Considered in Grand Committee
That the Grand Committee do report to the House that it has considered the European Communities (Definition of Treaties) (Central Africa Interim Economic Partnership Agreement) Order 2010.
Relevant document: 3rd Report from the Joint Committee on Statutory Instruments.
My Lords, the economic partnership agreements, or EPAs, with Cameroon and Côte d’Ivoire set in place a secure trading arrangement between these countries and the European Union to promote development-friendly trade. The arrangement is compatible with the World Trade Organisation’s provisions.
The agreements mean that Cameroon and Côte d’Ivoire will receive duty-free, quota-free access to European Union markets. Without them, these countries would face tariffs on up to 25 per cent of their exports, including on industries critical to their economies such as bananas and cocoa.
The EPAs allow Cameroon and Côte d’Ivoire to remove their own tariffs gradually, over 15 years, and each contains safeguards enabling them to protect infant industries and prevent import surges. However, in accordance with the wishes of Cameroon and Côte d’Ivoire, the EPAs do not include provisions on services, investment, procurement, intellectual property or other “deeper integration issues”.
Each agreement also contains a chapter on development, ensuring that Cameroon and Côte d’Ivoire receive the development assistance they need to make the most of the opportunities created by the EPAs. As a first step, in September 2009 the European Union signed off a €97 million package for Cameroon to accompany its EPA and to help boost its economy and trade activities. The UK is committed to monitoring this money closely to ensure that it is spent wisely and achieves the maximum impact on poverty reduction.
The benefits generated by duty-free, quota-free access to the European market and by improved rules of origin are the areas in which the EPAs will most quickly bring benefits. Without them, for example, the tariff on banana imports from Cameroon and Côte d’Ivoire would be €148 per tonne.
In the longer term, the biggest benefits will come from the increased trade and investment that will flow from Cameroon and Côte d’Ivoire removing their own tariffs and moving towards more open economies.
No nation can achieve prosperity by closing its borders to trade. Indeed, the World Bank’s 2008 Global Monitoring Report calculated that removing all trade tariffs could reduce the headcount poverty index by 5 to 6.5 percentage points over a 10-year period. A 1 per cent increase in Africa’s share of world trade would generate about $70 billion of additional income annually, which is about three times the total aid that Africa currently receives. So by removing tariffs and promoting free trade, the EPAs will deliver lasting benefits to Cameroon and Côte d’Ivoire, and to Britain.
To secure these gains for Côte d’Ivoire and Cameroon, we need to ratify these two EPAs. By agreeing to the orders today, the Committee will allow us to proceed without delay.
My Lords, I welcome the Minister’s opening remarks on the orders. She will be reassured that we largely welcome the agreements. The trading agreements are designed to support parts of the African economy and should benefit workers in training and employment generally. In turn, businesses and workplaces will be made safer and more efficient. As the Minister said, economic partnership agreements are intended to be broad agreements that help to build regional markets and diversify economies in the African, Caribbean and Pacific regions, before opening up the international benefits of increased, balanced and sustainable trade between the regions. They will change our relationship from one that offers tariff preferences to one that builds lasting and more efficient regional and international markets for the ACP regions.
The ACP economies are too small to go it alone and regional integration has the potential to boost local trade and to create larger markets, which will attract trade and investment. Eliminating the barriers between neighbouring countries and creating real integration favours trade exchanges and boosts economic growth. It also creates bigger markets that are more attractive to investors, and facilitates trade with landlocked countries. We have already heard from the Minister about the benefits of trade with Africa overall.
I have no criticisms of these agreements, but I would appreciate clarification from the Minister on a number of points. First, on the central Africa agreement, noble Lords will note that Cameroon is the only central African country to have signed the document. Its strong links with the EU are well documented. It is estimated that 61 per cent of its exports go to the EU and 56 per cent of its imports come from the EU. Will the Minister confirm that the agreement will strengthen the quality of the Cameroon economy, which might benefit its trade dealings outside the EU? Does she expect the agreement to be superseded by one that includes the seven countries of the Economic and Monetary Community of Central Africa and, if so, when? Are there plans for the agreement, or any future agreement, to be extended to cover not only goods but services? The Minister has spoken of the specific requests of Côte d’Ivoire and Cameroon that these be goods-only arrangements, but are there plans for wider arrangements that include services?
Obviously there are gains to be had when the less developed members of such trading arrangements gain fairer access to larger markets such as the EU. However, that is not the only prize. There is an opportunity to improve access to the larger, more developed markets of fellow African continental members. Does the Minister agree that that in itself is a big prize in expanding the membership of the central Africa group?
Finally on this agreement, is the Minister satisfied that the gradual reduction of tariffs on goods entering from the EU, such as vehicles, chemicals and power generation equipment that are not manufactured in Cameroon, will reduce production costs and product prices in the Cameroon economy quickly enough?
Will the Côte d’Ivoire agreement be a stepping stone to securing a larger agreement that encompasses more of western Africa? Whereas the EPA covering Cameroon has been established in preparation for a possible expansion under the central Africa banner, I am concerned that the Côte d’Ivoire EPA is restricted to just the one country. Will the Minister update noble Lords on the progress of the discussions on securing similar agreements with Côte d’Ivoire’s neighbours, in particular Nigeria and Ghana, but also other members of the Economic Community of West African States? When might we expect to see further developments towards a regional-based agreement for west Africa?
Countries such as Côte d’Ivoire are using the agreements as a gateway to larger markets among their African neighbours, which will allow them to grow their national industries before looking to other international markets in a significant way. Does the Minister see such goals as significant in the domestic economy of Côte d’Ivoire? Are those goals hampered by this being a single agreement with Côte d’Ivoire, without any additional African benefit? As with the Cameroon agreement, will the Minister confirm whether he has ambitions for an economic agreement covering not just goods but services? Does she feel that the reduction in the tariffs over 15 years on certain manufactured products that could drive the Côte d’Ivoire economy is being done over an appropriate period? We have heard about the case of the central African EPA, and the Côte d’Ivoire agreement will be negligible in its impact on UK imports and investment.
It would also be useful to know when the Minister last met the relevant trade Ministers from each country to ascertain what assistance they need to make best use of these agreements. It is vital that the interests of Cameroon and Côte d’Ivoire are central to the legislation. I am keen to find out whether the Minister’s department works closely with colleagues in DfID on such matters.
My Lords, I, too, wish to thank my noble friend for presenting these orders for approval and join in the support for the two orders. I thank the opposition spokesman for his points and questions. I associate myself with some of them in respect of future arrangements.
The European Union is making process in doing deals that are equitable for these countries, which are still very poor, but it does take time. The Lomé convention had many imperfections, but at least some progress was made. It was succeeded by the Cotonou agreement, which made still further strides, but I think the EPA system is better, because it can deal with segmental differences and the isolation of a particular product in more detail, which is a good thing. I, too, would be interested to speculate with the Minister whether other countries, not just Cameroon, will join in the central African part of the first order. A large number of countries were involved, and it would be interesting, if the Minister had time, briefly to enunciate why those negotiations with other countries did not go ahead and why they decided not to pursue that. There is still some feeling in west Africa that these agreements are inherently unfair and unbalanced. That is an over-exaggerated impression; the European Union is definitely trying to do something more for these countries, genuinely and sincerely—but there are still those anxieties.
Will the Minister, if she has time, speculate a little, although not too long, on the political situation in both countries? Unrest can of course delay economic progress. On the Côte d’Ivoire order, I presume that having the same list of products that will come from the EU as imports into Côte d’Ivoire, as in the central Africa agreement, is a sign of making these negotiations uniform. Presumably in future there will be significant differences. In the mean time, we wish these countries well in their development. They are not really significant for United Kingdom exports, and for imports to them. We are very marginal in both those places. Whether that is a good idea or not I do not know, but there has been a habit for it to be dominated by the French and, to a lesser extent, the Germans, Dutch and Belgians. I hope that in future there will be more British business activity in these countries and the rest of west Africa. I agree with the opposition spokesman that an all-territorial agreement for all the countries would be a very good achievement in future.
My Lords, I am delighted to see the noble Lord, Lord Young, in the Room. I seem to follow him on all sorts of things that he has started, and which I finish. He hit me with a flurry of questions, most of which I will not be able to answer this fast, as he will know from being in this Room and trying to do so. However, I may be able to cope with one or two. He knows this subject very well, and most of his questions seemed to seek reassurance that we will follow the line that he has taken before.
In response to a question asked by the noble Lord, both the Cameroon and the Côte d’Ivoire EPAs are intended to be stepping stones to full regional EPAs. Côte d’Ivoire is part of the western Arica grouping, and, with the other nations in the group, it continues actively to negotiate a regional goods-only EPA. The negotiations are moving slowly, but some progress was made in 2010 and they could be concluded in 2011. Cameroon is part of the central Africa grouping, as the noble Lord will know. That grouping contains a large number of fragile states, such as the Democratic Republic of Congo, for which signing an EPA with the European Union is not a priority at this time. The Cameroon interim EPA is therefore likely to remain in place for several years, but the European Commission stands ready to negotiate a regional EPA, and, when the region indicates that it is ready, we will be able to move.
The services will come later, as the United Kingdom must negotiate at the pace of the developing countries. They must feel comfortable with the pace at which we are working and not intimidated or pressured by us, so that they have a chance to get used to systems that we ourselves find easy to use.
In response to the noble Lord, Lord Dykes, Cameroon and Côte d’Ivoire will liberalise gradually over 15 years. As to the political situation, the European Union has pledged more than £500 million to help to implement the agreements. This will help to overcome the difficult political situation and, we hope, will provide greater political stability. As I said in my opening remarks, this is the right way to develop with these countries so that they do not feel pressured by us but, at the same time, free trade is extended across the world, particularly with Côte d’Ivoire; Cameroon; the South African Development Community; the Pacific, eastern and southern African regions; and so on. It all takes a great deal of time, as the noble Lord, Lord Young, knows very well, but I think that it will be worth while in the end.
I do not think that I have picked up anywhere near as many questions as I have been asked but I know that we will reply to noble Lords in writing unless there is a very pressing matter that I have not managed to answer now. I thank all noble Lords for their contributions today and commend the orders to the Committee.