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PACNEWS Editor, Makereta Komai spoke to Adam Janssen, the Head of Political and Trade at the Delegation of the European Union in the Pacific about the October 01 deadline for the ratification of interim Economic Partnership Agreements signed between the EU and certain ACP countries. Fiji is one of the countries that will feel the pinch if it doesn’t decide by October 01 what it wants to do with this preferential arrangement, especially for its sugar exports.
MK: The October 01 deadline is looming and Fiji needs to make a decision on the preferential access of its sugar exports to the European Union market. What are the possible scenarios for Fiji right now?
Adam Janssen: For Fiji we have what is called an interim Economic Partnership Agreement signed between the European Union and Fiji. It has been ratified by the European Union but not by Fiji yet. So the agreement is not in force for Fiji. Currently trade between Fiji and the European Union is covered under a unilateral concession measure by the EU that was adopted in 2007 to give time to countries like Fiji which have concluded an agreement but needed time to ratify it. This is the agreement which will expire on October 01 this year. That is the cut-off date after which, in order for Fiji to continue to benefit from duty free quota free preferential access to the EU market, Fiji will either need the interim Economic Partnership Agreement enforced or a regional comprehensive agreement. The regional agreement is still under negotiation whereas the interim agreement has been ready for the past seven years. So if by the October 01 Fiji has an agreement in place to continue the preferential access to the EU market, there will be no change. If no such agreement is in place, then Fiji will lose the preferential access. In practice that means that Fiji will have to pay duty on sugar exports to the EU. Not only will Fiji need to pay duties but also compete with other non-preferential and preferential sugar suppliers to the EU.
MK: This cut-off date, which has been seven years in the making - any possibility of allowing more time for countries like Fiji?
AJ: No there was long negotiation amongst our member states and the European institutions which ended last year and that was the date they agreed on and that date has been set in stone. They will not re-open that debate.
MK: How many other sugar producing countries in the ACP like Fiji will be affected by the 01 October deadline?
AJ: In total 36 countries are covered by the Regulation that will come to an end in October. 19 have gone ahead and ratified their agreement, only 17 are left. Among the 17 countries, many of them are least developed countries (LDCs), who already enjoy duty free and quota free access to the EU market. So that leaves six to seven countries, including Fiji that will be affected if they don’t meet the October 01 deadline. I believe four of them produce sugar (Fiji, Kenya, Swaziland and Zimbabwe). In the Pacific, Papua New Guinea is not affected because it has already ratified its interim Economic Partnership Agreement (iEPA), so its trade with the EU is safe.
MK: If Fiji does not ratify by the October 01 deadline – Fiji will pay duty for its sugar export and compete with other preferential and non-preferential sugar producers. How much duty will be imposed on Fiji for its sugar exports?
AJ: The duty is the same for all countries. For raw sugar, it is 339 Euros per tonne.
MK: You will of course be in discussion and consultation with the Fijian Government about the looming deadline. What is the feeling and response towards the deadline?
AJ: The Fiji Government is perfectly aware of the deadline. Every party in the trade negotiation is entitled to its strategy they prefer. I really wouldn’t judge the strategy used by the Fijian Government. I am convinced that there is no misunderstanding and I think they are also committed to the regional negotiations and as time passes they will make a decision.
MK: If the ratification will be done by the current administration – is that accepted by the EU?
AJ: Naturally it will have to be by the current administration and that has never been a problem. The agreement foresees that the ratification has to be done according to the country’s constitutional arrangements so it is up to each country to notify the EU that procedures at national level have been completed and the agreement will be applied. When that happens the agreement enters into force on the first day of the next month.
MK: The other possible scenario you talked about is the conclusion of a comprehensive regional agreement. Fiji is supporting that process of a comprehensive regional agreement. But that is taking a while to come to a conclusion. There is now some deadline for the region to work towards. Clearly this will be way after the October deadline. Is Fiji in a situation where it is caught between a rock and a hard place?
AJ: The deadline if there was any was the WTO waiver deadline in 2007 when the unilateral preferential concession was deemed illegal so we had to change that regime. After that, the successive deadlines were self-imposed by the Pacific Leaders who wanted to conclude by certain dates. The EU has never set any deadline and we still have no deadline for the regional negotiations. We are committed to it. Our Trade Commissioner has personally travelled to meet with Trade Ministers in December in Honiara. He’s exchanged many letters with the Pacific Lead Spokesperson. Negotiations with senior officials have been on-going now for the past years. It’s a trade negotiation and it’s difficult. Of course there are many interests and strategies also involved.
MK: If the comprehensive agreement comes into force, what happens to the interim EPA that Fiji and Papua New Guinea have signed up to?
AJ: I’d like to clarify here that the interim agreement will not be put in jeopardy in any way. The interim agreement was meant to secure Fiji and PNG’s access to the EU market while they negotiate a regional agreement. The regional agreement is supposed to replace the interim agreement. The interim agreement has no deadline or expiry date. If there is no comprehensive agreement, the interim agreement can go on forever. Fiji can have quota free and duty free access to the EU already under the interim EPA but if we manage to conclude a regional agreement then Fiji and other Pacific ACP countries will have this preferential access to the EU market and it will override the interim agreement. The interim agreement was meant to bridge a gap or act as a stepping stone to the regional agreement.
MK: In the interim EPA, Fiji and PNG now enjoy what’s called ‘global sourcing’ for their fish exports into the EU that the rest of the Pacific ACP countries want included in the comprehensive agreement. PNG might not want to opt for a comprehensive agreement because it might lose some of the benefits already deriving for its fish in the interim EPA. This is an issue that is dividing Pacific ACP in their negotiations.
AJ: Indeed the fisheries chapter on global sourcing is very important for PNG and Fiji. But it’s clear in the negotiations the existing concessions given in the interim EPA would not be called into question. The problematic part is that in the comprehensive negotiations the region wants to extend these concessions even further. Currently they cover processed fish and the Pacific wants to enlarge it to include fresh, frozen and chilled fish as well. Already, the global sourcing concession that was given to Fiji and PNG was the most generous the EU has ever given to any country or countries. Therefore, any further concession is difficult I think for the European negotiators and has to be accompanied for example by measures regarding the sustainable management of resources to make sure that it does not contribute to reckless use of the resources.
MK: Which the Pacific countries are saying is an additional requirement now demanded by EU?
AJ: As far as the EU is concerned, it needs to be seen as a package because if the EU is asked to make concessions, I think we are entitled also to ask for some safeguards in exchange so that these concessions will not be abused.
MK: In one of the negotiations in Brussels, your Trade Commissioner made reference to a possible parallel agreement for the Pacific. What did he mean?
AJ: Before the Honiara meeting in December last year, there was a meeting in Brussels where representatives of Papua New Guinea walked out. They said that they were not interested anymore in pursuing a regional negotiation. That put the negotiation in a very difficult position because the regional EPA is supposed to replace the interim agreement. The interim EPA is with Fiji and PNG. If one of these countries is not part of the regional agreement, it creates legal problems. Our negotiating mandate from our member states is to negotiate with all Pacific ACP countries. If PNG is not part of the negotiations, it will create several legal problems for us. How is one agreement supposed to replace another one when one of the members is not part of it. Also, if the set-up is different, the European Commission will have to ask for a new negotiating mandate from its member states and this normally takes several months. It’s a lengthy process trying to approval from all our 28 member states. For several reasons, it’s not workable to have two sets of trade agreements between the EU and the Pacific ACP countries. For the moment what the Commissioner has asked the Pacific ACP countries is to talk amongst themselves, engage with PNG as well and try to clarify what the Pacific position is before they can sit down for another round of negotiations. We can devise a way forward based on PNG’s decision whether it wants to be part of the comprehensive agreement.
MK: When Fiji and PNG signed on the interim EPA, did they commit themselves to the eventual comprehensive regional EPA?
AJ: In the text, it says that all Parties commit themselves to negotiating a comprehensive agreement.
MK: From the EU’s perspective – is there now a deadline that Pacific ACP need to work towards to finalise the Economic Partnership Agreement – given that the future of the ACP as a group is due to the expiry of the Cotonou Agreement in 2020?
AJ: We, the European Union have committed ourselves to regularize our trade relations with the ACP countries. It goes back to the WTO decision that our former relationship was not compatible with WTO rules. We said we would put into a WTO compatible platform, the so-called Economic Partnership Agreements. We have to negotiate with all the six regions of the ACP countries an EPA. This is included in the Cotonou Agreement but the EPAs do not expire in 2020, they are open-ended.
MK: Is there a deadline for the Pacific ACP to conclude the comprehensive agreement?
AJ: There is no deadline. The interim agreement is in place to provide a bridge and the comprehensive negotiation can go on as long as there is a hope of concluding. These are trade negotiations which are often difficult. There are some external factors that may have an impact on the negotiations. On the EU’s side for instance, the current Trade Commissioner is very committed to concluding a Pacific EPA. However this year is a year of change in the EU. We have the European elections in May and the new European Commission will be appointed in September/October. The current Trade Commissioner has committed himself to do what he can to complete an EPA with the Pacific before the end of his mandate. After November, a new Commission will be appointed. We don’t know who the new Commissioners will be and don’t know what their priorities will be.
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