association Agreements with former Eastern European countries (Macedonia, Croatia, Albania, Montenegro, Bosnia, Serbia) • Association agreements with Mediterranean countries (Algeria, Egypt, Israel, Jordan, Lebanon, Morocco, Palestine, Syria, Tunisia) in 2000. Agadir Agreement among Tunisia, Morocco, Egypt and Jordan (FTA). Launched DCTFA Negotiations started in April 2013 with Morocco. • Free Trade Agreements with Mexico (1999), Chile (2002), S Korea (2012), Singapore (2012 0 signed but not yet applied) • EPAs with ESA, Cariforum, PNG (2008) • Trade and Development Cooperation Agreement, South Africa (1999) • Preferential agreements with Peru – Columbia (2012); Central America with Panama, Guatemala, Costa Rica, El Salvador, Honduras, Nicaragua (2012) ; These 2 agreements are not yet into force Overview of Bilateral FTAs – Agreements signed ECDPM Page 18
  19. 19. • US: Negotiations for a Transatlantic Trade and Investment Partnership (TTIP) started in July 2013 • India – a high potential economy, with rising middle class (markets) and rising GDP (purchasing power). Negotiations are quite slow. • ASEAN (Indonesia, Malaysia, Philippines, Singapore, Philippines, Thailand, Vietnam, Cambodia, Laos, Myanmar): Third largest trading partner of EU. Negotiations for FTA have started with Malaysia in 2010, with Thailand in 2012 and with Vietnam in 2012. • Gulf Cooperation Council (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, UAE). Negotiations were re-launched in 2002 • MERCOSUR - Argentina, Brazil, Paraguay and Uruguay – first EU’s market for agriculture (19.8% of total EU imports). Negotiations difficult (8 rounds) • Canada: Started in May 2009, Quite advanced, but yet to be concluded. • Japan: Negotiations launched in April 2013 FTAs under negotiations – strategic partnerships ECDPM Page 19
  20. 20. 3. Overview of EU FTA’s with key partners How will Africa be affected? ECDPM Page 20
  21. 21. Africa/ACP countries are covered by multiple (5) regimes: 1. LDCs are covered by EBA: DFQF with stricter RoO compared to countries with FTA (except for some textile products where they have ST) 2. GSP – with trade preferences for a no. of products; with stricter RoO 3. EPA – only 4 countries (ESA) currently applying the EPAs; some others have signed but not ratified; others have initialed but not signed; 4. South Africa – TDCA 5. North Africa: Euromed Agreement; some have started to negotiate DCFTA Given different rules in these agreements, cummulation of RoO is made difficult and countries face competing MA towards EU (varying degree of openness for their products; Not conducive to intra-regional trade because cannot be used as a lever to build regional markets. Implications for Africa/ACP ECDPM Page 21
  22. 22. 1. Erosion of preferences: Europe has tariff peaks on a number of products of interest to Africa. This is expected to be eliminated, causing African business to have to compete more to access EU 1. Beyond tariffs, erosion of preferences due to partners’ improved RoO; non-tariff measures are also tackled (eg. Standards); 2. Trade diversion: better market access condition, with relatively easier procedures is expected to divert trade away from Africa; 3. Services and investments: The new generation of agreements is not only about trade. But massively about inter-related investments and services given the high degree of inter-dependence among those economies. Expected to deepen further investment in these sectors if access to markets are improved Impact of EU’s trade agreements on Africa ECDPM Page 22
  23. 23. Erosion of preferences: Main exports from African regions to EU ECDPM Page 23
  24. 24. ECDPM Page 24 But also beef, tobacco, furniture EPA Market Access: duty free and quota free EBA Market Access: duty free and quota free GSP Market Access (see table below)
  25. 25. 1. EU Med Agreements Coverage: Algeria, Egypt, Israel, Jordan, Lebanon, Morocco, Tunisia, Palestine, Turkey, Syria (not signed) • Cover essentially trade in goods, being complemented with a number of additional negotiations to open up additional agricultural trade; • Duty-free access to the EU for Med industrial products and around 80% of agricultural produce • Common rules to allow cumulation of origin within the Euromed and beyond. • Regional convention on PanEuroMed preferential rules of origin agreed in 2011 • However: proper implementation of the requires complete South-South FTA network ECDPMPage 25
  26. 26. 1. Textile and clothing (shirts, tshirts, pulls, trousers, yarn) • Tunisia, Morocco and Egypt are important producers of T&C: DFQF • RoO: single transformation for fabric; double transformation for Apparel • Cummulation: Jordan, Morocco, Egypt and Tunisia have an FTA: allows them bilateral, diagonal and full cumulation 2. Fisheries: • Tunisia and Morocco produce preserved, fresh and chilled fish products, DFQF, except for Egypt on Tuna (duty 20.5%) 3. Other important products include nuts (almonds, cashew) and citrus fruits (oranges, lime, grapefruits etc). All enjoy DFQF Key products of interest to Africa ECDPM Page 26
  27. 27. Key products which will where margins of preferences will be eroded Preference erosion ECDPM Page 27 Oranges Mandarines grapefruits Lemon Lime Grapes, seedless grapes, others MFN 3.20% 16% 2.40% €82.40/100 kg 12.80% €50/100 kg 17.50% GSP 0% 12.50% 0% n/a 8.90% n/a 14.10% FTA 0% 0% 0% 0% 0% 0% 0% Cashew nuts, in shell and shelled Almonds, bitter Almonds others MFN 0% 0% 5.60% Non pref TRQ n/a n/a 2.00% GSP 0% 0% 2.10% FTA 0% 0% 0% Tshirt cotton Shirts Cotton T Shirts man-made Trousers Denim fabric Cotton Fabric Pullover cotton Pullover wool yarn MFN 12% 12% 12% 12% 8% 8% 12% 12% 3.8% GSP 9.6% 9.6% 9.6% 9.6% 6.4% 6.4% 9.6% 9.6% 3.8% FTA 0% 0% 0% 0% 0% 0% 0% 0% 0% Fish fillets Tuna, skip jack Fish prepared, preserved MFN 18% 24% 24% GSP 14.5% 20.5% 20.5% FTA 0% 0% 0%
  28. 28. 4 Agreements: 1. EU - Mexico (1st generation – not full FTA) – entered into force in 2000 2. EU – Chile (1st generation – not full FTA), entered into force in 2003 3. EU – Central American countries (2nd generation, more comprehensive). Signed in 2012, expected to enter in force in 2nd half of 2013 (69% lib immediately; 96% in 10 years; 100% in 15 yrs) 4. EU – Peru – Columbia (2nd generation, more comprehensive) in force since 1st March 2013 with Peru, Columbia being finalised 2. Agreements with Latin American countries ECDPM Page 28
  29. 29. • EU – Mexico: does not cover all agricultural products but covers goods. Mex is an important producer of textiles • EU – Chile : do not cover all agricultural products • EU – CA and EU-Peru-Columbia: DFQF (they already GSP+ countries) Rules of origin for EU-CA and EU Peru-Columbia: - Bilateral Cumulation; - Diagonal cumulation between: EU, Columbia and Peru on the one hand; and Costa Rica; El Salvador, Guatemala; Honduras; Nicaragua; Panama and Venezuela; or at the request of C and P for materials originating from Central America, Latin America and Caribbean countries if: -Products are sufficiently worked; -RoO are identical in these countries; -Countries have signed a customs cooperation agreement + certification and verification of status Key elements of Agreements ECDPM Page 29
  30. 30. Preference erosion ECDPM Page 30 Fish fillets, fresh, frozen, chilled Tuna, skip jack fish prepared and preserved Mexico 0.0% 6.8% 6.8% Chile 3.4% 8.0% 8.0% Colombia* 0.0% 0.0% 0.0% El Salvador* 0.0% 0.0% 0.0% 1. Fish and fish product 2. Fruits: bananas, pineapples, mangoes (origin: Central America, Peru) Bananas Pinepples Mangoes Plantain, fresh and dried (08.03.10) Others, fresh and dried (08.03.30) Dried Others MFN 16% 16% 5.8% 5.8% 0% GSP 12.5% 12.5% 2.3% 2.3% 0% FTA 0% 0% 0% 0% 0% 3. Coffee, tea (origin: Columbia, Central America) Coffee (09.01) Not roasted Roasted Coffee substitute containing coffee (09.01.90.90) Not decaf (09.01.11) Decaf (09.01.12) Not decaf (09.01.21) Decaf (09.01.22) MFN 0% 8.3% 7.5% 9.0% 11.5% GSP 0% 4.8% 2.6% 3.1% 8.0% FTAs 0% 0% 0% 0% 0%
  31. 31. ECDPM Page 31 4. Cocoa and cocoa products (origin mainly Ecuador, Peru) Cocoa beans (18.01) Cocoa paste (18.03) Cocoa butter (18.04) Cocoa powder (18.05) MFN 0% 9.6% 7.7% 8.0% GSP 0% 6.1% 4.2% 2.8% FTA 0% 0% 0% 0% Chocolate (18.06) 0%<sucrose<5% 5%<sucrose<65% 65%<sucrose<80% >80% sucrose MFN 8% 8% + €25.2/100kg 8% + €31.4/100kg 8% + €41.9/100kg non-pref TRQ 43% 43% 43% 43% GSP 2.80% 2.8% + €25.2/100kg 4.5% + €31.4/100kg 4.5% + €41.9/100kg FTA 0% 0% 0% 0% 5. Textiles products (origin: Mexico, Central America) Tshirt cotton Shirts Cotton T Shirts man- made Trousers Denim fabric Cotton Fabric Pullover cotton Pullover wool yarn MFN 12% 12% 12% 12% 8% 8% 12% 12% 3.8% GSP 9.6% 9.6% 9.6% 9.6% 6.4% 6.4% 9.6% 9.6% 3.8% FTA 0% 0% 0% 0% 0% 0% 0% 0% 0%
  32. 32. 6. Other potential exports to EU ECDPM Page 32 Cut flowers Roses (06.03.11) Carnation (06.03.12) Orchids (06.03.13) Others (06.03.90) MFN 12% 12% 12% 10% GSP 8.5% 8.5% 4.2% 6.5% FTA 0% 0% 0% 0% 7. Nuts Cashew nuts, in shell and shelled Almonds, bitter Almonds others Macadamia , in shell and shelled Hazelnuts, in shell and shelled Walnuts, in shell Walnut shelled Pistachio, in shell and shelled Pine nuts MFN 0% 0% 5.6% 2% 3.2% 4.0% 5.1% 1.6% 2% Non pref TRQ n/a n/a 2.0% n/a n/a n/a n/a n/a n/a GSP 0% 0% 2.1% 0% 0% 0% 0% 0% 0% FTA 0% 0% 0% 0% 0% 0% 0% 0% 0%
  33. 33. • South Korea signed an FTA with the EU in 2011. This FTA is considered as the most advanced trade agreement the EU has signed so far. S. Korea does not benefit from full duty free and quota free market access to the EU. • On average, S. Korea is not a large trading partner to the EU: EU’s share of imports from S. Korea represents 2% of its total imports and EU’s share of exports to Korea also represents 2% of total EU export. • However, for specific sectors, such as automobile and machinery, S. Korea is an important player 3. EU – South Korea ECDPM Page 33
  34. 34. ECDPM Page 34
  35. 35. • Textile products: South Korea is not a major exporter of textiles to the EU. Main markets are in Asia – Mainly Japan and China • FTA will provide DFQF EU market. However, RoO are quite strict for textile products (double stage transformation – value tolerance 8 – 10% of the weight of basic materials used) Overview of preferences granted to S. Korea in selected products ECDPMPage 35 Fish fillets, fresh, frozen, chilled Tuna, skip jack fish prepared and preserved South Korea 13.5% 16.0% 16.0% Fish and fish products – S. Korea exports mainly prepared and preserved fish to EU (15.5% of its total exports go to EU). No DFQF; derogation; RoO: vessel and crew requirement; value tolerance 10% of ex-works price) Tshirt cotton Shirts Cotton T Shirts man- made Trousers Denim fabric Cotton Fabric Pullover cotton Pullover wool yarn MFN 12% 12% 12% 12% 8% 8% 12% 12% 3.8% GSP 9.6% 9.6% 9.6% 9.6% 6.4% 6.4% 9.6% 9.6% 3.8% FTA 0% 0% 0% 0% 0% 0% 0% 0% 0%
  36. 36. Beef, fresh, chilled and frozen (no DFQF, but 50% lib) ECDPM Page 36 Meat of bovine animals, fresh and chilled Carcasse / half carcasse (02.01.20) Other cut with bone (02.01.20) other (02.01.20.90.10) Boneless incl buffalo (02.10.30) MFN 12.5% + €176.80/100 kg 12.5% + €176.80/100 kg 12.5% + €265.2/100 kg 12.5% +€176.1/100 kg Non Pref TRQ n/a n/a n/a n/a GSP n/a n/a n/a n/a South Korea 6.4% + €88.4/100 kg 6.4% + €88.4/100 kg 6.4% + €132.6/100 kg 6.4% + €88.4/100 kg Meat of bovine animals, frozen carcasse/ half carcasse (02.02.10) Other cuts 02.02.20) Boneless (02.02.30) Others (02.02.30.90) MFN 12.8% + €176.8/100kg 12.8% + €176.8/100kg 12.8% + €221.10/100kg 12.8% + €304/100kg) Non Pref TRQ n/a 20% 20% 20% GSP n/a n/a n/a n/a South Korea 6.4% + €88.4/100 kg 6.4% + €88.4/100 kg 6.4%+€110.55/100kg 6.4%+€152.5/100kg
  37. 37. EU current FTA negotiations and potential impact on Africa ECDPM Page 37
  38. 38. US represents 16% of the total trade of EU, mostly in industrial pdts 1. EU–US Trans-Atlantic Trade & Investment Partnership ECDPM Page 38
  39. 39. Composition of trade and tariffs ECDPM Page 39
  40. 40. Key issues to watch out for Africa 1. Discussions on agriculture: - EU regulations against GMO crops; - Restrictions on import of beef, chicken that are fed with ractopamine, an additive that promotes the growth of lean muscles in livestock; - Other food safety rules in EU 2. NTMs linked to investment and procurement restrictions (in the US buy-America; in EU support to SMEs) 3. RoO are likely to be very flexible to foster integration of global value chains ECDPM Page 40
  41. 41. 2. Other EU trade partners: Which regimes apply? ECDPM Page 41 India Thailand, Philippines, Malaysia, Vietnam Pakistan Regime GSP - some products are excluded from preferences GSP Special regime for 75 products, GSP for the rest State of play of EU trade policy: -India, Thailand, Malaysia, Vietnam: Currently negotiating FTAs -Philippines: Considering negotiating FTAs (not started yet) - Pakistan: Special incentive
  42. 42. a. India: currently negotiating an FTA Why? - An important partner for the EU, a high potential emerging economy - Middle class is rising (currently 150 million, expected to reach 600 million in 2020) – HUGE market potential for EU products Current state of play: • India is a beneficiary of the EU's GSP scheme. In 2010, around 85% of Indian exports to the EU entered under a zero or a preferential tariff. But average tariffs is high in India for EU products (31.8 % for agric and 10.1% for industrial products) • FTA launched in 2007 - expected to cover 25% of world population and 30% of world GDP ECDPMPage 42
  43. 43. • EU not expected to provide DFQF – will liberalise 95% of its market (with an exclusion list of 226 products, mostly chemicals, petrochemicals, plastics, ceramics and glassware. • India expected to liberalise 90%, with an exclusion list of about 150 agricultural goods (including dairy products, sugar, fruits and vegetables, meat products, fish and fish products) and 250 manufactured products such as some textiles and clothing, textile machinery, cars, and wines and spirits. Key challenges: India is inflexible on tariffs on automobiles (peak of 60%); access to wines and spirit; want to exclude products where EU has subsidies (dairies). • Concerns regarding clauses on human rights, social and environmental; labour standards. • Strict requirements on Intellectual Property Rights issues from EU, which may curtail the production of cheap generic drugs, especially AIDS drugs which India exports to Africa. • Concerns in Services – movement of people, liberalisation of services such as professional services ECDPMPage 43
  44. 44. India exports under the Generalised system of preferences. Big producer of textiles Rate of duty applied to Indian textile products ECDPMPage 44 T-Shirt Cotton Shirts - Cotton Trousers T-Shirts man made Denim fabric Pull Cotton Cotton Fabric Yarn Pull Wool Duty applied to Indian products 9.6% 9.6% 9.6% 9.6% 8.0% 9.6% 8.0% 3.8% 9.6% Scheme GSP GSP GSP GSP MFN GSP MFN MFN GSP GSP preferences are suspended for yarn and fabric because the value of EU imports from India for 3 consecutive years exceeded 14.5% of total EU imports of yarn and fabric from all GSP countries. Here India pays the normal tariff (non-preferential). RoO: GSP Rules apply: double transformation
  45. 45. b. Viet Nam EU signed a Partnership and Cooperation Agreement with Vietnam in June 2012. This is a political agreement. Negotiations have started on a FTA in June 2012. Main Vietnamese textile products are cotton pullovers, t-shirts (cotton, man made and trousers. Vietnam is not an LDC and benefits from GSP Scheme. ECDPMPage 45 Pull Cotton T Shirt Cotton Trousers T Shirts man made Shirts Cotton Cotton Fabric Pull Wool Denim Fabric Tariff applied to Vietnam 9.6% 9.6% 9.6% 9.6% 9.6% 6.4% 9.6% 6.4% Regime GSP GSP GSP GSP GSP GSP GSP GSP
  46. 46. c. Thailand and Philippines Important producer of numerous textile products and fisheries ECDPMPage 46 Pull Cotton T Shirt Cotton Trousers T Shirts man made Shirts Cotton Cotton Fabric Pull Wool Denim Fabric Tariff applied to Thailand 9.6% 9.6% 9.6% 9.6% 9.6% 6.4% 9.6% 6.4% Regime GSP GSP GSP GSP GSP GSP GSP GSP Tuna, skip jack fish prepared and preserved Fish fillets, fresh, frozen, chilled Tariff applied to Thailand and Philippines 20.5% 20.5% 14.5% Regime GSP GSP GSP
  47. 47. ECDPMPage 47 Rules of origin 1. Fish fillets: Wholly obtained 2. Tuna, skipjacks and prepared fish: all materials from fresh fish are wholly obtained Value tolerance: 15% ex-works price Derogations: No derogations Vessels: Registration and flag requirements; Either 50% owned by nationals or owned by company with head office in country or EU + at least 50% ownership Possibility to use Regional cumulation to vessels of different beneficiary countries (product will have origin of country which flag the vessels)
  48. 48. d. Pakistan (Special arrangement) • Pakistan is an important partner for the EU, although trade and investment remain below its potential. • In 2011, after a severe flood resulting in a serious impact on Pakistan's economy, EC agreed on a package of measures to assist in the recovery of Pakistan's economy. • One element of this package is the granting of 2 years unilateral trade preferences on a number of goods (75 products) imported into the EU from Pakistan. Duty free for 55 products; tariff rate quotas for 20 products • Most products are textile products. These include yarns, fabric and apparel – but most products on interest to Africa are NOT INCLUDED. The normal GSP applies to these products and Pakistan pays the same duties as Vietnam above. ECDPMPage 48
  49. 49. ECDPMPage 49 With the exception of wool pullovers, Pakistan’s main market for textiles products is in fact the US, with the EU representing less than 25% of Pakistan’s exports Pull Cotton T Shirt Cotton Trousers T Shirts man made Shirts Cotton Cotton Fabric Pull Wool Denim Fabric Tariff applied to Pakistan 9.6% 9.6% 9.6% 9.6% 9.6% 6.4% 9.6% 6.4% Regime GSP GSP GSP GSP GSP GSP GSP GSP
  50. 50. What then for Africa? ECDPM Page 50
  51. 51. 1. Strengthen and stimulate internal (i.e intra and inter-regional) demand: a. Boost intra-Africa trade; b. Support and encourage regional value chains; c. Boost industrialisation 2. External trade: Work on export competitiveness (c.f China); a. This includes having a foreign trade policy, based on national and regional realities and priorities; b. Focus on standards; c. Address unnecessary trade and investment barriers; d. Enhance trade facilitation (both soft and hard infrastructure; behind and beyond the border measures; beyond the continent) A 2-pronged approach ECDPM Page 51
  52. 52. Thank you www.ecdpm.org www.slideshare.net/ecdpm Page 52
  53. 53. ECDPMPage 53 Cumulation explained: Bilateral cumulation: Applies to members of a single FTA, operated between 2 partners. Diagonal cumulation: • Applies between 2 or more countries. • Requires a network of FTAs containing identical RoO and diagonal cumulation involving all the countries of the zone. • Allows originating materials to be further processed in the region • Value added in the last stage of production should exceed the highest customs value of any of the inputs used from countries in the regional grouping • The Pan-Euromed System (42 participating countries) is based on the application of a common set of RoO within all RTAs concluded among countries in the region Full cumulation (EEA, EC, Algeria, Morocco, Tunisia) • Operating between 2 or more countries; • Countries must have identical RoO and provide for full cumulation • Working or processing may be done on non-originating material in any partner country (cumulation of processing is possible). Therefore any processing in a participating country can be counted as qualifying content, regardless if processing is sufficient to confer originating status.
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