European CommissionDG Development and

Relations with ACP States

EU support for EPA implementation and regional

integration agenda on services and investment

Alex Nakajjo28th-29th May 2008

Outline

1. Development support for Services• Background: legal basis in Cotonou &

IEPA• EU instruments • Actions that could be supported2. Services and regional integration

Cotonou and IEPAs• Cotonou.

–Chapter 2. Investment &PSD. Art 21.1:•« The Cooperation shall support necessary eco and inst reforms at national & regional level aimed at favourable envt for private investment & dev of a competitive private sector. […] »

• Chapter 4. Trade in Services. Art 41.1:•« The Community shall support the ACP States’ efforts to strengthen their capacity in the supply of services. […] »

Cotonou provisions cont-

–Chapter 2. Regional cooperation and Integration. Art 28:“Cooperation shall provide effective assistance to achieve the objectives and priorities, which the ACP countries have set themselves in the context of regional and sub-regional cooperation and integration. « […] »

Cotonou provisions cont-

• Cooperation in the area of regional economic integration and regional cooperation should support the main fields identified in articles 29 and 30 of the Cotonou Agreement. Furthermore, article 35 provides that “economic and trade cooperation shall build on regional integration initiatives of ACP States

IEPA Provisions

• EAC interim EPA: Chapter V. Article 37. notes that negotiations will continue in the areas of trade in services and trade related issues including investment.

• On the Development cooperation, the EAC IEPA notes recognition of development needs and parties agree to work together to define and address development needs.

IEPA Provisions• Other IEPA in the ESA region make reference to the

Development Matrix developed by the region as a basis for cooperation. The Matrix identifies the main areas where support is needed in order to fully benefit from regional integration and an EPA. These address supply-side constraints (infrastructure development, productive capacity, private sector development), trade policy and regulations, and adjustment costs.

IEPA Provisions – Types of Interventions (non-exhaustive list):

• policy development;• legislation and regulatory framework development; • institutional/organizational development; • capacity building and training.[1]; • technical advisory services; • administrative services; • support in SPS and TBT areas• operational support including equipment, materials and related

works.[1] "capacity building“: may include in particular training, institutional

development, organizational development (structures and procedures), inter-institutional communication and cooperation procedures, operational support.

Instruments

1. COMESA Regional Indicative Programme –9th and 10th EDF

2. Country National Indicative Programmes3. EU Member States own instruments4. Other community instruments:

• EIB Investment Facility• Horizontal all-ACP instruments: Infrastructure

and Energy partnerships

RIP – 9th EDF• Under the 6th, 7th and 8th EDFs, the ESA-IO region had three

separate regional indicative programmes, aimed mainly at functional cooperation.

• Current RIP under 9th EDF-moved from predominantly functional cooperation to policy support

• Focus on:– Regional economic integration and trade agenda– sustainable management of natural and marine resources – Socio-economic infrastructure-Transport and communications

(incl. water and energy)• And also:

– Agriculture and food security ; HIV-AIDS ; Gender; Peace and security

RIP – 10th EDF• 10th EDF should enter into force in the coming

weeks.• The RIP is in the process of finalisation: Commission

aims to sign it later this year (€645Mn).• Opportunity to integrate priorities from

COMESA/EAC’s integration Agenda and second phase of EPA negotiations.

• RIP would also build on needs identified by Regional Preparatory Task Force (RPTF)

• Intention to limit number of intervention areas and increase focus on trade and regional integration.

Indicative Prioties-RIP10th EDF

• Indicative Programme ESA-IO €645m• Regional Economic Integration (including

Infrastructure, and Natural Resources, Environment and Food Security): 85 percent of the total allocation.

• Regional Political Integration/ Cooperation : 10 percent of the total allocation.

• Other programmes: 5 percent of the total allocation.

RIP 10th EDF

• major interventions foreseen shall be-Trade-Related assistance and Capacity Building- Alleviation of the impact of economic and fiscal adjustments on public

expenditure- Support private sector development- Removal of Supply-Side Constraints- Improvement of land and water resources management to develop

agricultural and food production- Improve the capacity of the region in deriving economic benefits from

its marine resources and managing it in a sustainable way

National indicative programme

• Each country has NIP which target addressing country specific constraints.

• For Uganda, €439Mn is provided for 2008-2013• Budget Support: 42% includes €7Mn to trade and

MTTI capacity building • Focal sector 1: Support to Transport sector(39%).• Focal sector 2: Rural Development (14%)• Non focal sector: 5% -non state actors,

democratisation, etc.

EU Member States contrib.• The Member States of the European Union

collectively undertake to support, by means of their respective development policies and instruments, development cooperation activities for regional economic cooperation and integration and for the implementation of the cotonou and EPAs agreement

• The main areas of donor intervention are trade, regional integration, agriculture, infrastructure, telecommunications including information technology, environment and marine resources management, food security, disaster management, peace and security and capacity building.

EU Member States contrib.

• Several EU MS have participated in RPTF.• AfT Strategy: EU to make available €2bn per

year on trade-related assistance (half EU MS and half Commission).

• ACP countries should receive in the range of 50% of the funds (an increase of €300-400Mn a year)

EU Financial contribution• Between 2001-2005, €3,3 b was received

at the national level by the ESA countries from the EU (MS & EC) to cover areas of trade policy and regulations, building productive capacity, and trade-related infrastructure. Out of this amount, infrastructure accounts for almost 60 % (€2 billion), building productive capacity for 39% (around €1.3 billion), and Trade Policy and regulations for 1% (€32 million).

EU Financial contribution• In addition, the countries in the region have

had access to global and regional programmes. The EC provided €1.1 billion for Trade-related Infrastructure for the ESA countries and the EU Member States €851 million. The EU Member States provided together 69% of the €1,3 billion for Building productive capacity in ESA countries and the EC two thirds of the amounts devoted to trade related assistance.

Other Community Instruments

• EIB Investment Facility• Infrastructure partnership and Energy

facility

Identification of needs : RPTF

• Regional Preparatory Task Force (RPTF) –Link EPA negotiations with development

cooperation –Ensure complementarity among

development partners

Identification of needs

• Priorities in line both with comprehensive EPA and COMESA/EAC’s own agenda, in particular multi-annual business plan and the Regional Indicative Strategic development Plan RISDP.

• Possibility to identify additional priorities in the context of the EPA negotiations on services and investment :

• Private sector development.

Identification of needs : RPTF

• RPTF identified priority areas for support:1) Trade in goods2) Trade data (essentially statistics)3) EPA implementation and future negotiations.4) Trade in core services5) Trade related issues (competition, investment,

IPR, public procurement, labour and environment).

Identification of needs : RPTF4) Trade in core services:

• Sectors identified: Transport, Finance (banking/insurance), Tourism, Professional Services, Education, Construction and engineering

• Types of activities: – Capacity building (e.g. to conform to international

standards, equipment)– Institution building (e.g. regulatory frameworks)– Needs assessment studies / Impact assessment studies– Establishment of regulatory bodies (e.g. in finance)– Support for promotion and marketing institutions (e.g. in

tourism)– Establishment of accreditation bodies (e.g. for

professional services, engineering, education)

Identification of needs : RPTF5) Trade related issues (competition, investment, IPR,

public procurement, labour and environment).• Types of activities:

– Capacity building to develop, harmonise and implement policies– Establishment of accreditation/regulatory bodies– Development of institutional, policy and legislative infrastructure– Devt & implementation of regional Foreign Investment Strategy– Establishment and strengthening of competition authorities– Impact assessment studies (e.g. public procurement, IPR)– Capacity building for SMMEs (e.g. to participate in procurement)

Regional Integration• Trade in services and investment in particular, as

instruments of a global strategy for regional integration and development.

• Commission is preparing a Policy Communication on Regional Integration for Development in ACP countries.

• Vision of regional integration (economic dimension):• Establishment of larger markets and secure/sound

regulatory and institutional frameworks as a means to enhance trade, investment and economic development

• Regional integration as a springboard towards gradual integration into world economy

Regional Integration

• Goal is to support the regions’ own integration Agendas

• Proposed approach could build on: (i) regional integrated markets and supportive business environment (regional dimension of PSD/diversification); (ii) connected regional infrastructure networks; (iii) regional policies for sustainable development; (iv) effective regional governance

Regional integrationAlready reflected in IEPA Art. 1 : Objectivesa) Contributing to the economic growth and development […];b) Promoting regional integration, economic cooperation and

good governance thus establishing and implementing an effective, predictable and transparent regional regulatory framework for trade and investment between the Parties and among the ACP EPA States;

c) Promoting the gradual integration of the ACP EPA States into the world economy, in conformity with their political choices and development priorities;

d) […]

Issues/Challenges• Overlapping configurations and memberships: RIPs

overlap (SADC/COMESA/EAC) • Objective for development cooperation and the EPA

supportive of the region’s own integration agenda• Prioritising Regional Integration by EAC/COMESA

member states.• EAC/COMESA Countries taking ownership of trade

issues in their development strategies• Harmonisation of all actions by development

partners• Managing for results-on all development programme

Thank you