GVCs AND THE RATIONALE FOR ECONOMIC PARTNERSHIP AGREEMENT BETWEEN CAMEROON AND EUROPEAN UNION

1. GVCs AND THE RATIONALE FOR
ECONOMIC PARTNERSHIP
AGREEMENT BETWEEN
CAMEROON AND EUROPEAN
UNION

2. SUMMARY
01 Context
02 WHAT IS THE EPA?
03 Impacts on GVCs
04 Prospects and challenges of EPA

3. The importance of global value chains implies that tariff and
non-tariff barriers to trade matter a great deal – especially for
integrating developing countries into the chains.
Traditional trade policies can backfire by undermining
comparative advantages. Moreover, the interdependence of
trade and investments makes dimensions such as the
institutional quality, government transparency, the investment
framework, intellectual property rights and contract
enforcement more important. One means of addressing tariffs
as well as behind-the-border issues underpinning global value
chain trade is the signing of deep preferential trade agreements,
as the EPA between Cameroon and EU is supposed to become.
C o n t e x t
According to Baldwin, “protectionism is destructionism as far as
d e v e l o p i n g n a t i o n s a r e c o n c e r n e d ” .

4. EPA PROCESS
Ratification by
Cameroon
Phase II of
dismantling
Phase IV of
dismantling
Signature
Entry into force in
Cameroon/Phase I of
dismantling
Phase III of
dismantling
201920182017201620142009
Negotiations
2007

5. GVCs AND RATIONALE FOR EPA
EPA goes beyond traditional market access issues
and include disciplines such as investment,
competition policy, and harmonization of product
regulations.
Certain behind-the-border policies need to be
disciplined in trade agreements for GVCs to
operate efficiently.
These spillovers and credibility concerns generate
demand for deeper forms of integration
The costs created by coordination externalities
(such as heterogeneous regulations) may be
higher in the presence of cross-border
production.
These in turn generate demand for deeper
forms of integration.
The unbundling of stages of production
across borders creates new forms of
international policy spillovers and time-
consistency problems.

6. WHAT IS THE EPA?
The EU and Cameroon concluded negotiations on
an interim Economic Partnership Agreement (EPA)
in 2007. The European Parliament approved the
agreement in June 2013 and it was ratified by
Cameroon in July 2014.
The interim EPA is a ‘stepping-stone’ agreement. This means the EU and
partner countries can deepen the agreement through ‘rendez-vous’ clauses
which allow further negotiations on trade-related issues like services,
competition, intellectual property, etc.
This agreement lets all goods from Cameroon
enter the EU duty and quota-free, and gradually
removes duties and quotas over 15 years on 80% of
EU exports to Cameroon. It covers trade in goods,
aid for trade, institutional issues and dispute
settlement.
The objective of these economic partnership agreements is to showcase
regional markets, as well as grant developing countries as Cameroon access
to European goods and services. This is notably the reason why developing
countries are reticent, given that they already had access to the European
market without having to open their own markets, which would lead to a
loss of fiscal revenue and the coming of more competitive or subsidized
products as in the area of agriculture. That is notably the cause of the failure
of certain negotiations or their extensions.
Cameroon signed an interim agreement in an isolated manner on 28 July 2014, which
entered into force in August 2014. A new stage in the implementation of the said
agreement was concluded in August 2016, notably with the signing of the implementing
presidential decree. The said agreement provides for the suppression of 80 % of custom
duties on European products over a period of 15 years. Concerning other regions of
Africa, in June 2016, an economic partnership agreement was signed between the
European Union and SADC countries.
In 2007, countries of the Eastern and Southern
regions of Africa (AFOA) signed an interim
economic partnership agreement with the
European Union. Seven years later in 2014,
interim agreements were signed between the
European Union, the Economic Community of
West African States (ECOWAS), the Southern
Africa Development Community (SADC) and
the East African Community (EAC). Thus in
2015, only the Central African area had not
signed an interim agreement at regional level.

7. HOW EPA MIGHT IMPACT GVCs PARTICIPATION
Indirect impacts on the growth and trade prospects of
actors
By stimulating local and/or FDI in that value chain and
facilitating aid for trade or other forms of development
cooperation support. The implementation of EPAs
could serve to facilitate and focus development
cooperation support in areas relevant for value chain
development in Cameroon.
Broader impact
Broader economy-wide impacts of EPAs could affect
Cameroonian actors by altering the economic environments in
which they operate. EPA could affect growth, investment and
employment patterns, influencing allocation of labour and
capital between sectors. They could lend credibility to reforms
and create domestic, regional and bilateral channels of
communication on trade-related issues. On the other hand,
they could also prevent Governments from using export taxes
to promote domestic production.
Direct impacts on their trade prospects by
altering market access conditions
Especially tariffs and rules of origin. Tariff
liberalisation could result in cheaper inputs for
Cameroonian producers that procure goods (and
services, if services were covered by the EPA) from
the EU, but could also lead to increased
competition from European producers in some
African domestic and regional markets. EPAs could
therefore contribute towards strengthening the
competitiveness of some African value chains
More support
Such support could include support efforts to build
the capacity of Cameroonian producers and
services providers to take advantage of trade-
related opportunities by, for example, improving
their competitiveness as businesses or by
addressing technical barriers to trade, sanitary and
phytosanitary measures and other barriers that
may limit their effective access to the EU market.

8. STATISTICS OF THE TRADE BETWEEN CAMEROUN AND EUROPEAN UNION
Year
Market shares
Cameroon's export and import market
share from 1995 to 2018 as shown in the
figure below has deteriorated; 76.4% in
1995 to 43.3% in 2018 for exports and
from 56.2% in 1995 to 31.6% in 2018 for
imports. This erosion of European market
share in Cameroon and the European
orientation of Cameroonian exports could
be explained in particular by the rise of
new trading powers such as China, India
or the intensification of cooperation with
Nigeria.
Cameroon’s Exports increased from USD 1175390.201 million
to USD 1661813.651 million in 2017, an increase of 41%.
Imports from the EU grew by more than 215%, from USD
606119.902 million to 1910748.665 million USD. Moreover, as
the figure below illustrates, imports peaked in 2008 and fell
drastically, probably due to the effects of the international
financial crisis.
Year

9. PROSPECTS AND CHALLENGES OF EPA FOR
CAMEROON
EPAs that are concluded by some members
of an African regional bloc, but not others,
could undermine existing regional
integration processes involving those
countries and the development of effective
and coherent regional markets, thereby
inhibiting the development of regional value
chains.
Single manner challenge
In reality, EPAs do not provide significantly
increased access to the EU market for
African exporters compared to the status
quo, as most of these exporters already
benefit from DFQF access to the EU market
either as least developed countries (LDCs),
or under the temporarily applied Market
Access Regulation.
Market access
EPAs are also likely to lead to decreased
government revenue from import duties in
certain African countries
Tax losses
could also lead to weaker African value
chain actors being driven out of the
market, or even prevent the development
of nascent domestic and regional
industries that are not yet able to compete
with more developed EU industries. .
Participation in GVCs
S W
O T

10. Conclusion: How Cameroon could go trough GVCs
with the EPA?
Building capacities
Strong domestic
policies
Finally…
Build capacities of Cameroonian
companies to strengthen theirs
methods of production and to be
able to match the EU standards
The importance of the elimination of tariff and non-tariff
barriers
for integration in GVCs. However, “domestic (economic)
policies largely determine
which position countries occupy in GVCs and thus what
value they are able to create and
capture” (OECD 2013). Accordingly, industrial policy and
other means of supporting
domestic development are increasingly on the agenda of
policy-makers and the subject of
an evolving debate (Gereffi / Sturgeon 2013).
if the EPAs are to facilitate support for value chain development in Africa, they will need to be
implemented properly (including through the introduction of necessary domestic reforms) and
complemented with national and regional policies that improve the capacity of African businesses to
capitalise on EPA-related opportunities and that mitigate any negative consequences of EPA
implementation. Proper implementation of the EPAs and EPA-related reforms, and of accompanying policy
measures, will require a fairly high degree of capacity within African EPA state governments and relevant
national and regional public institutions.
Content

11. GVCs AND THE RATIONALE FOR ECONOMIC
PARTNERSHIP AGREEMENT
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