SIA of negotiations of ACP-EU Economic Partnership Agreements: SIA of negotiations of ACP-EU Economic Partnership Agreements This report was prepared with financial assistance from the Commission of the European Communities. The views expressed herein are those of the Consultant, and do not represent any official view of the Commission.
This is one of a series of Sustainability Impact Assessment (SIA) projects coordinated by PricewaterhouseCooopers. For more information about our Consortium and this project, please visit our website:
www.sia-acp.org 9 March 2004 (Phase 2) MIMAP Network Micro Impacts of Macroeconomic and Adjustment Policies
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Outline of Presentation: Outline of Presentation
The EU-ACP SIA Phase II : Terms of reference for year 2
II. The EU-ACP SIA Phase II : Proposed Sectors
Caribbean: Tourism services
Western Africa: Fisheries
Central Africa: Textiles
Southern and Eastern Africa: Food Crops
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Terms of Reference: Phase II: Terms of Reference: Phase II Provide in-depth sustainability impact assessments of the EC-ACP EPA negotiations for four sectors in four different ACP regions:
two agriculture sectors
one industrial sector
one service sector
Include a comprehensive consultation process and continued maintenance of a dedicated website.
Produce three reports: an inception report, a midterm report and a final report.
Terms of Reference: Phase II (cont’d): Terms of Reference: Phase II (cont’d) The inception report will give a detailed overview of the structure and organisation of the work and will propose the specific sectors/regions for work and details of the consultation process.
The midterm report will summarise the work undertaken and will present questions and issues to be addressed.
The final report will include the results of the sectoral SIAs including detailed policy recommendations; communication and consultation activities; the methodology; conclusions and recommendations for further work; and references and key sources.
Rationale for selecting specific sectors: Rationale for selecting specific sectors Significant for economy, environment and social well-being (based on “hot spots” determination);
Significant trade flows (volume and value terms);
May be impacted by EPAs (Major trade measures; Challenges and/or opportunities)
May be important sustainability impacts (at local/regional level; for different actors; including EU outermost regions).
Proposed Sectors for Phase II: Proposed Sectors for Phase II Caribbean: Tourism services
Western Africa: Fisheries
Central Africa: Textiles
Southern and Eastern Africa: Food Crops
Caribbean: Tourism services: Caribbean: Tourism services MIMAP Network Micro Impacts of Macroeconomic and Adjustment Policies
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Slide8: Tourism in the Caribbean Definition
GATS classification: Tourism & Travel related services
Hotels and restaurants (incl. catering)
Travel agencies and tour operators services
Tourist guide services
Other
Is this broad enough?
Major inputs:
goods (e.g., food, beverages, man-made products)
other services (e.g. telecommunications, transport, insurance)
Geographic scope: All the ACP Caribbean countries (specific emphasis to be determined)
Slide9: Significance for economy Caribbean economies are mainly tourism economies
Contribution to GDP: e.g., 71.1% in A&B ; 50.6% in St Lucia
Higher contribution if linkages with other sectors are taken into account
High vulnerability of the economies to external shocks
Different types of tourism….: business tourism (e;g. T&T), eco-tourism (e.g. Guyana, Surinam, Belize), all-inclusive holidays (e.g. DR, Jamaica), multifaceted tourism experiences (eco-tourism, adventure, casino, cultural, sport tourism…)
… With different spin-off effects on the local economy: little impact from cruise tourism, stronger impact with land-based hotels depending on whether they are enclave-resort or traditional accommodations
High degree of foreign ownership for large hotels
Slide10: Significance for environment Environment is a key resource for the tourism (contributes to the attractiveness and competitiveness of the region)
Tourism contributes to environmental degradation (destruction of natural assets, pressure on water, sewage)
Vulnerability to global and regional accidents (global warming, El Nino, cyclones)
Development of sustainable tourism practices
Slide11: Significance for social-well being Tourism sector is a major employer: 1 in every 4 jobs
Mainly women
Often low qualified
Problem of “working poor”
Social and cultural frictions
Slide12: Significant trade flows The 4 GATS modes of supply
Mode 1: Cross-border supply (e.g. Internet bookings)
Mode 2: Consumption abroad (e.g. tourists consuming accomodations, catering)
Mode 3: Commercial presence (FDI)
Mode 4: Presence of natural persons (e.g. guides from abroad)
Caribbean is a major destination for EU consumers
Caribbean is an important destination for European FDI
Slide13: Potential impacts of EPAs Trade measures
Market access and national treatment for each mode and sub-sector in tourism and other services sectors (telecommunications, electricity, insurance, environmental services)
already a high degree of liberalization compared to other ACP countries (incentives and concessions to attract FDI)
but still some limitations (e.g. Hotel proprietor Act, withholding tax)
Tariff on imported goods used as inputs in the tourism sector
Modes 2 and 4 from the EU
Non-trade measures: domestic regulations
Slide14: Potential impacts (cont ’d) Challenges
Limitation of the heavy reliance on FDI/ local involvement
Reduction of the global economic vulnerability
Diversification and quality of tourism
Management of the environmental pressure
Development of sustainable practices
Opportunities
Increased FDI and transfers of sustainable practices
Increased competitiveness and attractiveness of the region
Increased employment and reduced poverty (depending on wages)
Increased linkages with other sectors
Western Africa: Fisheries: Western Africa: Fisheries MIMAP Network Micro Impacts of Macroeconomic and Adjustment Policies
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Fisheries Sector in ECOWAS countries: Fisheries Sector in ECOWAS countries Definition of the sector
HS codes 0300, 0301, 0302, 0303, 0304 , 0305, 1600, 1603, 1604 : covering Fish and Crustaceans, Molluscs and Other Aquatic Invertebrate (fresh, chilled, frozen, dried, salted, and preparation, extracts and juices of).
Reform of the Common Fishery Policy as of January 2004 : to preserve stock protect the marine environment, match fleet size to supply and provide consumers with quality fish at affordable prices.
International cooperation
Fisheries Sector in ECOWAS countries International Cooperation of CFP: Fisheries Sector in ECOWAS countries International Cooperation of CFP
Current situation: Bilateral Fisheries Agreements; Financial compensation in exchange of access rights to the EEZ.
EU Proposal: to move to Partnership Agreements aiming at a sustainable development of fisheries.
Others important international factors
Emergence of new actors (Asia)
Increase of pavillion de complaisance boats
Low respect for international fisheries agreements
Fisheries Sector in ECOWAS countries Geographical Scope: Fisheries Sector in ECOWAS countries Geographical Scope
EU Bilateral Fishery Agreements with 6 ECOWAS countries: Senegal, Mauritania, Guinea, Guinea-Bissau, Côte d’Ivoire, Cape Verde.
Also take into account: Western African land-locked countries as potential regional markets for fisheries production.
In the EU, focus on France, Portugal and Spain.
Fisheries Sector in ECOWAS countries Economic Importance in ECOWAS: Fisheries Sector in ECOWAS countries Economic Importance in ECOWAS Economic Dimension:
Value of fish exports to EU: mainly Senegal and Mauritania
Financial Compensation for access right to EEZ to fish ‘surplus’ not exploited by national fishers: Senegal, Mauritania and Guinea Bissau.
Importance of the sector in terms of public budget: Guinea Bissau (30 %), Mauritania (15 %).
Fisheries Sector in ECOWAS countries Social Importance in ECOWAS: Fisheries Sector in ECOWAS countries Social Importance in ECOWAS For all countries, especially:
Côte d’Ivoire: the fishery sector generates directly around 70,000 jobs and indirectly, 400,000 jobs.
Mauritania: 36 % of the jobs in the modern sector are in fisheries.
Senegal: over 600,000 people work directly or indirectly in the sector.
Fisheries Sector in ECOWAS countries Environmental Importance at world level: Fisheries Sector in ECOWAS countries Environmental Importance at world level Sharp reduction of world fish stocks.
Trend to fishing ever younger fish, thus endangering the renewing of the species.
Short-term financial compensation does not compensate for the long-term negative environmental impacts and the dramatic reduction of fish stocks.
Danger of scarcity of the local market with negative impacts on local population nutrition habits.
Fisheries Sector in ECOWAS countries Economic and Social Importance for EU: Fisheries Sector in ECOWAS countries Economic and Social Importance for EU EU: One of the main third-world fishing powers and the first market for processed products and aquaculture.
260.000 fisherman in the EU and more indirect job generated : less then 1% of total EU but more then 10 % of job in 20 precise geographical areas.
Whole production chain (fishing, aquaculture, processing and marketing) accounts for 0.28% of EU GDP (€ 20 billion).
Direct value-added of fishing agreements: 220 million €/year; Indirect value-added around 500 million €/year ; 33,000 jobs created.
More than 80% of these benefits go to Spain ; France and Portugal account for 7% of these benefits each.
Potential impacts of EPAs Challenges: Potential impacts of EPAs Challenges Trade measures: not an issue in the EU (EBA-Lome Protocols).
Danger of Fishery Agreements for the African countries: highly subsidized European commercial fleets competing with poor, artisanal African fishers that cannot afford to invest in modern boats.
Market segmentation: Deep sea EEZ only exploited by EU boats and national fishers reduced to coastal zones.
Food security dimension: in Senegal, over 70% of local fish consumption come from around 60,000 artisanal fishers.
Potential impacts of EPAs (cont’d) Opportunities: Potential impacts of EPAs (cont’d) Opportunities Sustainable Development Partnership in Fisheries Sector.
To direct an even more important share of financial compensation to the development of the sector.
To invest at the first stage: modernization of the fleets.
To invest at the second stage in the transformation chain to add more value in situ.
Investment in the building/modernization of infrastructure both in coastal zones (ports, etc.) and between the coast and the landlocked countries (Mali, Niger, Burkina-Faso).
Potential impacts of EPAs (cont’d) Opportunities: Potential impacts of EPAs (cont’d) Opportunities
Building a comprehensive ‘cold chain’ in West Africa :
to transport fish and fisheries products from the coast to the landlocked countries (implying a progressive shift in the nutrition habits of the populations).
to export products from the landlocked countries – fresh ‘out of season’ fruits and vegetables, meat – to Europe and more generally the overseas market via the coastal infrastructures.
Central Africa: Textiles: Central Africa: Textiles MIMAP Network Micro Impacts of Macroeconomic and Adjustment Policies
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Textile Industry in CEMAC countries: Textile Industry in CEMAC countries Definition of the sector
HS codes 5205,5208,5208: covering production of cotton yarns, unbleached fabrics, finished products including clothes
Allows SIA of an industrial sector both for local and export markets
Linkages with cotton production and finishing
Efficiency of regional organisations
Possible synergies with textile industry in the EU
Textile Industry in CEMAC countries: Textile Industry in CEMAC countries Geographical scope
EU – mainly Germany, France and Italy
Cotton producers in CEMAC:
Cameroon – CICAM –significant textile industry
Chad – significant cotton producer but no textile industry
CAR – smaller cotton producer but with a former textile industry
Textile Industry in CEMAC countries Importance in CEMAC: Textile Industry in CEMAC countries Importance in CEMAC Economic
West and Central Africa third world exporter of cotton fibres after the US and Uzbekistan. But is the only region where there is no significant transformation to cotton production (only 7% transformed in Cameroon compared to US 62% or Brazil 159%).
The cost of cotton production in Central African is considered competitive and raw material account for 52% of the final price of yarn;
Adds value to cotton fibers
Textile Industry in CEMAC countries Importance in CEMAC (cont’d): Textile Industry in CEMAC countries Importance in CEMAC (cont’d) Market opportunities in the EU (duty and quota free)
Market opportunities in other African countries benefiting from AGOA agreement and forced to include African raw materials including yarns and unbleached fabrics
Local market and regional market demand expanding (3%/year) but competition from Asian imports and worn clothes;
Textile Industry in CEMAC countries Importance in CEMAC (cont’d): Textile Industry in CEMAC countries Importance in CEMAC (cont’d) Social
Significant job and revenue creation in poor areas close to production zones for yarn and unbleached fabrics (4,000 tons/year production plant = 900 jobs).
Job creation in urban areas (700 jobs per 4,000 tons/year finishing textile plant).
Qualified jobs inducing education and training to improve skills.
Local production of yarns allows creation of traditional handlooms and clothing SMEs and additional job creation.
Textile Industry in CEMAC countries Importance in CEMAC (cont’d): Textile Industry in CEMAC countries Importance in CEMAC (cont’d) Environmental issues related to textile industry are significant and include:
Inefficient use of water and energy where there is a shortage of supply both in North Cameroon and Chad.
High level of noise and dust in the spinning process.
Use of dyes and harmful chemicals in the finishing process inducing a problem of water treatment which is expensive (2 million US$ on average for a 4,000 tons/year capacity) in a context where there is a concentration of industries and no common water treatment.
Textile Industry in CEMAC countries Importance in the EU : Textile Industry in CEMAC countries Importance in the EU Economic
Final consumption of textile products in Europe is increasing with 7.86 million tons in 2000 and a forecast consumption of 10.5 million tons in 2010. At the same time industrial consumption of semi-finished textile products is shrinking with 5.36 million tons in 2000 and a forecast of 4.0 million tons in 2010.
The trend of the spinning industry in Europe is to delocalise or abandon this activity and purchase semi-finished products) to be transformed to high value products.
Textile Industry in CEMAC countries Importance in the EU (cont’d): Textile Industry in CEMAC countries Importance in the EU (cont’d) Social
loss of 1/3 of the jobs in the textile industry in the past ten years in the EU, mainly in France, Germany and Italy.
Environmental
Possible use of African cotton by products considered environmentally friendly compared to other producers (less chemicals inputs, rain felt production, small farmers ( 1 to 5 ha).
Potential impacts of EPAs: Potential impacts of EPAs Trade measures
Not an issue in the EU (EBA-Lome Protocols)
CEMAC: protection of local and regional markets
FDI needed and partnership with EU textile companies
Trade facilitation: improvement of regulatory environment, port facilities, export procedures etc.
Potential impacts of EPAs: Potential impacts of EPAs Challenges :
CEMAC: enforcement of regulations and controls. Dealing with Nigeria and informal regional trade.
Opportunities
EU: contribute to maintain and develop textile industry in partnership with ACP cotton producers.
CEMAC: add value to local production, create revenues and jobs, maintain and develop cotton production.
Southern & Eastern Africa: Food Crops: Southern & Eastern Africa: Food Crops MIMAP Network Micro Impacts of Macroeconomic and Adjustment Policies
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Food crops in Eastern and Southern Africa: Food crops in Eastern and Southern Africa Definition
ESA countries: maize and cassava
large volume of production, not specific to one or two countries, significant trade flows, including regional trade, export opportunity (processing cassava)
EU: wheat
2nd world producer, 5th exporter, 1st agricultural product export from the EU to ESA countries
Geographic scope
The EU (including new member states)
Main producers in ESA : DR Congo, Uganda, Madagascar, Malawi, Rwanda, Ethiopia, Kenya, Zambia, Zimbabwe
Importance in the EU: Importance in the EU Economic
5.9% of total value of agricultural production (EU 15), higher share in some new member states
Social
Large or medium size farms, trend to increase.
Low level of employment
High farmers income, rely on CAP support
Environment
in specialized areas: poor water management, water pollution, negative impact on soil, loss of biodiversity.
Importance in ESA countries: Importance in ESA countries Economic: agriculture share of GDP remains high
Social: linked to food security
most of population in rural areas - most of them produce food products
supply side
access side (income)
key role of women in food security at household level
negative impacts of food aid to face food shortages
development of wheat consumption in urban areas / middle class
Importance in ESA countries (cont’d): Social (continued)
processing of maize and cassava : income diversification, source of employment
Environment
Intensive maize production decrease soil fertility
vulnerability to climate change (floods, droughts) in Southern Africa
positive effects of cassava production on soils - high flexible production
introduction on GM maize and cassava Importance in ESA countries (cont’d)
Potential impacts of EPAs: Potential impacts of EPAs Trade measures
EU: arable crops support - export subsidies
ESA: state trading enterprises - food security stocks - tariffs
Challenges: in ESA, openness to wheat imports increase competition with local production. Impact on small farmers.
Opportunities
EU: compete with USA and other suppliers in some national markets
ESA:
response to urban demand.
export cassava products to EU markets, for the feed industry.
Slide43: Pwc