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EU-ACP Economic Partnership Agreements and the Development Question:
Which way now?

Cosmas Ochieng

International Food Policy Research Institute (IFPRI), Addis Ababa, Ethiopia

23 October 2006

Regional Round Table on Economic Partnership Agreements (EPAs) and Poverty Reduction.
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  1. EPAs: Legalistic Trade Accords or Development Agreements?

    The global trade environment is increasingly characterised by regional integration agreements, including continental economic regionalisation (the European Union, the American Hemispheric Economic Compact, the Asian Economic Cooperation Organisation and the African Economic Community (WTO, 2000; Schiff & Winters, 2003; Matthews, 2003; Dutta, 2004). Some are trade focused (mostly, regional trade agreements) while others are based on cooperation on a broader range of economic and political issues. Regional trade agreements (RTAs) are increasingly more complex and comprehensive in their coverage, (scope), design and depth. Where in the past they were typically limited to trade in goods and mainly involved South-South or North-North countries, they now include North-South agreements and increasingly cover services, investment, intellectual property, competition policy, government procurement, policy integration, labour and environmental standards (Matthews, 2003).

    Despite this increasing interest in regionalism, there are differing viewpoints on the desirability and design of agreements for development. Broadly, these differences revolve around two choices: 1) trade focused regional integration and 2) development-based integration arrangements whose objectives are much broader than trade integration. Opponents of trade focused integration argue that 1) the development objectives sought through trade integration can be targeted more directly by focusing on a broader set of economic 'fundamentals' (e.g. structural diversification of developing country economies, development of infrastructure and human capital), 2) static welfare gains from regional trade integration are typically modest, 3) the performance of trade focused regional integration in developing countries has been dismal and 4) the trade specific objectives of RTAs are best achieved through multilateral (WTO) agreements, which are considered more welfare enhancing than RTAs (Collier & Gunning, 1995; Collier, 1998; Baldwin, 1997; Fine & Yeo, 1997; Helleiner, 1999; Oyejide, 1997: 2000; ADB, 1999; Matthews, 2003, Karingi, 2005, KASA et al, 2005, Bilal & Rampa, 2006). Proponents counter that broad-based regional integration agreements tend to lack resolve/commitment and policy harmonisation and/or 'lock in' of policy reforms (i.e. inability to catalyse trade liberalisation) needed to assure private investors (UNECA, 2004; Hess & Hess, 2004; Kandelwal, 2004). It is argued that this partly accounts for the continued existence of overlapping memberships in numerous regional agreements (especially in Africa) and their historically dismal performance.

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