EU-ACP economic agreements and WTO/GATT compatibility : options for ACP countries under Cotonou Agreement

Abstract

The member states of European Union (EU) and a group of African, Caribbean and Pacific (ACP) states are currently negotiating for new trading agreements compatible with World Trade Organization‘s (WTO) rules. Whereas both the EU and the ACP states are in agreement that the new trading arrangements must be WTO compatible, there is no consensus on the format of the new trading agreements. The EU has insisted that the new trading arrangements should be in the form of free trade agreements, established under Article XXIV of General Agreement on Tariffs and Trade (GATT). Unlike the previous EU – ACP trade agreements which were non – reciprocal, Article XXIV requires that the new trading agreements should be reciprocal. Consequently the EU has gone ahead to negotiate for reciprocal Economic Partnership Agreements (EPAs) with some of the ACP states. Some ACP countries which are opposed to reciprocity have proposed that the new trading arrangements should be established under the provisions of Enabling Clause. Others have suggested that EU should attempt to apply for a WTO waiver. The Cotonou Agreement, under which the new trading agreements are being negotiated, provides that in case of those countries which are not ready to negotiate for EPAs, the EU should examine alternative possibilities, in order to provide these countries with a new framework for trade which is equivalent to their existing situation and in conformity with WTO rules. So far no alternative trading arrangements have been proposed. Although some ACP countries have agreed to negotiate for Economic Partnership Agreements under article XXIV of GAAT, there is no consensus on the interpretation of key provisions of Article XXIV. Under Article XXIV, the parties are required to remove substantially all trade barriers between themselves within reasonable time. The meaning of the phrases 'substantially all' and 'reasonable time‘ has remained controversial with each party giving an interpretation that favours its interests. Lack of consensus on the meaning of these phrases has hindered the conclusion of negotiations for EPAs. In a nutshell, the question of WTO compatibility presents the biggest hurdle to the conclusion of the new trading arrangements between the EU and the ACP group. This paper is an evaluation of the options available to the ACP countries to conclude WTO compatible trading arrangements with the EU. Chapter one of this paper is an introductory chapter which offers an overview of the entire paper. Chapter two sets out in details the historical background of the economic relationship between the EU and the ACP states. This chapter illustrates the historical background from which the new trading agreements have evolved to help the reader understand certain key features of the current economic partnership agreements. Chapter three looks at the GATT/WTO provisions relevant to the establishment of WTO compatible trading arrangements between EU and ACP countries. Particular emphasis is placed on Article XXIV, the Enabling Clause and the WTO waiver. Chapter four is the main chapter in which the paper explores the possibilities of concluding WTO compatible trading agreements under Article XXIV, Enabling clause and the WTO waiver. Chapter five draws the conclusions of this paper.