ABSTRACT
A broad consensus exists that since the signing of the original Lomé agreements with the European Union (EU) in 1975, the export performance of the African, Pacific and Caribbean (ACP) group of countries has been disappointing compared to other developing countries – their share in both world exports and in imports by the EU has declined over time. This happened in spite of receiving preferential market access to the European market for the last 35 years. Over 95 per cent of ACP exports entered the EU duty-free in 2006 (Curran et al., 2008). Preferential access was thus deemed to have failed in terms of catalysing the desired export supply response and product and market diversification. The Economic Partnership Agreements (EPAs) can in part be seen as a response to this perceived failure – the declining share of ACP countries in global trade is taken as a signal of lack of competitiveness on international markets – the basic idea being that if the supply-side has not reacted favourably to preferential market access, a deeper process of mutual liberalisation of trade between the EU and the ACP may provide the necessary stimulus to exports. At face value, however, it is difficult to see exactly what the EPAs offer to the ACP countries. Least-developed ACP countries (LDCs) already qualify for preferential access under the EU’s Everything but Arms (EBA) initiative. These LDCs would be granting tariff-free access to the EU in return for preferences to which they are already entitled (Mold, 2007). Developing (i.e. non-LDC) ACP countries, however, are not entitled to the same preferences and would, to the extent that they compete in the same products, be at a disadvantage relative to LDCs if they did not sign an EPA (see the discussion in Chapter 2). For such countries, preferential access to the EU plus any net benefit from regional integration would have to be weighed against the cost of giving the EU preferential access to their own domestic and regional market (see discussion in Chapter 3). This chapter provides an overview of the export goods1 performance of the ACP countries as a group,2 both at the global level and, in particular, with respect to the EU, and then proceeds to analyse econometrically the fundamental determinants of their export performance. In this way, the analysis will throw some light on what can be expected from the EPAs in terms of their potential impact on supply-side capacity in the ACP countries. Reference will be made to previous studies on sub-Saharan Africa (SSA), as it is on this region that most
case fairly representative of the ACP countries as a group). The structure of the chapter is as follows. Section 8.1 presents some of the stylised facts on ACP exports. Section 8.2 reviews past evidence on the effects of trade liberalisation on export performance. Section 8.3 discusses the determinants of export volumes for ACP countries, emphasising the role played by world commodity prices. Section 8.4 concludes by drawing some policy implications.
