Research Papers 11 - April 2007

EXECUTIVE SUMMARY

The relationship between African, Caribbean and Pacific (ACP) countries and the European Union (EU) is undergoing an overhaul. ACP countries are engaged in trade liberalization negotiations, based on reciprocity, to agree Economic Partnership Agreements (EPAs) with the EU. The introduction of reciprocity into a previously preferential arrangement between these groups of countries poses critical challenges for the development prospects of ACP countries. Owing to weak production and export capacities, the ACP countries are not at the stage where they can compete on equal footing with the EU in trade in goods and services. By signing a reciprocal trade Agreement with the EU, the ACP countries will be singling out the EU for more favourable treatment than is available to other WTO members, but they will not benefit from market openings in the EU in ways remotely comparable to the benefits to be enjoyed by the EU.

The EU is faced with great pressure from other WTO members to correct what they view as illegal and discriminatory preferential treatment to the ACP countries under the Enabling clause. In signing EPAs, the EU will have solved the questions of WTO incompatibility of certain aspects of the Lomé Conventions, which are the legal basis for the preferences it currently grants to the ACP group of states. However, aside from resolving this legal technicality, EPAs will not represent any significant development prospects for ACP countries, either in the short or long term.

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