RTA negotiations

WTiilst there has been overall growth in regional trade agreements since 2000, negotiations have, often, been lengthy and inconclusive lasting in several instances over 10 years. For example, the African Union negotiations since the 2002 Monterey Declaration have been slow in creating an overarching trade and economic framework linking the eight separate and embedded existing regional economic communities.¹² Further EU attempts to develop associative link-ups with Africa and Asia Pacific have lengthy and often inconclusive. EU negotiations with India faltered on agriculture; pharmaceutical manufacturing standards and conditionality. In 2009, in other talks, the EU switched to bilateral negotiations with individual ASEAN members rather than an abortive interregional agreement, negotiations over which were subsequently shelved for 10 years.¹³ In contrast, less integrated and more loosely organised institutions have found it easier to reach agreements, such as EFTA and EAEU. Similarly, MERCOSUR link-ups have been more successful on a continental basis with

Chile and Mexico and for similar organisation and procedural reasons with India.¹⁴ India, as part of trade negotiation, turned to Latin America as a means of offsetting the increasingly competitive Asian region. Overall bilateral-regional trade agreements in mainly goods registered with WTO have proliferated from 2009. The main drivers have been Turkey, Chile, Republic of Korea and Japan.¹⁵

Regional trade agreements and geopolitics

In economic terms the main purposes of RTAs are market access, trade diversification, trade security or as part of a wider trade reorientation. The other functions of RTAs are as an instrument of diplomacy as part of foreign policy. In this second sense, an important aspect of RTAs is their use as support for strategies of influence and hegemonic control in and over regional organisations and groupings. RTAs were used increasingly used to project presence and influence by primary and other powers. China’s early use of RTAs in the early period after 2000 was very much based on an experimental strategy of low-cost high information gain in the agreements with Iceland and New Zealand with whom trade was minimal.¹⁶ The later strategy of competing with Japan for influence within ASEAN through agenda setting and project diplomacy was abandoned by 2010. Japan was much more technically effective and diplomatically assured in running regional link-up projects in areas such as ports; logistics; disaster relief and eco cities. Thereafter, Chinese ASEAN strategy shifted to the more comfortable broad-brush slogan approach of annual China-ASEAN meetings and competitive mega regional groupings. The approach contrasted with that of the at a distance, less engaged approach of the United States via APEC and Trans Pacific Partnership (TPP).

For ASEAN a constant geopolitical concern was to retain ASEAN centrality-elevated to a political and administrative doctrine within ASEAN. The essential concern of the idea was that regardless of the changes surround-ing ASEAN, and wider proposals for Asia Pacific cooperation in which the role of ASEAN was unclear, ASEAN diplomacy would be directed to ensuring that the ASEAN institutions would remain central to whatever regional proposals might be put forward by primary or other powers.

Other geopolitical aspects of regionalism can be seen in the use of bilateral arrangements in the rush to conclude bilateral trade agreements ahead of mega regional negotiations; and, in counter-diplomacy to delay or derail competing regional arrangements. For example, India was concerned to conclude quickly bilateral trade agreements with Latin America and Asia-Pacific countries, ahead of wider regional diplomacy associated with the Trans-Pacific Pact or the Regional Economic Cooperation Pact promoted by China, in order avoid being marginalised in a plurilateral agreement and forced to make concessions on Indian domestic industries.¹⁷

Within the AU, for example, counter-diplomacy was used by the AU to block the rival Tripartite Agreement proposed by Egypt, linking up southern African states, in favour of the AU preferred rival Pan-African grouping comprising 44 countries in the Continental Free Trade concept (AfCFTA).¹⁸

Developing countries in the international trade setting

At a WTO level a major question for developing countries is how to ensure the inclusion of development trade concerns on the global trade regulation agenda. That is, whether the main issues in the development Agenda are adequately reflected in the Doha Round negotiations. That link was called into question by the breakdown of the Doha talks - the link between development and trade was effectively severed. Whilst the Doha Round continued, questions central to the concern of developing countries, such as trade preferences, agricultural market access; provisions for special interests such as cotton, and LDC industrial goods remained on the collective international trade agenda. The suspension of the Doha Round and disputes over the direction of the WTO at the Nairobi ministerial meeting, confirmed the delinking of multiple development issues from global trade rulemaking negotiations. Wider alliance groups such as the G-77, plus China, ACP and the G-90 had become in a trade context unwieldy and blunt coordination instruments and ineffective mechanisms for innovation and framing cohesive proposals post Doha. The splintering of the G-90 and shift of some leading developing countries such as Kenya, Nigeria and Ghana was seen through support for the e-commerce, services revised agenda favoured by developed economies.¹⁹

A further area of note with respect to the loss of influence of developing countries within the WTO, is the dispute over which body within the WTO would carry out review functions of trade arrangements (RTAs) notified to WTO. The Doha Round had originally set out that developing country' agreements would go to the Trade and Development Committee for review.²⁰ The proliferation of RTAs and the accompanying issues raised regarding the implications for multilateralism however led to pressure particularly from large developed economies (EU, Japan, US) for the creation of a new committee with a revised mandate to carry out review functions with respect to all new arrangements, and, report on trade regionalism.²¹ The running of the Committee on the Regional Agreement became key' instrument, particularly for the EU, as a vehicle for influence within the WTO, on regional organisation issues and as a means of asserting the Committee’s role over that of the Trade and Development Committee.²²

Economic preference arrangements

Economic preference arrangements are generally used as a means of providing distinctive treatment to another state or group, or, readjusting trade relations. Economic preference agreements have generally, though not always, involved countries which have had long historical links; colonial ties or other administrative links as dependencies or territories. EPA negotiations with former colonial territories or dependencies have in the main proved difficult, divisive and lengthy. Cotonou Agreements, concluded in 2002, illustrated the difficulties. The EU-ACP negotiations, after 2000, accurately illustrate the problems of replacing an historic set of agreements (Lomé and Cotonou), based on preferential trade, with trade development and market liberalisation arrangements phased over a 20-year period. Before this, market access trade preferences were maintained under Cotonou until 31 December 2007, during which the new Economic Preference Agreements (APAs) would be negotiated.²³

The negotiations with the more integrationist Caribbean component of the ACP were completed by 2008, through CARICOM, though the position of the micro economies of the Eastern Caribbean within CARICOM,²⁴ which were dependent on tourism and market access for agricultural exports, remained unresolved and vulnerable. The position of other CARICOM members was seemingly covered by the EU transition terms or at least postponed difficult decisions on trade diversification or were subject to special regimes; for example, sugar dependent economies.²⁵

EU negotiations with the Pacific component were inconclusive and underlined the problems for micro Pacific economies’ perception of becoming dependencies of a large metropolitan power. Negotiations with the larger remaining African LDC bloc were inconclusive. The differences at a bilateral level mirrored those during the multilateral Doha Round (access, agricultural products, safeguards and preferential treatment.) Four areas are worth highlighting in these negotiations in terms of diplomatic practice.

The EPA negotiations with the African members of the Cotonou group, spanned a period of over 20 years - punctuated by the 2007 international financial and commodity price crises, and became focal points in a contested vision of African integration. For developing countries, negotiation of bilateral EPAs with the EU posed, in many instances, critical strategic issues of trade orientation and market access. Brexit negotiations added another dimension of complexity, particularly for those African and Asia-Pacific countries with strong trade ties to the United Kingdom, such as Tanzania, UK and limited trade with the EU, Australia and New Zealand.²⁶

The long drawn out negotiations on EPAs added uncertainty over the wider issues of progressing the development of African regional economic communities, and, were at variance with the longer-range plans for pan-African integration. Underlying the differing concerns was the compatibility or fit of bilateralism with regional and pan-regional African economic integration aims.

A second feature of the EPA Cotonou negotiations was the use of interim agreements. Most of the negotiations running from 2000 lasted seven to eight years. Many were unresolved or partially concluded using an interim arrangement formula. The unsatisfactory nature of interim agreements meant that some were overturned following changes of government (e.g. Guyana) or domestically contested.²⁷

Third, the contested nature of the negotiations, was reflected at business organisation; religious group; parliamentary; governmental and NGO levels. The EU strategy was described by one Africa newspaper as like ‘Knocking over pieces on a chess board’.²⁸ The EU diplomatic strategy involved representations at embassy level, conferences, media, disguised state lobbying organisations and trade access inducements.²⁹ Strategy was switched after 2009 to bilateral negotiations and when these stagnated to a combination of bilateral and REC ministerial pressure, e.g. EAC heads of government, to put pressure on EAC members to reverse anti-EPA positions. In the case of West Africa negotiations, the continuing role of an ambassador, frequently in some analyses, was underlined by the defensive lobbying campaign of the EU ambassador to ECOWAS and Nigeria, to provide rebuttals to the anti-EPA position of the Nigerian government.

Trade coercion was used on several occasions in an effort to speed up negotiations, or, increase pressure on a wavering state. Deadlines were set for conclusion e.g. EAC negotiations; revised and negotiations suspended. The use of deadlines was backed up with loss of market access threats, or loss of market status, e.g. Kenya, which had a specialised agricultural and horticultural trade with Europe and was extremely vulnerable to loss of market.³⁰

Two unusual features of the EPA negotiations are particularly interesting concerning the evolution of diplomatic practice - the role of external media, and, UN regional organisations. On the role of media, an area of note is that of Xinhua in contemporary diplomacy and especially conflict, as an indirect transnational actor. In the EPA negotiations with EAC and Tanzania, for example, Xinhua took a strong anti-EU EPA line at critical junctures of the negotiations.³¹

At the international organisation level, the UN Economic Commission for Africa played an unusual role in the debate, with an intervention opposing EPAs. The ECA opposition was based on the likely adverse impact on the industrialisation options for economies such as Tanzania.³² The issue remains an area on major concern in LDC trade policy.

Fourth, a number of areas within the negotiations were problematic. Difficult areas included length of transition; preferences for LDC industrial special ‘vulnerable’ tariff items, including agriculture, fisheries and LDC manufactured goods (e.g. textiles, machinery). These concerns were evidently issues in the original Cotonou agreement, in the provisions on sugar beet export from ACP. The eventual introduction of new, revised, EU quotas on domestic market sugar quota suppliers from 2017 adversely impacted on the economies of small and vulnerable ACP economies exporting to the EU market.³³ As noted earlier, the vulnerable small and micro economies in CARICOM considered their position as vulnerable with the CARFORUM-EU agreement. The ACP agreement was seen as an albeit weak and ineffective last resort for diplomatic pressure on the EU to modify its domestic market subsidies.

Other areas of difficulty included the provisions for most favoured nation (MFN), which were seen as vehicles for locking in tariffs in favour of the major economies and limiting the freedom of developing countries party to make other arrangements.³⁴

Smaller states have in general found it difficult to establish mechanisms of redress for market access issues arising from FTA and EPA arrangements. The G-20 for example has been one of the routes used though with very limited success.³⁵