CHALLENGES
“
AT
THE BORDER”
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setback if production capacity being builtin African countries can be sustained or, more probably, if niche rather than mass markets are targeted.
Cotonou Agreement and Economic Partnership Agreements of the EUIn addition to EBA,
the EU has extended to Africa, the Caribbean, and the
Pacific (ACP) countries preferential access to
its market under the CotonouAgreement, the successor to the Lomé Convention. Economic Partnership
Agreements (EPAs) between the EU and ACP countries are under negotiation to replace the preferential systems embodied
in the Cotonou Agreement, which had received a waiver under the enabling clause from GATT
Article XXIV this waiver expires in It is envisioned that the EPAs will promote
trade and development in theACP countries compatible with WTO principles by establishing agreements between large groups of countries forming customs unions. By negotiating reciprocal liberalization with existing South-South regional groupings and by providing common rules of origin with cumulative provisions, the intention is to prevent the hub-and-spokes effects that
plague many bilateral North-South agreements. Several issues will determine the ultimate effectiveness of any EPAs in promoting development the degree of additional MFN liberalization in goods and services the restrictiveness of rules of origin and the extent of trade diversion that could occur in the event that there is no reduction in
MFN border protection. Because tariffs are relatively high and internal barriers within
groupings are still prevalent, enacting EPAs without prior action on
FIGURE 3.13
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