EPA and the issue of regional EPA and the issue of regional - PowerPoint PPT Presentation

EPA and the issue of regional EPA and the issue of regional integration in Africa integration in Africa GIOVANNI VALENSISI Regional Integration and Trade Division – UNECA Regional Integration and Trade Division – UNECA Regional multi-stakeholder dialogue “The EPA, regional sectorial policies & development in West Africa: Threat or opportunity” Dakar 27-28 October 2014

Introduction Institutional challenges Impact on CFTA & BIAT Conclusions Key Features of EPAs Affecting Africa’s Regional Integration � Negotiating Configuration → 5 African blocks (plus Euro-Med) � Timing → Consolida5on on African RECs into FTA & CU is ongoing, but at uneven pace � Differences between LDCs and non-LDCs � � Structural asymmetries in trade relationships: Structural asymmetries in trade relationships: 1. Rela5ve importance of bilateral trade rela5ons → EU accounted for 40% of ECOWAS exp., ECOWAS for < 1% of EU exp. (2009-2012) 2. Composi5on/concentra5on → ECOWAS exp. to EU consists for 72% of fuels, 4% manufactures; EU exports to ECOWAS for 31% of fuels, & 52% manufactures (2009-2012) 3. Market access → ECOWAS already having good mkt access to EU, but EU facing relatively high protection in ECOWAS

Introduction Institutional challenges Impact on CFTA & BIAT Conclusions COMESA ECOWAS � REC members negotiated � REC members negotiated EPAs within ESA, but also EPAs as a single block Central Africa, EAC, SADC Euromed � 3-bands CET agreed, but no � 5-bands CET in place by 1 st yet clear when its structure yet clear when its structure January 2015 January 2015 will be in place � Buy time on EPAs, through � EPAs officially approved by interim-EPAs Heads of States in July 2014 EPAs risk creating additional obstacles to the consolidation of RECs into CU, esp. in case of overlapping REC memberships

Introduction Institutional challenges Impact on CFTA & BIAT Conclusions Empirical analysis Computable General Equilibrium model used here to analyze � expected impacts from EPAs: � CGE models have some limitations but are the sole tools capable of capturing multiple interactions within the world economy � CGE is complementary to partial eq. analysis MIRAGE CGE model used (dynamic, multi-country, multi-sector) � Key data inputs come from: � � G lobal T rade A nalysis P roject (GTAP) database � M arket Ac cess Map-HS6 database (updated to reflect latest evolutions: EU-28 embers, EBA, AGOA, progress in regional integration…)

Introduction Institutional challenges Impact on CFTA & BIAT Conclusions Baseline, Scenario and Comparison Baseline: � � COMESA & ECOWAS CET assumed to be in place by 1 January 2015 � ESA is assumed to be a FTA by 1 January 2015 EPA Scenario: � � EU to grant immediately 100% DFQF on its imports from ECOWAS & ESA � ECOWAS to grant progressively not less than 75% DFQF on its imports from ECOWAS to grant progressively not less than 75% DFQF on its imports from the EU according to its liberalization schedule � ESA countries to grant progressively not less than 80% DFQF on imports from the EU by 2035 (sensitive products are selected taking into account: (i) tariff; (ii) trade; and (iii) tariff reduction; (Jean, Laborde and Martin; 2008)) Comparisons: � � Results are obtained by comparison between the scenario and the baseline in the year 2040 (to leave sufficient time for the model to adjust)

Introduction Average tariff faced by EU (28) on its exports to ECOWAS 10.0 20.0 30.0 40.0 50.0 60.0 0.0 P addy and proc es s ed ric e C ereals and c rops Institutional challenges V egetable fruit and nuts P lant-bas ed fibers Liv es toc k M ilk and dairy produc ts S ugar Before CET M eat produc ts O ther food produc ts After CET M ining C rude and refined oil 2020 Impact on CFTA & BIAT O ther energy 2025 F is hing 2030 W ood produc ts 2035 C hem ic al rubber and plas tic produc ts T ex tile apparel and leather produc ts N on-m etalic m inerals Iron and s teel O ther m etal produc ts M otor v ehic le and trans port equipm ent Conclusions E lec tronic and m ac hinery equipm ent O ther m anufac ture

Introduction Institutional challenges Impact on CFTA & BIAT Conclusions EU-ECOWAS & EU-ESA EPAs – Total exports Main regions’ total exports following implementation of EU-ESA and EU- ECOWAS EPAs – 2040 – % and USD billion % USD bn ECOWAS 2.9 10.6 ESA 1.3 1.4 Rest of Africa 0.0 -0.5 European Union (28) 0.4 17.8 United States 0.0 -0.6 Rest of the World Rest of the World 0.0 0.0 -2.0 -2.0 TOTAL 0.1 26.7 Source: authors’ calculations based on the MIRAGE model Both the EU and African EPA signatory countries would expand their total exports � under EPAs ECOWAS gains the most in % terms, but EU gains the most in absolute terms � Export gains for African countries are concentrated in non-LDCs, and in few sectors � EU would expand its exports to Africa in a wide range of sectors, including to some � extent at the expenses of third countries (→ trade diversion)

Introduction Institutional challenges Impact on CFTA & BIAT Conclusions EU-ECOWAS & EU-ESA EPAs – ECOWAS-EU bilateral trade Changes in ECOWAS and selected ECOWAS countries’ exports to the EU following implementation of ESA-EU and ECOWAS-EU EPAs – By sectors – 2040 – % and USD bn Key winners from ECOWAS ECOWAS Cote d'Ivoire Ghana Nigeria % USD bn % USD bn % USD bn % USD bn Paddy and processed rice 4256.7 1.9 3535.3 0.3 4846.9 1.6 10.7 0.0 Cereals and crops -4.5 -0.6 -0.9 0.0 -3.0 -0.1 -9.2 -0.5 Vegetable, fruit and nuts 23.3 0.2 60.5 0.2 2.1 0.0 -0.3 0.0 Plant-based fibers -0.1 0.0 -0.7 0.0 -2.0 0.0 -5.2 0.0 Livestock -4.7 0.0 -1.9 0.0 -3.0 0.0 -12.0 0.0 Milk and dairy products 5385.4 0.8 12762.6 0.8 31738.7 0.0 1445.5 0.0 Sugar 11.3 0.0 Meat products 3103.7 5.4 2010.2 0.2 9439.6 0.9 8073.5 4.3 Other food products 2.3 0.1 2.4 0.0 0.4 0.0 7.2 0.0 Agriculture and food Agriculture and food 44.5 44.5 7.8 7.8 9.9 9.9 0.4 0.4 42.3 42.3 1.8 1.8 95.7 95.7 5.6 5.6 Mining 0.5 0.0 0.8 0.0 0.6 0.0 1.1 0.0 Crude and refined oil 2.1 0.3 5.6 0.0 15.7 0.0 1.8 0.2 Other energy 4.5 0.5 24.8 0.0 23.4 0.0 1.8 0.2 Mining and energy 2.9 0.8 6.5 0.0 17.2 0.1 1.8 0.4 Fishing 0.7 0.0 -0.1 0.0 0.4 0.0 -2.4 0.0 Wood products 2.5 0.0 4.3 0.0 0.4 0.0 -5.2 0.0 Chemical, rubber and plastic products 3.7 0.2 5.0 0.0 1.5 0.0 5.5 0.0 Textile, wearing apparel and leather products -6.3 -0.3 8.3 0.0 -4.3 0.0 -7.8 -0.3 Non-metalic minerals 4.1 0.0 7.1 0.0 3.2 0.0 3.0 0.0 Iron and steel 3.2 0.0 16.5 0.0 1.3 0.0 2.4 0.0 Other metal products 4.0 0.1 7.2 0.0 -0.9 0.0 3.5 0.0 Motor vehicle and transport equipment 3.4 0.1 7.8 0.0 8.3 0.0 0.7 0.0 Electronic and machinery equipment 6.9 0.2 8.9 0.1 0.2 0.0 2.0 0.0 Other manufacture -0.3 0.0 3.8 0.0 0.5 0.0 -4.1 0.0 Industry 1.5 0.3 6.6 0.3 0.1 0.0 -3.5 -0.3 Transport services 2.4 0.1 2.6 0.0 -0.7 0.0 3.8 0.0 Other services 0.1 0.0 2.3 0.0 -2.0 0.0 -5.7 0.0 Services 0.9 0.1 2.4 0.0 -1.5 0.0 -0.4 0.0 Source: authors’ calculations based on the MIRAGE model

Introduction Institutional challenges Impact on CFTA & BIAT Conclusions Following implementation of ESA/ECOWAS-EU EPAs, intra-African trade is � reduced by USD 3 billion and can be decomposed as follow: USD bn Intra-ECOWAS trade -1.2 ECOWAS exports to ESA 0.0 ECOWAS exports to Rest of Africa 0.5 Intra-ESA trade -0.1 ESA exports to ECOWAS -0.1 ESA exports to Rest of Africa -0.4 Intra-Rest of Africa trade 0.0 Rest of Africa export to ECOWAS Rest of Africa export to ECOWAS -2.1 -2.1 Rest of Africa export to ESA 0.4 Intra-African trade -3.0 Source: authors’ calculations based on the MIRAGE model African countries, esp. in ECOWAS, would tend to substitute imports sourced from the � continent with EU- origina5ng imports (→ remember the tariff structure) Industrial products account for 2/3 of the reduction in intra-African trade (notably � electronic & machinery equipment, chemicals, and textiles); the remaining is mostly fuels The net effect on real income depends on the combina5on of ↑ exp, ↑ imp, ↓ tariff � revenues; except a few African non-LDCs, most countries would suffer modest declines