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SIA of negotiations of ACPEU Economic Partnership Agreements

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Title: SIA of negotiations of ACPEU Economic Partnership Agreements


1
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
2
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
3
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.

4
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.

5
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).

6
Proposed Sectors for Phase II
  • Caribbean Tourism services
  • Western Africa Fisheries
  • Central Africa Textiles
  • Southern and Eastern Africa Food Crops

7
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)

9
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

10
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

11
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

12
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

13
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

14
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

15
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

17
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

18
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.

19
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 ).

20
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.

21
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.

22
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.

23
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.

24
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).

25
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.

26
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

28
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

29
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

30
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

31
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.

32
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.

33
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.

34
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).

35
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.

36
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.

37
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

39
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.

40
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

41
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

42
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.

43
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