JOINT COMMITTEE ON FOREIGN AFFAIRS AND TRADE díospóireacht -
Wednesday, 4 Apr 2012

Partnership Agreements with ACP Countries: Discussion

Chairman

We will proceed to the presentation by officials from the Department of Foreign Affairs and Trade and the Department of Jobs, Enterprise and Innovation on COM (2011) 598, a proposal relating to the economic partnership agreements with the African, Caribbean and Pacific, ACP, countries. From the Department of Foreign Affairs, I welcome Mr. Finbar O'Brien, counsellor, multilateral section of Irish Aid, and his colleague, Ms Mary Barrett, assistant principal, multilateral section of Irish Aid. From the Department of Jobs, Enterprise and Innovation, I welcome Mr. Gerard Monks, principal officer in the trade policy unit. I thank the delegates sincerely for attending to consider this EU proposal.

Before I invite the witnesses to make their presentation, I advise them that they are protected by absolute privilege in respect of utterances at this committee. However, if they are directed by the committee to cease making remarks on a particular matter and they continue to do so, they are entitled thereafter only to a qualified privilege in respect of their remarks. They are directed that only comments or evidence in relation to the subject matter of this meeting are to be given, and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against a Member of either House of the Oireachtas, a person outside the Houses, or an official, by name or in such way as to make him or her identifiable.

The committee understands that this proposal arises out of rulings by the World Trade Organisation. These rulings state the unilateral trade preferences of which the EU had previously granted to the African, Caribbean and Pacific, ACP, countries established unfair discrimination between developing countries. We understand that since 2002, the EU has been negotiating a series of new trade and development agreements with these ACP countries and that the original aim had been to conclude these agreements by the end of 2007. However, only one agreement was ready to be concluded at that time and a bridging solution to prevent trade disruption for these countries was introduced that provided for duty-free market access. Improved rules of origin for ACP countries in the short term were introduced.

We understand that a number of countries are still not ready to ratify an economic partnership agreement and that the proposal before us would have the effect of excluding those countries from the bridging solution and that they would therefore lose their tariff-free access to EU markets. The committee, when it first considered this proposal, had a number of concerns. What would the effect of exclusion be on the people in the countries affected? What are the difficulties that these countries have in concluding agreements? What is being done to assist them? These are among the questions which members will have. I now invite Mr. Finbar O'Brien and his colleagues to address the committee on this proposal. They are very welcome.

Mr. Finbar O’Brien

We are very happy to have the opportunity of meeting the joint committee as part of its scrutiny of the proposal. In my opening remarks, I would like to give an overview of the proposal and we will be very happy to answer any questions members may have on specific details later. This proposal seeks to amend the 2007 regulation which provided for duty and quota-free market access to the European Union for African, Caribbean and Pacific, ACP, countries which had agreed and initialled full or interim economic partnership agreements with the EU but had not yet signed or ratified them.

The ACP countries were listed in Annexe 1 to the regulation. This new proposal seeks to amend that list of countries in Annexe 1 by removing those countries which have still not taken the necessary steps towards ratification of their economic partnership agreement. This action is permitted under the 2007 regulation, which provided that the European Council could remove a country from Annexe 1 where it indicated it intended not to ratify its economic partnership agreement or where ratification had not taken place within a reasonable timeframe.

The proposal, as adopted in September, seeks to remove 18 of the 36 countries listed in Annexe 1. However any of these 18 countries which proceeds to take the necessary steps towards ratifying its interim economic partnership agreement or agrees a new full regional economic partnership agreement, EPA, by 1 January 2014 can continue to benefit from trade preferences under the 2007 regulation. If such countries take the necessary steps after that date, the proposal provides the mechanism whereby they could be reinstated as soon as possible to provide continuity of their market access. In this context we received positive news from the European Commission just last week that Zimbabwe has ratified its interim EPA. This means the number of countries now affected by this proposal is 17.

At this point, it is important to provide some background information on economic partnership agreements, EPAs, and the circumstances which led to this regulation. Historically, African, Caribbean and Pacific, ACP, countries benefitted from unilateral trade preferences with the EU. However, as indicated, these were deemed to violate World Trade Organisation, WTO, rules on the basis that they established unfair discrimination between developing countries. In 2000, the European Union and 77 ACP states concluded an agreement, known as the Cotonou Agreement, which is the most comprehensive partnership agreement between developing countries and the EU. Its overall objective is reducing and eventually eradicating poverty and a key strategy is the creation of a new trade and development framework based on economic partnership agreements.

On this basis, in 2001 the World Trade Organisation agreed to give a waiver to the EU to continue the unilateral preferences until 31 December 2007. The original intention was for the European Union to conclude comprehensive EPAs with the six regional groupings of the ACP states. Following protracted and difficult negotiations, only one of the regional groupings, the Caribbean, was in a position to initial a full EPA before the December 2007 deadline. A total of 21 other ACP countries initialled interim agreements in smaller sub-groups or individually. At the same time, on 20 December 2007, to avoid trade disruption the EU Council adopted the 2007 regulation to which I referred earlier. This is known as the EPA market access regulation. It provided for duty-free market access and improved rules of origin for ACP countries that had agreed full or interim EPAs. It was a bridging solution whereby the EU gave advanced provisional application of EPA benefits, based on a clear commitment by ACP countries to ratify their agreements.

EPAs seek to boost ACP trade, to support the ACP in gradually opening their economies to imports, thus promoting competitiveness in ACP countries, to kick-start reform to create an enabling business environment and to strengthen development co-operation on trade issues and existing regional integration efforts. At the same time, they include anti-dumping provisions and multilateral and bilateral safeguards for local ACP industries and farmers. The interim agreements, which already define much of the framework for negotiations, are acting as building blocks to full economic partnership agreements with the remaining ACP regions. Here in Ireland, six interim EPAs have been approved by Dáil Éireann. The full EPA with the Caribbean was signed by Ireland on 16 July 2008. With the conclusion of the EPA negotiations at the end of 2007, thus meeting the WTO waiver deadline and ensuring market access, thanks to the market access regulation, some ACP countries no longer felt any sense of urgency to complete the process. Some considered it preferable to await the outcome of the parallel regional negotiations and to undergo only one ratification process for the final agreement. All in all, the market access regulation, instead of being seen as temporary and a bridging mechanism to firm up economic partnership with the EU, ended up being perceived as open-ended and a disincentive to completing the EPA process.

In recent years, there have been well-founded concerns that there was a need to restore momentum to the negotiations and revitalise the shared commitment to the achievement of strong agreements which serve the development needs of the ACP countries. Political leaders from both sides agreed at the EU-Africa summit in November 2010 to conclude EPAs that support socioeconomic development, regional integration and the integration of Africa into the global economy. As a result of this political commitment, the European Commission last year engaged actively and flexibly in renewed negotiations at the regional level. It was in tandem with this renewed impetus in the negotiations that the Commission adopted the proposal under discussion.

Since 2008, Ireland has renewed its work with its EU partners to help ensure the European Commission's negotiating approach serves to strengthen the EU's partnership with developing countries. The Irish Government believes that EPA negotiations should result in agreements that are supportive of ACP countries' development needs and their programmes to reduce poverty. We strongly believe our active engagement has reaped results. The European Commission has followed through on the declarations made at the time of signature of the interim economic partnership agreements, for example, on export taxes and infant industry protection. Furthermore the Commission has agreed to push back negotiations on non-goods issues, such as services and competition, where some countries are of the opinion they are not in a position to make progress on such matters. EU trade Ministers have, at their most recent meeting on 16 March, acknowledged the need for flexibility and pragmatism on both sides to find solutions to the outstanding issues.

It is against this background that the Commission has adopted the proposal before the joint committee, which seeks to put EU-ACP relations on a solid legal footing, based on respect for WTO and EU law and balance and fairness towards both ACP and non-ACP developing countries. This proposal relates to agreements that have been approved by Dáil Éireann. It seeks to follow up on the clear ACP commitment to ratify these agreements. On balance, the Government accepts the aim of the proposal. The proposal is currently with the Council and the European Parliament. Once the proposal is tabled on the agenda of the Trade Policy Committee, Ireland can help ensure the discussions address any outstanding concerns. It can also underline again the importance of an ongoing flexible and partnership approach by the European Commission in the EPA negotiations. I stress again Ireland's commitment to continuing to work with its partners for economic partnership agreements that clearly support the development priorities and needs of ACP countries. I thank members for their time and would be happy to take any questions they may have.

Chairman

I thank Mr. O'Brien and it is good to learn that Zimbabwe has signed up to an economic partnership agreement. Hopefully, all other countries will have signed up to such agreements by the end of 2013. Moreover, it is heartening to learn the Commission is taking a fair approach to this issue and is giving the other countries time to ratify the agreement.

Deputy Eric Byrne

I believe this to be the first meeting of the joint committee over the past 12 months to deal almost exclusively with the issue of trade. While the joint committee is particularly expert in respect of foreign affairs, trade is not its strongest point. Consequently, I thank Mr. O'Brien for presenting members with a rather complex series of positions adopted by the Government. I do not understand fully the implications of what is being decided by the Government and whenever I am not 100% sure, I always like to hear an objective and independent presentation by an NGO to help me to balance my positions on the decisions that might be taken. I note Mr. O'Brien's presentation states, "This proposal relates to agreements that have been approved by Dáil Éireann". As a Member of Dáil Éireann, this leaves me in a position to ask what the joint committee is doing in this regard. If the agreement already has been approved by the national Parliament, why is the joint committee only debating it now? I hope this will be the beginning of a relationship between the joint committee and those officials in the Department of Foreign Affairs and Trade who are engaged in trade links. I have made the point to the Chairman a number of times that while members are particularly adept at analysing issues from Bosnia-Herzegovina to places in northern Nigeria such as Kano, Maiduguri and so on, over the past 12 months they have not been on top of the game in respect of trade links, trade relationships and trade debates.

While I await with interest what might evolve around this table on this issue, I seek a response to one question. The witnesses are telling me that the proposals we are debating have already been approved by Dáil Éireann. Perhaps they could tease out with me, in the absence of an NGO, why the reluctance and the slowness? We have an Africa policy as an established programme, so what are the arguments or positions of other countries that are not as enthusiastic in signing up, as we clearly are in our attempt to have them abide by the terms of the agreement?

Senator Mark Daly

Would the witnesses have been following the debate in Dáil Éireann? Was there such a debate or was it just a case of an item being listed on the Order Paper?

Chairman

To answer that, we are discussing the exclusion of countries, not the original debate. The proposal concerns the exclusion of those countries that have not signed the economic partnership agreement.

Senator Mark Daly

I am sure members of the joint committee have received correspondence in recent days on this issue. I know it is a slow process but what seems to be happening is that the EU is using its economic muscle to frighten countries into signing this trade agreement. While this committee deals with trade, our remit also covers overseas development and development aid. Some of the countries we are trying to assist are on this list. This makes a bit of a mockery of our attempts to help them on the one hand, while on the other hand we will beat them over the head because trade is essentially the way to get out of poverty. The witnesses addressed some of it, but when we close the door on them they do not have access to markets. Do we have to increase aid to help people because we are going to send them back into poverty? I cannot imagine the ability of some countries to negotiate trade agreements with the EU. I can imagine the EU trade delegation dancing rings around places like Burundi, Botswana and Côte d'Ivoire. The Ivory Coast has a hard enough time putting teachers into schools, which is a monumental task for them, never mind trying to negotiate a trade agreement with the EU. Are we seriously stating that the Irish position would be to say: "We'll put a gun to your head and if you don't sign up, and we know you have no capacity to negotiate this stuff, we're going to turn off the tap and make sure we send you back into poverty"? I want to get the witnesses' view on whether this is a fair way to operate. I know that time has elapsed but the witnesses can appreciate that these countries' capacity to negotiate a trade agreement is virtually nil.

Deputy Eric Byrne

An annexe has been referred to concerning these countries, but do we have that documentation?

Chairman

The annexe has not been sent down. A link to that annexe was sent around.

Deputy Pádraig Mac Lochlainn

First of all, I want to apologise for having missed the bulk of the presentation. Unfortunately, it is one of those days when things clashed. There are hearings next door at the Sub-committee on the Referendum on the Fiscal Stability Treaty, which I am tasked to attend as my party's spokesman on foreign affairs. I am sorry I am somewhat late for this meeting but I have read quite a bit on this matter.

There is a range of concerns among NGOs about all of this. President Michael D. Higgins would have had grave concerns about these agreements in the past and was a leading voice in this House on such matters.

Despite the analysis here, the EU could have sought waivers to allow more space for negotiations in this conversation. The EU says it has not done so because it is unfair to countries in other regions of the world that do not have the same opportunities. There are examples of where the EU has sought waivers, however.

The concern I have heard from NGOs is that this type of unilateral deadline to reach agreement is outside the whole process that economic partnership agreements are supposed to arrive at. One must ask why less than half the ACP states have signed the agreement. If more than half have not signed, it would lead to the conclusion that there must be something fundamentally wrong with the process. We are forcing a European world view concerning the liberalisation of trade onto these countries that might have a different plan. It does not sit easily with me, having read through the paperwork, although I have a lot more reading to do on it. Given what I have read so far, I do not get a sense that it fits within what Irish Aid has sought to do globally. I am proud of Irish Aid and the track record of our aid's effectiveness, including how we have led the charge. I had the privilege of visiting Ethiopia with the chairperson and others last year to see for myself the impact of intelligence and aid, as well as working in partnership with NGOs and local academic institutions.

It seems, however, that quite a few of our priority countries have yet to sign the agreement. On the one hand we are saying that these are our priority partner countries, but we are also saying they will have to agree to this economic partnership trade agreement by the deadline. I have grave concerns about all of this. I do not know if the chairperson intends to wrap up the scrutiny process today but, if not, we should have more time to scrutinise the issue before the joint committee reaches a conclusion. The implications are quite serious at a whole range of levels, and particularly the term "partnership". It is supposed to be a partnership of equals, but deadlines and threats to block access to our markets is not partnership. The language being used is not that of partnership.

I presume that the witnesses have read briefings, lobbies and representations from a range of NGOs, not least of which is Comlámh here in Ireland. I will listen to the responses and we will try to develop an ongoing analysis on this matter.

Senator Jim Walsh

Cuirim fáilte roimh na finnéithe anseo chun an t-ábhar tábhachtach seo a phlé.

On the face of it, the WTO ruling seems plausible to me. It states that the discriminatory nature of these agreements would tend to disadvantage other developing areas. I would like the witnesses to comment on that point.

Taking up the point made by Deputy Mac Lochlainn and others, would I be right in assuming that the main driver of this is the EU for its own benefit, as distinct from it being an aid programme inspired by more altruistic purposes? If these agreements are viewed as being important to the African, Caribbean and Pacific, ACP, countries involved, it seems strange they themselves are not more proactive in pursuing and meeting the EU's requirements. It also strikes me that instead of waiting for parallel regional negotiations, it would actually be in their interests to begin them. Will the officials comment on that?

The Rwandan President, Paul Kagame, has strongly promoted east African co-operation while many in Central America and the Caribbean also promote greater co-operation as it is in their interests. We should be supporting that both as a country and in the European Union. Ultimately, it will benefit everyone if the undeveloped countries can reach a level of sustainability which allows them to be significant players to deal with the challenges in their own countries and, accordingly, to participate in global trade issues.

The Commission has followed through on declarations on interim economic partnership agreements, EPAs, such as export taxes and infant industry protection. Will the officials explain infant industry protection?

Mr. Finbar O’Brien

Several Members raised the issue of what some of the non-governmental organisations, NGOs, have stated about these agreements. We have very close contacts with the Irish NGO community and are aware of the analysis by various NGOs at European level and some of the issues and concerns they have raised. The flexibilities we have been lobbying for in Europe are part of the concerns that have been raised in other quarters.

It is important for us to have strong linkages with our programme countries. It allows us to find out the feeling on the ground about EPAs and what outcomes they want to see from this process. That is why we are stressing putting overall EU-ACP trade relations on a solid legal footing and ensuring balance and fairness from this process.

It is important to examine why momentum in this area was lost. Once the market access regulation was in place, some countries did not feel any sense of urgency to complete the process. As they were benefiting from this, they did not see any advantage going ahead and completing the process. What has been recognised very much politically is this is not sustainable and that there is a need to bring the process to a conclusion. From our side, we were encouraged that at the 2010 EU-Africa summit, when many people claimed momentum had been lost on the issue, political leaders from both sides agreed there was a need to conclude the EPAs. Again, the perception that this is driven from the EU is not a reflection politically of what is there. There is a genuine interest in coming to a conclusion with EPAs.

The question of a deadline will be perceived differently by different sides. Some will claim having a deadline will help bring negotiations to a conclusion. We are trying to ensure that whatever conclusion we come to, it would be one that would benefit the development of the countries concerned.

More generally, aid for trade and building trade capacity is very much part of Ireland's programme of development co-operation. Even the technical aspects of training for countries to be equally involved in trade negotiation processes is all part of development co-operation and has been very much part of what Ireland and other EU partners have been doing.

Of the 17 countries that will be affected - Zimbabwe has already ratified the agreement - nine of them are least developed status countries which will continue to benefit from duty free and quota free access under the EU's Everything but Arms scheme. These countries will not be adversely affected by the proposal. Five Irish Aid programme countries affected by the regulation - Lesotho, Mozambique, Tanzania, Uganda and Zambia - are all in that category. Their market access to the EU will not actually be changed by this proposal.

On the issue of regional integration and whether we are encouraging a regional approach, that is very much part of the current negotiations in the EU. We are trying to strengthen this approach in these geographical regions. The regional groupings are quite variable in the degree of economic integration that has already taken place. That is why the Caribbean was the first to get to the EPA position as it already had a well-established regional grouping. Part of the overall aim of this process is to strengthen regional groupings. That is very much being looked at as we enter into the final stages of negotiations.

Ms Mary Barrett

If EPAs are positive, why is there a reluctance to move forward with them? It may be difficult to move away from three decades of a unilateral regime with free trade into the EU with no reciprocal access. The reality is there is a WTO ruling that must be implemented. EPAs are moving away from strictly trade agreements broadening them into more trade and development ones. Development co-operation is being introduced to help implement the trade aspects of the agreements. Attempts at introducing a new and ambitious programme when the countries affected are already used to three decades of a different scheme may be delayed.

There is also the issue of dealing with a large number of ACP countries. Both sides committed to this process in the Cotonou Agreement and wanted to move forward on regional integration. As Mr. O'Brien said, there were different levels of regional integration and these aspects were challenges in the negotiations from the beginning. The EU agreed to give advanced application of the market access regulation, pending ratification of the agreements, which did take emphasis out of the process.

It was asked if pressure had been put on the ACP countries. Countries signed up to this in the Cotonou Agreement in 2000. The ACP Ministers meet regularly in council at which they adopt declarations. In these declarations, they have repeatedly recommitted to the EPA process and stated that they want to reach a conclusion on these but, like the EU, they want to reach a successful conclusion. The EU is listening to what the Council of Ministers is saying and this would have been an impetus when the trade Ministers met on 16 March and stated that they wanted to see both sides bringing forward a flexible and pragmatic approach to reach a conclusion. Both sides are looking at the issue and moving forward. The Commission came forward with this regulation last year because of the agreement in 2010 at the EU-Africa summit and because of the impetus that came from that.

On the issue of pressure, this idea was originally mooted 12 years ago in the Cotonou Agreement, the negotiations started eight years ago and these interim agreements were agreed four years ago. One can see there is another side to the story whereby one could ask whether that is undue pressure when there is that amount of time involved. Given that the Commission has renewed its efforts and has been, with the support of the member states, demonstrating more flexibility, there is a view there that successful agreements can be reached in time to dovetail with the implementation of this regulation at the beginning of 2014.

The countries involved have time to consider their position and decide whether they want to go forward with their interim agreement or to move to the new regional agreements that are being negotiated flexibly at present.

Mr. Gerard Monks

I want to comment on the infant industry argument that was raised by Senator Walsh. I am glad to recognise that the Commission and the EU are showing some flexibility on this in recognising the development needs of the ACP countries. Where small industries are developing, to protect them and allow them to grow, there will be provision for an element of tariffs to be applied to imports that would compete with those industries where competition might unfairly hold them back. It is worthwhile acknowledging that there is flexibility and that on the infant industry argument, if we go back to the 1950s in Ireland, it was our tariff regime that protected domestic industry to allow it reach a scale whereby it could compete with imports.

It is important to acknowledge that the WTO is there to establish fair rules across its membership. In the case of the ACP countries, it was acknowledged that the preferences they were being given for market access to the EU were discriminatory and that it would affect the interests of other developing countries not in the ACP. That is why we are in a position now to negotiate new agreements that would bring fairness to the complete range of LDCs in developing countries that are affected because it is unfair that one developing country is discriminated against vis-à-vis another.

Linking the EPAs to a development agenda is important. A significant amount of funding is going into developing countries to help them to adjust and to meet their development objectives. A significant amount of funding is also being contributed for aid for trade. That is really important because reducing barriers to trade in a regional context helps adjacent countries trade with each other. It is important to put funding in to reduce customs irregularities and to make customs procedures more efficient and to put funding in to build infrastructure to help move goods more cheaply to contiguous countries. For example, one could see it in a food context where food is of critical importance to developing countries but much goes to waste because there is not refrigeration, transport and efficiency in markets. Addressing that by aid-for-trade measures contributes also to food security in developing countries.

Chairman

I will go back to some of the members. If the members would ask short sharp questions, rather than making Second Stage speeches, we could achieve much more and I am sure our witnesses will answer those questions. There will be one-to-one questions, short and sharp if possible.

Deputy Eric Byrne

I thank the three speakers. It helped me understand the complexities of the issues we are trying to address even though they are already agreed by the Parliament.

I am conscious of the audience, for example, that perhaps there are some ambassadors from African countries. I want to record the fact that there is a message on my answering machine to which I did not get around to listening in full from an NGO. I have read nothing from the NGO movement on this debate and I can state openly and honestly that I have not been influenced. I used the term NGO deliberately because it helps us to get a perspective other than the State or Government's perspective.

I should apologise to any ambassador who might be present because although we, as public representatives and politicians, can listen to NGOs, it is more important that the countries to which we are referring in this annex, if they have something to say, know how easy it is to access us. I must confess that there has been no expression of any interest, good, bad or indifferent, by any of these countries affected by the annex in lobbying me in favour or against, or to elaborate on difficulties that those countries might have. My offer to ambassadorial staff is that we are open to lobbying just as effectively as we are open to lobbying by the NGOs and we need not always adopt the NGO position if a country has its own difficulties or wishes to express its opinion that might differ from the NGO organisations.

Chairman

As Deputy Eric Byrne voiced an observation only, I call Senator Daly.

Senator Mark Daly

The representatives pointed out that in aspects there is no effect on access to five or six countries. They might explain why there is no effect on only a few countries if they do not sign up and why the remainder will be affected.

They also spoke about the World Trade Organisation rules. The rules are written by the big boys who, if they want to get around it, could change them if they wanted to. If the EU and the USA got together and held a two-minute telephone call, I would say the rule would be changed quick enough.

Was there any economic impact assessment done by the EU on what would happen to the current access to markets of countries that are trying to develop their economies in the event that we pull our interim trade agreement? I am always struck by a documentary I saw where a Guatemalan farmer had to slaughter his dairy herd because Danish powdered milk could be sold to Guatemalan citizens for less than they themselves could produce milk. Similarly, sugar from Europe was being dumped onto the market in Africa cheaper than the sugar cane producer could do it. We want to get to their market. That is why I ask if they could tell us was there an economic impact assessment. What will happen to these countries if they sign up to this agreement? Will they have their entire industries destroyed because the EU is not a benevolent organisation? When it comes to trade, the EU plays with hurleys instead of badminton rackets. What it does to some countries can be quite destructive to some of their industries.

In light of the fact that it has already been put through the Dáil, what happens from here? Do we vote or say Ireland's position is that it would like more information on the economic impact assessment and in light of the evidence we would get from that, we might take a different view than letting it ride on through?

Chairman

I ask the witnesses to deal with Senator Daly's questions.

Mr. Finbar O’Brien

Briefly, on the remarks from Deputy Eric Byrne first, at the official level we also will be listening to concerns that are raised, both by NGOs but also by the countries concerned, both from their representatives here but also in the countries where we have embassies. We try to find out what their issues and concerns are and how they view the process moving forward. Ireland has been good in doing this.

I will turn to the question of the impacts on the countries concerned. My colleagues will correct me if I go astray. Of the 17 countries under discussion, nine number among the least developed nations. As these will continue to benefit from duty free and quota-free access under the EU's Everything But Arms, EBA, scheme, the regulation will not have a significant effect on them. That said, it is important to realise that the economic partnership agreements, EPAs, are ambitious and have other dimensions. Therefore, such agreements can have important developmental benefits for such countries.

Six of the remaining countries are either low income or low to middle income countries. They are still able to benefit from the EU's less favourable generalised system of preferences, GSP, regime. If members wish further information on this, Mr. Monks is our expert. The final two countries are Botswana and Namibia, which are upper middle income countries. As such, they will be most effected by the regulation. In examining the EU's relationships with various countries, it is trying to ensure preferential treatment for the least developed countries is continued in a uniform way and with the agreement of World Trade Organisation, WTO, regulations.

I take Senator Daly's point, in that the EU, of which Ireland is a member, has trade interests. However, it is important to recognise that these EPAs go beyond that situation. Given the fact that they are trade and development agreements, they contain strong development aspects. It is not a question of viewing an agreement in terms of how the EU will benefit. Rather, it should be viewed as a partnership. These agreements arose from partnership discussions.

I will hand over to Ms Barrett, who will discuss some of the specific issues.

Ms Mary Barrett

Senator Daly asked about an impact assessment and the effect on specific types of agricultural products, for example, those from other countries. Table 1 of the legislative proposal sets out a legislative financial statement, which gives a breakdown of the budgetary impact country by country. The Commission conducts studies at the outset of EPAs. This is the normal procedure when proposals are made. Arriving at figures is difficult. A great deal of time has lapsed since the start of the negotiations. As well as potential costs, one tries to estimate the potential multiplier effects of the positive results of the agreements, for example, governance reform. Mr. Monks referred to the example of getting refrigerated goods across borders quickly. This is termed trade facilitation and each EPA contains a trade facilitation chapter that outlines how such governance aspects can be improved. Linked with these chapters is the issue of co-operation, in that the EU would help countries to improve these aspects. This is a benefit of EPAs.

The unilateral free access enjoyed by the least developed countries since 1975 did not provide the desired benefits. Rather, their share of EU trade decreased. This signals that more than just access is required. A country needs to put in place a good business environment that will promote entrepreneurship, help business people run their companies efficiently, reduce paperwork and get the borders moving so that goods can get out following the hard work of producing them. This is the additional benefit of EPAs.

The EU's EBA scheme applies to the least developed countries across the world, whereas African, Caribbean and Pacific, ACP, countries have the benefit of a special relationship with the EU. The least developed countries can remain in the EBA scheme. It is for them to decide but they would lose the benefit of a special relationship with the EU in which they would receive tailored support. They would continue to receive aid for trade from the EU, but parties that sign up to an agreement will work in partnership with each another. As such, there will be a greater focus on a country's concerns. Under each agreement, councils would be set up to monitor its implementation, examine progress and, if required, put in place and follow through on remedial measures.

Turning to the issue of being flooded by agricultural products, etc., independent commentators like Professor Alan Matthews have stated that African EPA countries have been successful in protecting their key agricultural products. Each country decided on the goods it believed were of most importance to it. Most African countries protected agricultural products, but some wanted to fast-track the liberalisation of certain goods, for example, industrial goods. For instance, if a country without industrial machinery acquired some, it would be able to produce goods more quickly. Reducing tariffs on industrial machinery would allow countries to acquire it more cheaply and boost their industries.

I will turn to Mr. Monks concerning the WTO's rules.

Mr. Gerard Monks

Regarding one of Ms Barrett's points, the EPAs are relevant in a development context because the level of tariff liberalisation is approximately 80%. There is a policy space for developing countries to protect their markets by not reducing their import tariffs to the same extent as the EU. When drafting a free trade agreement, the EU normally seeks a 90% liberalisation of tariff lines on day one. With the EPAs, the level of liberalisation will be much less. This asymmetry is of benefit to the developing countries.

The GSP is a new regime, as the old one has been revised to focus on countries most in need, remove upper income countries and ensure and promote good governance. For example, the EU will provide better access and lower tariffs where GSP plus countries sign up to core labour standards and international environmental and human rights provisions. Under GSP, there is a quid pro quo with the developing world.

Chairman

I thank the witnesses.

Deputy Pádraig Mac Lochlainn

Deputy Byrne raised a point about ACP countries' embassies in Ireland not making contact. To be fair, the timeframe between publicly calling for the meeting and holding it was not perfect and might not have given them a chance. What contact have the witnesses had with those embassies? What has been the extent of the dialogue between those countries' civil society organisations and the Department of Jobs, Enterprise and Innovation and Irish Aid and what has been the feedback in respect of the matters under discussion? Are the witnesses concerned that there does not appear to have been any consultation with ACP countries in advance of the proposal to cut off their market access? Should they not have been consulted prior to the making of this proposal?

Are the witnesses aware of any legal threats to the WTO in regard to the provision of market access to ACP countries under the historical agreements? Is the threat of legal action by any of the countries concerned a real issue? Do the Irish Aid officials believe - they do not have to answer this question if they do not wish to - they are adequately resourced to deal with the complicated and multi-layered inter-linkages between trade and development? There is renewed focus in the Africa strategy on trade promotion. I am mindful the witnesses before us wear two different hats in terms of their representing two different Departments. In terms of development of our historical relationship, of which Irish people are very proud, do they believe that there is equal balance with the new focus on trade? Do they believe they have the resources necessary to engage in consultation and to enable them listen to the views of the partner countries, NGOs therein and in Ireland and across Europe? It strikes me that there is no great enthusiasm among the NGO community, with whom we have a great partnership, in Ireland or in the countries concerned for this.

I am concerned about the reputation of Irish Aid and the Irish people, who are highly respected in the developing world. Are the witnesses concerned that we might lose that reputation as a result of our signing up to an agenda which some would argue seeks to take advantage of the resources within the developing world? Multinational companies are going into countries, taking over land and making considerable fortunes to the disadvantage of people in those countries, in return for which we give them trade agreements. Are the witnesses concerned that support for this agenda by Ireland would undermine all of the good work it does through Irish Aid? I will respect it if the witnesses do not wish to respond to any of my questions. I am taking this opportunity to volunteer my opinion and outline the concern of many of the NGOs.

Senator Jim Walsh

I still seek enlightenment on the reticence on behalf of those countries that have not signed up. If only one of 18 have signed up to it there must be some nugget preventing the others doing so, which I would like to expose, if possible. I suppose the witnesses may have answered that question in terms of their stating that nine countries are beneficiaries of a parallel agreement through which they can gain access to the European markets, which begs the question, why would they be interested in signing up to the agreement if the reciprocal arrangements would in fact impose economic difficulties on them. They would be unwise to do so. Perhaps the witnesses will comment on that.

Is there anything in the economic partnership agreements, EPAs, which presents an impediment to countries signing? Can the witnesses pinpoint anything in this regard? I presume there is a common thread among the countries reluctant to sign up. I have not been unable to pinpoint this from our discussions to date. While I note what was said about the tariffs, do the EPAs provide that countries can have complete access, with no tariffs, to the European market and are permitted to impose certain tariffs on European products of their choosing, or are there limitations on what products they can apply restrictions?

I note the witnesses' comments on infant industry protection, of which there would have to be recognition, in particular in the developing word. When I inquired as to the reason new industries in Africa were using intensive production line systems, which involved people bottling and packaging and so on, rather than using automatic systems, even in respect of palletising, I was told that while the system was designed in such a way, they had rowed back from it because of the need for job creation. There was an altruistic reason for their stepping back, which was the creation of jobs. Were this to be overridden by provisions under this agreement, it could be detrimental to their achieving a sustainable economy in the future.

Chairman

I now invite the witnesses to respond to the questions asked by Deputy Mac Lochlainn and Senator Walsh and to conclude the discussion on this issue.

Mr. Gerard Monks

I will be brief and will leave the conclusion to my colleagues from the Department of Foreign Affairs and Trade. On the issue of legal threats, I am not aware of any immediate or proximate legal threats. The original WTO ruling is that preferential access to the ACP states was discriminatory against others. We have an obligation to address this. A considerable length of time has passed without full agreement with all the ACP states being achieved. If this continued for an additional lengthy period, it is likely that some countries would lodge a complaint to the WTO.

On connectivity and relations between the Departments of Jobs, Enterprise and Innovation and Foreign Affairs and Trade, I am responsible for trade policy. We are in constant contact with our colleagues in the Irish Aid section of the Department of Foreign Affairs and Trade on development issues or trade agreements with a development perspective to understand and reflect the development dimension that Ireland would have in the negotiations that take place in Brussels. The Trade Policy Committee in Brussels meets on a weekly basis. There are other fora in which we discuss trade with the Commission. At each of the meetings on which development is on the agenda we will co-ordinate our response to reflect the development dimension of Irish Aid in Ireland's presentation to the Commission.

Senator Walsh asked about the tariffs applied by developing countries. When Russia formally accedes to the WTO - I understand it will be on 1 July this year - there will be 157 members of the World Trade Organisation, each of which has a schedule of tariffs which it has agreed to apply and not to exceed. As such, each of the countries in the frame for EPA or whatever other agreement might be negotiated will have a list of tariffs which it has lodged at the WTO and in respect of which it has agreed it will not exceed in applying. A number of issues in regard to the application of tariffs are connected to the EPA regime and the WTO.

Mr. Finbar O’Brien

I will try to respond to some of the questions raised by Deputy Mac Lochlainn. In terms of our contacts, there is ongoing contact by us with civil society in Ireland. Civil society in Ireland maintains good contact with civil society across Europe and, to an extent, with civil society in many of the ACP countries. What has been important for the Department of Foreign Affairs and Trade has been our contact through our missions, in an African context in particular from this perspective. We are linking government and related issues as well as the private business concerns in those countries. Some of those are very important. There is also the issue of broader civil society. There is much feedback and the positions we have advocated regarding economic partnership agreements have been influenced by listening to those voices.

Issues were raised about trade and development combination within the Department of Foreign Affairs and Trade. Different parts of the Department will deal with different issues and with Irish Aid we still have the focus on the development programme and trying to maintain that to a high quality. I have spent my career on the development side and 30 years ago I first worked in Africa in Ghana. I returned last year and saw the change which took place over that period. If we asked how much of that comes from aid and how much comes from improved trade, voices in Ghana would speak very strongly about the importance of trade. Aid has been important but trade has been even more important for them. We have heard such stories from many of the African partners in particular, and they want to see stronger trade relationships and a building of capacity in trade issues.

The Deputy's point is valid. There is fair and unfair trade, and from a development perspective we are constantly raising voices around ensuring a fair trade regime. If we can see that in place, we will certainly see development benefits for the countries concerned. I know these economic partnership agreements are extremely complex but if they work in the way in which they are designed, they should be good for development and help countries trade their way out of poverty. There is much work that must continue in the negotiations to ensure the agreements deliver on their design promise.

Our Minister is very clear that the linkage of trade promotion within this Department in no way means we are tying our aid programme in any way. The Irish Aid programme has never been a tied aid programme, and it will remain that way.

Ms Mary Barrett

Senator Walsh asked why the least developed countries would sign up. I mentioned previously that they could stay in a regime that countries all over the world have or they could move to a specific partnership from which they could benefit with the EU. He also mentioned impediments, and in our opening statement we referred to how the Commission has shown flexibility. That related to impediments in the negotiations, when the African, Caribbean and Pacific, ACP, group of states had raised concerns about export taxes or infant industry, for example. Some countries, like Mauritius, want to move forward on services, whereas others feel the process is moving too fast and they need more time. All these issues - they could be called impediments - are present in any negotiation. The Commission is working through these matters and showing flexibility while supported by member states.

Senator Mark Daly

If concerns were raised by partner countries or those involved in the negotiations, could they be sent to the committee? If this is such a good process, why is there resistance? Why are countries not rushing to sign the agreement? I take the point raised earlier about human rights causes-----

Chairman

We get the Senator's point.

Senator Mark Daly

Is the Euro-Med agreement worth the paper upon which it is written?

Chairman

We have never seen a deal easily done.

Ms Mary Barrett

That is the point. Why would countries rush to complete the deal? For 30 years there was a one-sided agreement and the day has dawned to face up to the World Trade Organisation ruling. The Commission got a waiver for seven years even after all that time. There is a reluctance.

Senator Mark Daly

What are we imposing on them that brings about such reluctance?

Chairman

We are wrapping up. If everything was so easy, there would be no problems and we would not be here at all.

Senator Mark Daly

Where does Ireland go from here?

Mr. Gerard Monks

The trade policy committee will consider the proposal and it will then go to the European Parliament and Council for final conclusion. There is a co-decision process with the European Parliament.

Chairman

I thank the witnesses for coming here this afternoon. I hope, as they said, that there will be some flexibility and pragmatism on both sides that will bring about a solution to any outstanding issues. The committee hopes there will be a successful conclusion benefiting all the countries concerned. We wish the EU and the APC countries every success in finding that conclusion before the end of 2013.

I remind members before going into private session that if they have any concerns about the issues raised by the speakers, we will present a draft report, and members may contact the clerk in that respect. We will present the report to the Minister on this issue, which will be concluded today. If members have any concerns they can be presented in letter form.

Deputy Bernard J. Durkan

I apologise for my absence because of a need to attend another meeting. I was going to make a long dissertation but my colleague dissuaded me from so doing. On this occasion I will take his advice.

Chairman

You have left other members to speak for you. We had a lengthy discussion.

Deputy Bernard J. Durkan

I was shadowing another colleague.

Chairman

We had a useful debate and exchange and I thank the witnesses for their comprehensive replies to questions from members. I hope they will keep us updated on developments and as the delegation can see, members have a keen interest in the area, particularly with regard to trade. I remind Deputy Byrne that we will have plenty of meetings relating to trade in the next six weeks, and we hope to have delegations from the IDA, Enterprise Ireland and Forfás before us. We have not forgotten about trade.

The joint committee went into private session at 3.50 p.m. and adjourned at 4.25 p.m. until 2.30 p.m. on Wednesday, 18 April 2012.