Information note on the Economic Partnership Agreement (EPA) between the European Union and the ACP Countries and the role and place national Committees for the follow up and coordination of the EPA negotiations

§  Subject of the Economic Partnership Agreement (EPA) with the European Union

§  The Economic Partnership Agreements (EPA) signed at Cotonou on 23 June 2000 open a new era of cooperation between the European Community and the ACP countries. They provide for –within the commercial component- the replacement of the system non reciprocal trade preferences by the system of reciprocal preferences compatible with the rules of the WTO, which is the sole international body which takes care of the rules governing trade between States.

In fact and from 1975 to 2000 in effect, the EU and the ACP countries have privileged trade relations tuned by commercial preferences which provide for the most part of the products duty and customs free entry on the European unique market. But since the signature of the WTO agreement in 1994, the EU countries started a movement of reduction or pure and simple suppression of trade barriers vis- à-vis all countries, to conform to the rules of the organisation. Also the preferential margins accorded to the ACP countries as compared to other developing countries are only at an average of 2% today (that is 1.6% for industrial products and 4.5% for agricultural products).

The implementation of the EPA which should be signed latest on 31 December 2007 will last for 13 years, from 2008 to 2020. At the end of the transition, countries would have carried out the elimination of customs duties on European imports, thus granting them a preferential treatment.

§  The structure of negotiations of the Central Africa – European Union EPA

CEMAC countries extended to Sao Tomé & Principe have chosen to negotiate in block a Regional Economic Partnership Agreement for which the negotiations were launched in Brazzaville in October 2003.

These countries adopted a road map comprising a structure of negotiations of five levels : 
- the commercial ministerial Committee;
- the regional negotiations Committee ;
- the group of experts ;
- the contact group ;
- the regional preparation Task Force de;
- a national Committee of EPA negotiations, within each State (in principle composed of representatives of the public and private sectors and the civil society).

§  Impact of the EPA on the Cameroonian economy

The potential negative effects of the EPAs could easily carry the day over the expected advantages and that way destabilise the socio-economic fabric of the ACP States as well as the ACP regional integration processes. The fiscal repercussions include notably losses in public revenue resulting from the reductions of tariffs applied on imports from the European Union and that, if we take into account the last two generations of structural adjustments and related programmes implemented in some ACP countries, the economic consequences would include the potential closure of several enterprises and non competitive "nascent" activities, resulting in an unprecedented increase of unemployment.

The study of the impact of the EPA on the economy of the sub-region ordered by CEMAC has in any case demonstrated that the envisaged adjustments would have important repercussions on our economies looking at the weight of customs revenue in the resources of the State.

The PCI International Consulting cabinet evaluated the impact of the EPA on public Finance. This report of impact study of the EPA on the Cameroonian economy realised in 2005 was restored on the 18-19 January 2006 in Douala. This report evaluates the tax and customs revenue losses in 2008 to the tune of between 220 000 to 290 000 million for a 95% liberalisation Cameroon’s trade.

The method used integrates the trend curve methodological combination (by comparing the evolution of time to that of the yield of import customs duty) and the models general and partial equilibrium, basing on several hypotheses:

- the regression equation projects revenue from import customs duty at horizon 2008 at 221 930 million ;
- on the hypothesis of an invariable import tax system in 2008 ;
- on the hypothesis of a cancellation of import duties (customs revenue exclusive of VAT) for products coming in from the EU (imports from the EU weighing 50.4%) : a reduction of close to 120 000 million of import duties + 23 000 million VAT at importation collected at customs ;
- on the hypothesis of a cancellation 99.5% of import duties (with the hypothesis of a deceleration of growth of about 3% in 2008) : loss of close to 225 000 million of import duties + 65 000 million of VAT revenue at importation in 2008.

In order to prepare the consequences and reduce the chock of EPA, in general, some ACP countries have already carried out important adjustments of their tax structure, others have implemented budgetary adjustments. But much still has to be done…