on the proposal for a Council Decision concluding the Economic Partnership Agreement between the European Community and its Member States, of the one part, and the CARIFORUM States, on the other part

(5211/2009 – COM(2008)0156 – C6-0054/2009 – 2008/0061(AVC))

(Assent procedure)

The European Parliament,

–   having regard to the proposal for a Council decision concluding the Economic Partnership Agreement between the European Community and its Member States, of the one part, and the CARIFORUM States, of the other part (COM(2008)0156),

–   having regard to the Economic Partnership Agreement between the CARIFORUM States, of the one part, and the European Community and its Member States, of the other part (5211/2009),

–   having regard to the request for assent submitted by the Council pursuant to Articles 57(2), 133(1) and (5) and 181 in conjunction with the first and second subparagraphs of Article 300(3) thereof (C6-0054/2009),

–   having regard to Rules 75 and 83(7) of its Rules of Procedure,

–   having regard to the recommendation of the Committee on International Trade and the opinion of the Committee on Development (A6-0117/2009),

1.  Gives its assent to conclusion of the agreement;

2.  Instructs its President to forward its position to the Council, the Commission and the governments and parliaments of the Member States and the CARIFORUM States.

In 2000 the ACP and EU agreed to conclude new trading arrangements compatible with the World Trade Organisation (WTO) rules to replace the unilateral regime of trade preferences granted by the EU to imports from the ACP that prevailed at the time.

Negotiation of the new Economic Partnership Agreements (EPAs) was initiated in 2002 with the aim of being concluded by 31st December 2007, knowing that, on the 1st January 2008, the WTO waiver covering the existing trade arrangements between the ACP and the EU would expire. Since EPAs aim at building on and strengthening the regional integration processes in the ACP, negotiations have been conducted at the regional level with six self-declared EPA regional groups.

The EPA negotiation process involved the all-ACP level to determine broad cross cutting themes of interest whilst the specific issues of interest of the negotiations were and still are being determined at the national and regional level.

The deadline of 31 December 2007 led to hastily drawn EPAs which show largely country-specific and ‘sub-regional’ liberalisation schedules that greatly differ within most EPA regions. Aligning these schedules in a regionally coherent way will be very difficult.

The Caribbean was the only one of the six negotiating ACP groups to initial - on 16 December 2007 - a "full" EPA in the original time-frame. 13 CARIFORUM Member States signed the EPA with the European Community on 15 October 2008, Guyana on 20 October 2008. The government of Haiti, which is addressing national hurricane recovery priorities, has requested more time to review the EPA. The EC responded positively to the request made by the Government of Haiti so that the country has until 2010 to sign the EPA. As a LDC Haiti also enjoys unilateral preferences to the EU market under the Everything But Arms Initiative.

The Agreement will officially enter into force once the process of ratification completed by the member states. Until then, CARIFORUM and the European Community will provisionally apply the EPA.

The comprehensive agreement includes "WTO-plus" obligations in subject areas such as investment, competition policy, government procurement, current account payments, environment, social aspects, cultural cooperation and heightened intellectual property protection, which are not included in current WTO negotiations and did not have to be included for the EPA to be WTO compatible.

Several subject areas covered in the EPA are not yet settled or have not yet been fully implemented in the region.

Your rapporteur considers that the European Parliament should give its assent on the Economic Partnership Agreement between the CARIFORUM States, of the one part, and the European Community and its Member States, of the other part if it received firm commitments from the Commission and the Council to ensure:

- that in the application of the EPA to the signatory CARIFORUM States that are members of the Caribbean Community, in the event of a conflict between the EPA and the Revised Treaty of Chaguaramas, the latter shall prevail;

- a mandatory comprehensive review of the Agreement will be undertaken not later than five years after the date of signature and at subsequent five-yearly intervals, in order to determine the impact of the Agreement, including the costs and consequences of implementation; that its provisions will be amended and its application will be adjusted, as necessary; that there will be a comprehensive renegotiation of the EPA after the initial five year period;

- that an independent monitoring mechanism will be established within the CARIFORUM States endowed with the necessary resources to undertake the analysis necessary to determining the extent to which the EPA is achieving its objectives;

- the application by the European Union of the MFN principle among all the ACP sub-regional groups;

- the elimination of the application of MFN treatment to the European Union by CARIFORUM and other sub-regional groups;

- that the implementation of commitments in subject-areas not yet settled under the CARICOM Single market and Economy (CSME) or fully implemented - including financial services, other services, investment, competition, public procurement, e-commerce, intellectual property, free circulation of goods, and the environment - be deferred pending completion of the CSME in these subject areas;

- an early determination and provision of an equitable share of the Aid for Trade resources; the guarantee that these funds represent additional resources and not merely repackaging of EDF funding, that they are conform to CARIFORUM priorities and that their disbursement will be timely, predictable and in harmony with the execution schedules of national and regional strategic development plans; an efficient use of these funds to compensate the loss of customs revenues;

- that the provisions regarding enforcement of intellectual property rights will not be used to thwart legitimate competition from generic pharmaceutical suppliers, and/or to inhibit government purchasing entities from acquiring generic supplies; regularly reports to the Parliament on the impact of PCT adherence on the level of patent filings for pharmaceutical products and processes in the CARIFORUM countries, as well as on the corresponding volume of litigation; regular reports on the implementation of the technology transfer commitments in the agreement; not to seek to impose harmonized IPRs standards that are inappropriate to the level of development of the CARIFORUM States; assistance to CARIFORUM countries to monitor against anticompetitive conduct in the pharmaceutical sector;

- clarifications on which funds are additional to the funding of the 10th EDF; that all development cooperation provisions, including their funding, are put into operation expeditiously, adequately, and effectively.

(*) Associated committee – Rule 47 of the Rules of Procedure

SHORT JUSTIFICATION

Justification

In Article 36 of the Cotonou Partnership Agreement EU and ACP countries agreed to conclude WTO compatible new trade agreements "removing progressively barriers to trade between them and enhancing cooperation in all areas relevant to trade." Article 37 provides that the "Economic Partnership Agreements shall be negotiated during the preparatory period which shall end by 31 December 2007 at the latest".

In 2002, the first phase of negotiations started between the Commission and the ACP group on issues of general interest to the all ACP countries of the agreements followed by separate negotiations with six ACP regions that were established for the EPA negotiations (Caribbean, West Africa, Central Africa, Eastern and Southern Africa (ESA), SADC minus, Pacific). At the end of the negotiations in 2007, the EAC (Eastern African Community) split up from the ESA negotiation group.

Only the Caribbean agreed after five years of negotiations in the end of 2007 to initial a full economic partnership agreement, which includes all aspects of economic cooperation and development. On 16 December 2007, the Commission for the European Community and 15 CARIFORUM States (Antigua and Barbuda, Bahamas, Barbados, Belize, Dominica, the Dominican Republic, Grenada, Guyana, Haiti, Jamaica, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Suriname and Trinidad and Tobago) initialled the agreement, which was signed by the EU and 13 CARIFORUM States on 15 October 2008, and by Guyana on 20 October 2008. Haiti did not sign the agreement.

Since beginning 2008, the duty and quota free access of CARIFORUM products to the EU market had been applied according to Council Regulation (EC) No 1528/2007 of 20 December 2007 applying the arrangements for products originating in certain states which are part of the African, Caribbean and Pacific (ACP) Group of States provided for in agreements establishing, or leading to the establishment of, Economic Partnership Agreements (OJ L 348, 31.12.2007, p. 1). Immediately after signature, the Commission notified the agreement to the WTO, therewith proving the WTO conformity of the EU import regime for goods from ACP States having signed EPAs.

Strong difficulties appeared during the negotiations and after initialling, in particular when the debate was reopened in Guyana. Guyana would have preferred to sign only the "goods part" of the agreement. While this request was not agreed, provisions in the protocol attached to the agreement call for an evaluation of the impact within five years time leading to possible amendments. The rapporteur welcomes these provisions, as regular evaluation can be an important instrument to ensure the development friendly implementation of the EPA. The EU should demonstrate a flexible and empathetic approach to implementation and should be ready to modify provisions of the agreement, if the review indicates so.

Beside difficulties of substance obviously tone and tactics of the Commission negotiators jeopardized the traditionally good EU-Caribbean negotiations. Your rapporteur deplores this deeply, and explicitly welcomes the change of tone in the European Commission following the replacement of the Commissioner for Trade. However, your rapporteur sees sufficient reason to congratulates the CARIFORUM States for the result of negotiations and their decision to sign the EPA.

Haiti, as the only LDC of the CARIFORUM group, did not sign the EPA. As LDC, it can benefit of the Everything But Arms schedule under the General System of Preferences (GSP). Therefore, the immediate need to secure the free access to the EU market via the EPA does not exist. Given the difficult political and economic situation of the country, Haiti should not be pressed but given the time, it needs to decide.

The EPA with CARIFORUM could have positive impact on the development of the Caribbean countries. In the view of your rapporteur, a swift ratification and implementation process combined with the necessary reforms are conditions to bring about the positive impact of the EPA. It can not be neglected that the improved market access for goods, investment and services can be more easily seized by EU companies in the Caribbean than by Caribbean companies in Europe due to lack of capacity. This may lead to an unbalanced outcome - very much, depending on how the agreement is implemented.

Implementation of the EPA and reforms can only work properly if the EPA is accompanied by considerable Aid for Trade (AfT) packages to make up for net customs losses and increase the economic activity in the CARIFORUM states. However, articles on development cooperation in the agreement do not bind the EU to provide additional financial assistance in connection to the EPA.

The main reason for the decision to include Article 36 in the Cotonou Agreement was the non-compatibility with WTO rules of the free access of goods from all ACP countries to the EU under the Lomé Treaties. Therefore, the biggest part of the EPA deals with the trade in goods. However, it was made clear from the beginning by all parties that the objectives of the agreement would be in line with the objectives of the Cotonou Partnership Agreement, which is the basis of the EPA EC-CARIFORUM.

The EPA itself (Article 1), formulates the "reduction and eventual eradication of poverty through the establishment of a trade partnership consistent with the objective sustainable development, the Millennium Development Goals and the Cotonou Agreement" as its first objective, followed by "promoting regional integration, economic cooperation and good governance thus establishing and implementing an effective, predictable and transparent regulatory framework for trade and investment between the Parties and the CARIFORUM region."

The EPA with CARIFORUM is linked in different ways closely with the Cotonou agreement. It is "based on the Fundamental Principles as well as the Essential and Fundamental Elements of the Cotonou Agreement". It shall "build on the provisions of the Cotonou Agreement and the previous ACP-EC Partnership Agreements [i.e. the four Lomé-Agreements and the preceding Yaoundé-Agreements] in the area of regional cooperation and integration as well as economic and trade cooperation.

The agreement contains detailed rules for the import and export of goods. The EU accepts to apply no customs duties and quotas since 1 January 2008, most CARIFORUM States will gradually open their markets for about 87% of the goods imported from the EU and originating in the EU over the next 25 years. This will lead to net-losses in customs revenue, but the CARIFORUM States have time to adjust and will be supported by Aid for Trade. It is hoped that the necessary reform in the customs and fiscal sector could be of benefit for the development of the public financial system of the CARIFORUM States in general.

The EPA contains provisions for Trade in Services, investment, competition, innovation, intellectual property and procurement. All these areas have been examined with some preoccupation by players in the CARIFORUM States and in the EU. Considerable obligations derive from these provisions, but they also open opportunities for economic development. The impact of these chapters on the development of the CARIFORUM States is difficult to predict. However, safeguards are included as well as accompanying measures in order to make the provisions a success in terms of development of the countries concerned. The EU must show maximum flexibility in view of the CARIFORUM using safeguards especially in the light of implementation costs and the uncertain development impact.

The available financial instruments for development cooperation will be used by the EU in order to accompany the EPA with CARIFORUM. Financial support will come from the Regional and National Indicative Programmes of the EDF as well as from the all-ACP programmes. In addition, CARIFORUM will receive its share of the trade related assistance of annually € 1 billion pledged by the EU and € 1 billion pledged by the Member States. However, little additional finance is guaranteed.

The agreement EC-CARIFORUM has been negotiated for the specific needs and interests of the Caribbean ACP countries. Future EPAs in other regions may include considerable different provisions and could include a different number of areas, depending on the development of each region.

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Conclusion

The Committee on Development calls on the Committee on International Trade, as the committee responsible, to propose that Parliament gives its assent to concluding the Economic Partnership Agreement subject to its ratification by CARIFORUM States and their parliaments where their constitutions so require.

PROCEDURE