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ACP States Risk Losing Duty-Free Access To EU

by Lorys Charalambous, Tax-News.com, Cyprus

07 October 2011


The European Commission (EC) is proposing to amend the Market Access Regulation (MAR) governing the trade conditions for certain developing countries that have negotiated, with the European Union (EU), Economic Partnership Agreements (EPAs) which have yet to be signed and ratified.

The MAR governs the EU import regime for 36 African, Caribbean and Pacific (ACP) countries that negotiated EPAs in 2007. It is a bridging solution for the countries that have negotiated EPAs, but not yet signed and ratified. In order to avoid a disruption in trade, the MAR anticipates the duty free access that the EU offered in these agreements whilst the 36 countries moved towards ratification.

The EC has pointed out that the MAR was conceived as a temporary solution, and not a permanent facility. It believes that four years of application has provided enough breathing space for ratification or further negotiation, and it is therefore “time to bring the process to a close”.

It is proposed, therefore, to withdraw the MAR from the countries that have not taken the necessary steps towards ratifying the EPAs signed with the EU. Eighteen countries (14 in the Caribbean, plus Madagascar, Mauritius, Seychelles and Papua New Guinea) have taken the necessary steps towards ratification of initialed agreements, and will continue to use the facility, but the other 18 countries have not even signed their agreement or are still not applying it.

It has been pointed out that this is neither a new policy nor a fundamental change of approach “as it has always been a cornerstone of the EC's strategy to put ACP-EU trade relations on a solid legal footing based on the respect of World Trade Organization and EU law, (and) balance and fairness towards other ACP and, indeed, non-ACP developing countries”.

To maintain free access to the EU, the 18 countries can take the necessary steps towards ratification of existing EPAs or conclude new regional agreements with the EU. On the other hand, if they opt out of EPAs, nine countries (Burundi, the Comoros, Haiti, Lesotho, Mozambique, Rwanda, Tanzania, Uganda and Zambia) are Least Developed Countries and can therefore benefit from duty- and quota-free access to the EU under the Everything But Arms scheme.

Furthermore, seven of them are low-income or lower middle income countries (Cameroon, Fiji, Ghana, Ivory Coast, Kenya, Swaziland and Zimbabwe) that could benefit from the Generalised System of Preferences (GSP) regime. The timing of the changes to the MAR will match the entry into force of the new GSP.

The last two countries, Botswana and Namibia, are currently upper middle-income countries and, if this status is confirmed in three consecutive years, would not qualify for preferential access under the proposed revision to the GSP, but, if they decide to go ahead with ratification of their EPAs, they could be re-instated in the MAR through a fast track procedure. They could also be involved in ongoing regional negotiations.

The EC is proposing that the amending regulation will not enter into force before January 2014, and this, it is hoped, will give those countries that are potentially affected the time to implement an EPA and thus maintain their current free access to the EU. The proposal is now being transmitted to the European Council and Parliament for discussion and, eventually, adoption.

TAGS: Haiti | tax | European Commission | Mauritius | Swaziland | Zimbabwe | law | tariffs | trade treaty | Comoros | Fiji | Lesotho | Madagascar | Mozambique | agreements | Botswana | Cameroon | Guinea | Kenya | Namibia | Papua New Guinea | Rwanda | Uganda | Zambia | import duty | regulation | trade | European Union (EU) | Burundi | Ghana | Seychelles | Tanzania | Europe

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