SIA of negotiations of ACPEU Economic Partnership Agreements

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SIA of negotiations of ACP-EU Economic
Partnership Agreements
MIMAP NetworkMicro Impacts of Macroeconomic and
Adjustment Policies
Forum pour lAfrique
9 March 2004 (Phase 2)
This report was prepared with financial
assistance from the Commission of the European
Communities. The views expressed herein are those
of the Consultant, and do not represent any
official view of the Commission. This is one of a
series of Sustainability Impact Assessment (SIA)
projects coordinated by PricewaterhouseCooopers.
For more information about our Consortium and
this project, please visit our website
www.sia-acp.org
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Outline of Presentation

• The EU-ACP SIA Phase II Terms of reference for
  year 2
• II. The EU-ACP SIA Phase II Proposed Sectors
• Caribbean Tourism services
• Western Africa Fisheries
• Central Africa Textiles
• Southern and Eastern Africa Food Crops

PricewaterhouseCoopers
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Terms of Reference Phase II

• Provide in-depth sustainability impact
  assessments of the EC-ACP EPA negotiations for
  four sectors in four different ACP regions
• two agriculture sectors
• one industrial sector
• one service sector
• Include a comprehensive consultation process and
  continued maintenance of a dedicated website.
• Produce three reports an inception report, a
  midterm report and a final report.

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Terms of Reference Phase II (contd)

• The inception report will give a detailed
  overview of the structure and organisation of the
  work and will propose the specific
  sectors/regions for work and details of the
  consultation process.
• The midterm report will summarise the work
  undertaken and will present questions and issues
  to be addressed.
• The final report will include the results of the
  sectoral SIAs including detailed policy
  recommendations communication and consultation
  activities the methodology conclusions and
  recommendations for further work and references
  and key sources.

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Rationale for selecting specific sectors

• Significant for economy, environment and social
  well-being (based on hot spots determination)
• Significant trade flows (volume and value terms)
• May be impacted by EPAs (Major trade measures
  Challenges and/or opportunities)
• May be important sustainability impacts (at
  local/regional level for different actors
  including EU outermost regions).

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Proposed Sectors for Phase II

• Caribbean Tourism services
• Western Africa Fisheries
• Central Africa Textiles
• Southern and Eastern Africa Food Crops

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Caribbean Tourism services
MIMAP NetworkMicro Impacts of Macroeconomic and
Adjustment Policies
Forum pour lAfrique
8
Tourism in the Caribbean

• Definition
• GATS classification Tourism Travel related
  services
• Hotels and restaurants (incl. catering)
• Travel agencies and tour operators services
• Tourist guide services
• Other
• Is this broad enough?
• Major inputs
• goods (e.g., food, beverages, man-made products)
• other services (e.g. telecommunications,
  transport, insurance)
• Geographic scope All the ACP Caribbean
  countries (specific emphasis to be determined)

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Significance for economy

• Caribbean economies are mainly tourism economies
• Contribution to GDP e.g., 71.1 in AB
  50.6 in St Lucia
• Higher contribution if linkages with other
  sectors are taken into account
• High vulnerability of the economies to external
  shocks
• Different types of tourism. business tourism
  (eg. TT), eco-tourism (e.g. Guyana, Surinam,
  Belize), all-inclusive holidays (e.g. DR,
  Jamaica), multifaceted tourism experiences
  (eco-tourism, adventure, casino, cultural, sport
  tourism)
• With different spin-off effects on the local
  economy little impact from cruise tourism,
  stronger impact with land-based hotels depending
  on whether they are enclave-resort or traditional
  accommodations
• High degree of foreign ownership for large hotels

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Significance for environment

• Environment is a key resource for the tourism
  (contributes to the attractiveness and
  competitiveness of the region)
• Tourism contributes to environmental degradation
  (destruction of natural assets, pressure on
  water, sewage)
• Vulnerability to global and regional accidents
  (global warming, El Nino, cyclones)
• Development of sustainable tourism practices

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Significance for social-well being

• Tourism sector is a major employer 1 in every 4
  jobs
• Mainly women
• Often low qualified
• Problem of working poor
• Social and cultural frictions

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Significant trade flows

• The 4 GATS modes of supply
• Mode 1 Cross-border supply (e.g. Internet
  bookings)
• Mode 2 Consumption abroad (e.g. tourists
  consuming accomodations, catering)
• Mode 3 Commercial presence (FDI)
• Mode 4 Presence of natural persons (e.g. guides
  from abroad)
• Caribbean is a major destination for EU consumers
• Caribbean is an important destination for
  European FDI

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Potential impacts of EPAs

• Trade measures
• Market access and national treatment for each
  mode and sub-sector in tourism and other services
  sectors (telecommunications, electricity,
  insurance, environmental services)
• already a high degree of liberalization compared
  to other ACP countries (incentives and
  concessions to attract FDI)
• but still some limitations (e.g. Hotel proprietor
  Act, withholding tax)
• Tariff on imported goods used as inputs in the
  tourism sector
• Modes 2 and 4 from the EU
• Non-trade measures domestic regulations

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Potential impacts (cont d)

• Challenges
• Limitation of the heavy reliance on FDI/ local
  involvement
• Reduction of the global economic vulnerability
• Diversification and quality of tourism
• Management of the environmental pressure
• Development of sustainable practices
• Opportunities
• Increased FDI and transfers of sustainable
  practices
• Increased competitiveness and attractiveness of
  the region
• Increased employment and reduced poverty
  (depending on wages)
• Increased linkages with other sectors

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Western Africa Fisheries
MIMAP NetworkMicro Impacts of Macroeconomic and
Adjustment Policies
Forum pour lAfrique
16
Fisheries Sector in ECOWAS countries

• Definition of the sector
• HS codes 0300, 0301, 0302, 0303, 0304 , 0305,
  1600, 1603, 1604 covering Fish and Crustaceans,
  Molluscs and Other Aquatic Invertebrate (fresh,
  chilled, frozen, dried, salted, and preparation,
  extracts and juices of).
• Reform of the Common Fishery Policy as of January
  2004 to preserve stock protect the marine
  environment, match fleet size to supply and
  provide consumers with quality fish at affordable
  prices.
• International cooperation

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Fisheries Sector in ECOWAS countries
International Cooperation of CFP

• Current situation Bilateral Fisheries
  Agreements Financial compensation in exchange of
  access rights to the EEZ.
• EU Proposal to move to Partnership Agreements
  aiming at a sustainable development of fisheries.
• Others important international factors
• Emergence of new actors (Asia)
• Increase of pavillion de complaisance boats
• Low respect for international fisheries agreements

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Fisheries Sector in ECOWAS countries
Geographical Scope

• EU Bilateral Fishery Agreements with 6 ECOWAS
  countries Senegal, Mauritania, Guinea,
  Guinea-Bissau, Côte dIvoire, Cape Verde.
• Also take into account Western African
  land-locked countries as potential regional
  markets for fisheries production.
• In the EU, focus on France, Portugal and Spain.

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Fisheries Sector in ECOWAS countries Economic
Importance in ECOWAS

• Economic Dimension
• Value of fish exports to EU mainly Senegal and
  Mauritania
• Financial Compensation for access right to EEZ to
  fish surplus not exploited by national fishers
  Senegal, Mauritania and Guinea Bissau.
• Importance of the sector in terms of public
  budget Guinea Bissau (30 ), Mauritania (15 ).

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Fisheries Sector in ECOWAS countries Social
Importance in ECOWAS

• For all countries, especially
• Côte dIvoire the fishery sector generates
  directly around 70,000 jobs and indirectly,
  400,000 jobs.
• Mauritania 36 of the jobs in the modern sector
  are in fisheries.
• Senegal over 600,000 people work directly or
  indirectly in the sector.

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Fisheries Sector in ECOWAS countries
Environmental Importance at world level

• Sharp reduction of world fish stocks.
• Trend to fishing ever younger fish, thus
  endangering the renewing of the species.
• Short-term financial compensation does not
  compensate for the long-term negative
  environmental impacts and the dramatic reduction
  of fish stocks.
• Danger of scarcity of the local market with
  negative impacts on local population nutrition
  habits.

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Fisheries Sector in ECOWAS countries Economic and
Social Importance for EU

• EU One of the main third-world fishing powers
  and the first market for processed products and
  aquaculture.
• 260.000 fisherman in the EU and more indirect job
  generated less then 1 of total EU but more
  then 10 of job in 20 precise geographical
  areas.
• Whole production chain (fishing, aquaculture,
  processing and marketing) accounts for 0.28 of
  EU GDP ( 20 billion).
• Direct value-added of fishing agreements 220
  million /year Indirect value-added around 500
  million /year 33,000 jobs created.
• More than 80 of these benefits go to Spain
  France and Portugal account for 7 of these
  benefits each.

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Potential impacts of EPAs Challenges

• Trade measures not an issue in the EU (EBA-Lome
  Protocols).
• Danger of Fishery Agreements for the African
  countries highly subsidized European commercial
  fleets competing with poor, artisanal African
  fishers that cannot afford to invest in modern
  boats.
• Market segmentation Deep sea EEZ only exploited
  by EU boats and national fishers reduced to
  coastal zones.
• Food security dimension in Senegal, over 70 of
  local fish consumption come from around 60,000
  artisanal fishers.

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Potential impacts of EPAs (contd)Opportunities

• Sustainable Development Partnership in Fisheries
  Sector.
• To direct an even more important share of
  financial compensation to the development of the
  sector.
• To invest at the first stage modernization of
  the fleets.
• To invest at the second stage in the
  transformation chain to add more value in situ.
• Investment in the building/modernization of
  infrastructure both in coastal zones (ports,
  etc.) and between the coast and the landlocked
  countries (Mali, Niger, Burkina-Faso).

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Potential impacts of EPAs (contd)Opportunities

• Building a comprehensive cold chain in West
  Africa
• to transport fish and fisheries products from
  the coast to the landlocked countries (implying a
  progressive shift in the nutrition habits of the
  populations).
• to export products from the landlocked countries
  fresh out of season fruits and vegetables,
  meat to Europe and more generally the overseas
  market via the coastal infrastructures.

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Central Africa Textiles
MIMAP NetworkMicro Impacts of Macroeconomic and
Adjustment Policies
Forum pour lAfrique
27
Textile Industry in CEMAC countries

• Definition of the sector
• HS codes 5205,5208,5208 covering production of
  cotton yarns, unbleached fabrics, finished
  products including clothes
• Allows SIA of an industrial sector both for local
  and export markets
• Linkages with cotton production and finishing
• Efficiency of regional organisations
• Possible synergies with textile industry in the
  EU

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Textile Industry in CEMAC countries

• Geographical scope
• EU mainly Germany, France and Italy
• Cotton producers in CEMAC
• Cameroon CICAM significant textile industry
• Chad significant cotton producer but no textile
  industry
• CAR smaller cotton producer but with a former
  textile industry

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Textile Industry in CEMAC countriesImportance in
CEMAC

• Economic
• West and Central Africa third world exporter of
  cotton fibres after the US and Uzbekistan. But is
  the only region where there is no significant
  transformation to cotton production (only 7
  transformed in Cameroon compared to US 62 or
  Brazil 159).
• The cost of cotton production in Central African
  is considered competitive and raw material
  account for 52 of the final price of yarn
• Adds value to cotton fibers

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Textile Industry in CEMAC countriesImportance in
CEMAC (contd)

• Market opportunities in the EU (duty and quota
  free)
• Market opportunities in other African countries
  benefiting from AGOA agreement and forced to
  include African raw materials including yarns and
  unbleached fabrics
• Local market and regional market demand expanding
  (3/year) but competition from Asian imports and
  worn clothes

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Textile Industry in CEMAC countriesImportance in
CEMAC (contd)

• Social
• Significant job and revenue creation in poor
  areas close to production zones for yarn and
  unbleached fabrics (4,000 tons/year production
  plant 900 jobs).
• Job creation in urban areas (700 jobs per 4,000
  tons/year finishing textile plant).
• Qualified jobs inducing education and training to
  improve skills.
• Local production of yarns allows creation of
  traditional handlooms and clothing SMEs and
  additional job creation.

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Textile Industry in CEMAC countriesImportance in
CEMAC (contd)

• Environmental issues related to textile industry
  are significant and include
• Inefficient use of water and energy where there
  is a shortage of supply both in North Cameroon
  and Chad.
• High level of noise and dust in the spinning
  process.
• Use of dyes and harmful chemicals in the
  finishing process inducing a problem of water
  treatment which is expensive (2 million US on
  average for a 4,000 tons/year capacity) in a
  context where there is a concentration of
  industries and no common water treatment.

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Textile Industry in CEMAC countriesImportance in
the EU

• Economic
• Final consumption of textile products in Europe
  is increasing with 7.86 million tons in 2000 and
  a forecast consumption of 10.5 million tons in
  2010. At the same time industrial consumption of
  semi-finished textile products is shrinking with
  5.36 million tons in 2000 and a forecast of 4.0
  million tons in 2010.
• The trend of the spinning industry in Europe is
  to delocalise or abandon this activity and
  purchase semi-finished products) to be
  transformed to high value products.

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Textile Industry in CEMAC countriesImportance in
the EU (contd)

• Social
• loss of 1/3 of the jobs in the textile industry
  in the past ten years in the EU, mainly in
  France, Germany and Italy.
• Environmental
• Possible use of African cotton by products
  considered environmentally friendly compared to
  other producers (less chemicals inputs, rain felt
  production, small farmers ( 1 to 5 ha).

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Potential impacts of EPAs

• Trade measures
• Not an issue in the EU (EBA-Lome Protocols)
• CEMAC protection of local and regional markets
• FDI needed and partnership with EU textile
  companies
• Trade facilitation improvement of regulatory
  environment, port facilities, export procedures
  etc.

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Potential impacts of EPAs

• Challenges
• CEMAC enforcement of regulations and controls.
  Dealing with Nigeria and informal regional trade.
  
• Opportunities
• EU contribute to maintain and develop textile
  industry in partnership with ACP cotton
  producers.
• CEMAC add value to local production, create
  revenues and jobs, maintain and develop cotton
  production.

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Southern Eastern Africa Food Crops
MIMAP NetworkMicro Impacts of Macroeconomic and
Adjustment Policies
Forum pour lAfrique
38
Food crops in Eastern and Southern Africa

• Definition
• ESA countries maize and cassava
• large volume of production, not specific to one
  or two countries, significant trade flows,
  including regional trade, export opportunity
  (processing cassava)
• EU wheat
• 2nd world producer, 5th exporter, 1st
  agricultural product export from the EU to ESA
  countries
• Geographic scope
• The EU (including new member states)
• Main producers in ESA DR Congo, Uganda,
  Madagascar, Malawi, Rwanda, Ethiopia, Kenya,
  Zambia, Zimbabwe

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Importance in the EU

• Economic
• 5.9 of total value of agricultural production
  (EU 15), higher share in some new member states
• Social
• Large or medium size farms, trend to increase.
• Low level of employment
• High farmers income, rely on CAP support
• Environment
• in specialized areas poor water management,
  water pollution, negative impact on soil, loss of
  biodiversity.

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Importance in ESA countries

• Economic agriculture share of GDP remains high
• Social linked to food security
• most of population in rural areas - most of them
  produce food products
• supply side
• access side (income)
• key role of women in food security at household
  level
• negative impacts of food aid to face food
  shortages
• development of wheat consumption in urban areas /
  middle class

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Importance in ESA countries (contd)

• Social (continued)
• processing of maize and cassava income
  diversification, source of employment
• Environment
• Intensive maize production decrease soil
  fertility
• vulnerability to climate change (floods,
  droughts) in Southern Africa
• positive effects of cassava production on soils -
  high flexible production
• introduction on GM maize and cassava

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Potential impacts of EPAs

• Trade measures
• EU arable crops support - export subsidies
• ESA state trading enterprises - food security
  stocks - tariffs
• Challenges in ESA, openness to wheat imports
  increase competition with local production.
  Impact on small farmers.
• Opportunities
• EU compete with USA and other suppliers in some
  national markets
• ESA
• response to urban demand.
• export cassava products to EU markets, for the
  feed industry.

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