Designing Economic Partnership Agreements to Promote Intra-Regional Trade in ACP Countries

The final details of Economic Partnership Agreements (EPAs) between the EU and (six) ACP regions are being negotiated over the next few year. This paper suggests how EPAs can facilitate intra-regional trade, given that promoting regional integration within ACP was an objective. The introduction of reciprocity under an EPA will tend to threaten intra-regional trade in ACP groupings for a number of reasons. There is a direct displacement threat to existing regional suppliers from the removal of external tariff protection vis-à-vis European exporters. There is also an indirect threat associated with the displacement of domestic production by European exporters in domestic markets, which may thereby reduce regional production capacity and future prospects for intra-regional exporting. These threats to regional trade development can be offset in a number of ways. Most obviously, as negotiations allow for the exclusion of sensitive products and for phased introduction of the tariff reductions, ACP regions may benefit by treating products traded within the region as sensitive for EPAs, hence postponing any reductions on tariffs on imports from the EU. Less directly, if the EU supports measures that enhance the productivity and competitiveness of domestic producers, export capacity (both intra- and extra-regional) can be improved.