EPAs: The development component

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EPAs The development component

• Francesca Di Mauro- EC Delegation Lusaka

EPA Information Seminar European
Commission Lusaka, 31 May 2007
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I. The ESA case for requesting more aid

• ESA region mostly made up pf LDCs (out of 15
  countries only 4 are non-LDCs)
• ? In general, these are countries in need, for
  which trade can be a necessary but not a
  sufficient factor for poverty reduction
• Reciprocity of trade liberalisation in EU-ESA may
  bring costs
• Revenue losses costs
• Adjustment costs for labour (across sectors),
  for enhancing production capacity (including via
  better infrastructure), for facing competition
• ? Dynamic factors should be taken into account
  increase in trade volumes, graduation
• Implementation costs may also arise (legal,
  administrative)

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I. The ESA case cont.d

• Since the start of text-based negotiations
  (September 2006, Mombasa) ESA request for
  additional funding has been a sticky point
• Turning point February 2007 (Brussels) Joint
  EC-Ministerial Declaration
• Commitment to end of 2007 deadline
• Acknowledgement of need to mobilise additional
  resources, beyond EDF EU member States and other
  donors (Aid for Trade)
• Use agreed Development Matrix as a basis for
  assessing needs
• Recognition of importance of regionally-owned
  mechanisms, such as the COMESA Fund, to pursue
  improved aid effectiveness

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II. The development component

• A comprehensive strategy for addressing the
  regions concerns on facilitating the flow of
  development assistance
• Work on EPA text
• Work on the Development Matrix
• Implement the Aid for Trade initiative
• Make best use of existing and future EDF
  resources

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1. EPA text and the Development chapter

• Based on February Declaration, revision of
  ESA-EPA text (Lilongwe, April 2007)
• Inclusion of a Development Clause in text,
  fully in line with February Declaration
• Identification of objectives, areas of
  cooperation and specific actions for each sector
  where development cooperation is expected
• Reference in the text to the Development Matrix

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2. The Development Matrix

• First draft of the matrix large list of projects
  totalling 15 billion in infrastructure only!
• Credibility issue, prioritisation is key
• Work in progress, being revised, discussions
  on-going on the nature of the Development Matrix
  dynamic and evolving

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3. Aid for trade

• Global commitments made back in 2005 by G8, EU
• - EU MS committed 1 billion by 2010 EU Council
  reconfirmed on 16/10 this commitment, and called
  for a monitoring system to be put in place? new
  Aid for Trade Communication
• - other G8 members also committed large
  increases in Aid for Trade

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3. Aid for trade, cont.d

• EC Aid for Trade Communication (April 2007)
• Starting point for a comprehensive EU strategy to
  be agreed in the second half of the year
• Reiteration of Aid for Trade commitments
  increase EU Trade-related assistance up to 2
  billion euro a year by 2010 (equally split
  EC/EU), supporting
• Trade policy and regulation (institutional
  capacity)
• Trade development (business capacity)
• Mostly ACPs and EPAs
• More broadly trade-related infrastructure,
  productive capacity and trade-related adjustments
• Efforts towards enhancing quality of EU Aid for
  Trade aid effectiveness agenda, use of
  regionally-owned mechanisms
• Effective monitoring and reporting, identifying
  result-based indicators to measure the impact of
  Aid for Trade on poverty reduction

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4. Effective use of EDF resources

• On going programmes 9th EDF (2000-2007)
• RSP 287 million (RIP 2003-2007) for ESA, of
  which
• RISP (30 mio euro) capacity building to RIOs for
  negotiations and trade-related capacity
• RTCS/PIP identification of infrastructure needs
• RISM (78 mio euro) forthcoming programme to
  address issue of revenue losses deriving from
  trade liberalisation

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4. Effective use of EDF resources, cont.d

• Future programmes under 10th EDF (2008-2013)
• ESA Regional programme (RSP) 465 million
  focal areas include
• 1) Regional Economic Integration and
  Infrastructure (325 million) supply-side
  constraints (infrastructure, PSD), adjustment
  costs, capacity building
• 2) Management of Natural Resources, Environment
  and Food Security (80 million)
• 3) other programmes (40 million) peace and
  security, capacity building
• increase use of regionally-owned funding
  mechanisms

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4. Effective use of EDF resources, cont.d

• National programmes ESA 15 members would
  receive around 3.6 billion within their CSPs
  focal areas often include support to regional
  integration, private sector development,
  infrastructure, and capacity building
• Total envelope could be up to 5 billion for ESA

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Conclusions

• ESA region mostly made up of LDCs, needs are
  large, but cannot all be attributed to EPA
• Trade is only one of the determinants of poverty
  reduction
• To address concerns on potential costs, EPAs are
  accompanied by a substantial funding package,
  with increased amounts available from EDF
  (approx. EUR 5 billion in total for the ESA
  region) EU MS commitments should also be added,
  and those of other G8 countries
• Prioritisation in use of funds will be key, as
  well use of regionally-owned funding mechanisms

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THANK YOU!

• For any queries
• Francesca.di-mauro_at_ec.europa.eu