ABSTRACT
Article 34 of the CPA defines the objectives of the economic and trade cooperation between the ACP and the EU. According to this article, such cooperation should aim at promoting the smooth and gradual integration of the ACP countries into the world economy; enhancing their production, supply and trading capabilities; creating new trading dynamics and fostering investment; and ensuring full conformity with WTO provisions, including special and differential treatment (SDT) and active participation in the multilateral trade system (MTS) (see Ongunglo and Ito, 2003). The emphasis on WTO compatibility arises from the fact that the unilateral preferences extended by the EU to the ACP countries in the context of the Lomé Conventions were declared illegal in the WTO when challenged by other WTO members, notably some Latin American countries concerned at being disadvantaged in their access to the EU market for bananas and other products. The EU sugar regime, which included related provisions of the Sugar Protocol under the CPA, was also successfully challenged at the WTO by Australia, Brazil and Thailand. The CPA states that the new WTO-compatible arrangements should be introduced gradually. During the preparatory period leading to the introduction of these new arrangements, the non-reciprocal preferences applied under the Fourth Lomé Convention shall be maintained (Article 36.2 and 36.3 of the CPA) and EPAs shall be negotiated. The EPAs will be undertaken with the ACP countries
in a position to do so, and take into account the regional integration process within the ACP (Article 37. 5 of the CPA). In order to maintain the existing level of non-reciprocal preferences, the EU, with the support of ACP countries, applied for a waiver at the WTO.3 This waiver, which was granted in 2001, was set to expire on 31 December 2007, at which point EPA negotiations were to be concluded. In addressing WTO compatibility, the ACP and the EU broadly had two options: (i) defining a programme of unilateral preferences equivalent to the CPA to be covered by the enabling clause;4 or (ii) establishing a free trade area (FTA) within the meaning of Article XXIV of the GATT. The EPA negotiations have been construed to constitute FTA, and thus must comply with the provisions of Article XXIV of the GATT, adopted in 1947, and its Understanding of 1994 as a result of the Uruguay Round. The second option implies that the trade relationship between the ACP states and the EU should be based on reciprocity, representing a fundamental shift from the approach enshrined in the Lomé framework based on non-reciprocal preferences provided by the EU. The CPA conceived the EPAs as reciprocal arrangements, stating that ‘the Parties agree to establish World Trade Organization (WTO) compatible trading arrangement, removing progressively barriers to trade among them and enhancing cooperation in all areas relevant to trade’ (Article 37.7). However, the Agreement also states that the EPA negotiations will be as flexible as possible with respect to key parameters, while remaining in conformity with WTO rules ‘then prevailing’, since there was already the expectation that WTO rules relating to RTAs might be modified in the context of a new round of multilateral trade negotiations at the WTO. The CPA further states that the EU and the non-least developed country (LDC)5 ACP countries not in a position to sign an EPA will consult and examine alternative possibilities to provide these countries with a new framework that is equivalent to their existing situation, in conformity with the WTO (Article 37.6 of the CPA).6
