The private sector in the Pacific region could derive significant benefits from a comprehensive Economic Partnership Agreement (EPA) with the European Union (EU).Addressing an EU-Pacific Business Forum held at the fringes of the African, Caribbean and Pacific (ACP) Ministerial meeting in Port, Vila, Vanuatu this week, Forum Secretariat Deputy Secretary General, Ms Andie Fong Toy said that the comprehensive EPA could offer real advantages to the private sector when compared to the other trading arrangements such as the Generalised System of Preferences and the "Everything But Arms" schemes that most of the Pacific ACP countries are utilising for their exports to Europe.
"Such schemes are only concerned about market access (tariff concessions only) of goods into the EU market and do not address the broader development needs of the Pacific ACP private sector," Ms Fong Toy explained.
She said that a comprehensive EPA with the EU would not just allow for 100% duty free and quota free market access into the EU for Pacific ACP exports (except for sugar which is subjected to quotas until 2015), but would also "aim to achieve development objectives including through the promotion of regional integration, the gradual integration of PACP countries into the world economy, capacity building in trade policy and trade related issues, and supporting the conditions for increased investment".
Ms Fong Toy stated that the development dimension of the comprehensive EPA that is proposed by the Pacific also recognises the importance of development resources to address EPA adjustment costs and broader trade-related issues such as improving trade infrastructure and addressing supply side constraints.
She further stated that development cooperation and aid-for-trade resources are needed to address EPA implementation needs as well as wider trade-related needs. The comprehensive EPA seeks to address these issues through a development cooperation chapter which is being negotiated with the EU.
The development dimension is also reflected in the trade related rules of the comprehensive EPA that has been proposed by the Pacific and will, for example, address issues such as the protection of Pacific infant industries and preserve development policy space. Improved rules of origin for exports to the EU could also open up new opportunities for trade and investment for both Pacific and EU businesses. Key sectors that could benefit from favorable rules of origin that are being negotiated in the comprehensive EPA include fisheries, garment and agro-processing sectors.
The proposed comprehensive EPA provides legal avenues for dispute settlement to ensure that trade issues are addressed in a transparent and accountable manner. Special bodies and mechanisms are proposed to discuss and arbitrate on trade issues such as the Joint Council and Trade and Development Committee responsible for implementation and monitoring of the EPA.
Forum Secretariat Deputy Secretary General Ms Fong Toy stated that, "Time is of essence to the successful business person and the EPA ensures that there is effective communication and timely flow of information between key agencies involved in the implementation of the agreement, especially in areas such as customs and bio-security, so as to avoid any unnecessary disruption to trade."
Ms Fong Toy also stated that the comprehensive EPA will provide the private sector with predictability and transparency in the application of trade rules as it will be a treaty that will bind the parties for an indefinite period of time.
"Having clear trade related rules increases transparency and predictability and ensures that there is no 'shifting of the goals' and both parties are on the same page on a particular issue."
Deputy Secretary General, Ms Fong Toy, further explained that unlike any other current trading arrangements in place between the Pacific ACP states and the EU, the comprehensive EPA is expected to cover both the trade in goods and could be extended to trade in services in future to assist with diversification of exports and promotion of both trade and investment opportunities.
"The comprehensive EPA with the EU," Ms Fong Toy said, "will see the creation of a business environment which stimulates business development and the establishment of a modern trade infrastructure in the Pacific. The EPA provides the framework for the private sector to utilise opportunities and be the catalyst in realising the potential benefits. The private sector will contribute to job creation, increasing exports, improvements in government revenues and consequently contributing to balance of payments, and addressing social issues such as poverty and unemployment."
However, she pointed out that, for this to happen, governments need to put in place appropriate legislative and institutional measures to address bottle necks and facilitate trade.
Ms Fong Toy explained to the Business Forum that the comprehensive EPA currently being negotiated with the EU builds on the interim EPA signed by Papua New Guinea and Fiji in 2009. These two countries signed the interim EPA primarily to avoid disruption of trade for key commodities - canned tuna and sugar. All 14 Pacific ACP states are currently negotiating a comprehensive EPA with the EU as a single region and aim to conclude negotiations before the end of 2012 as mandated by Pacific ACP Leaders at their meeting last year.
The Pacific ACP states are ready to move forward with substantive negotiations on a comprehensive EPA with the EU.