Thread by @Jim_Cornelius

Hello Lord RIdley. Please see trade.ec.europa.eu/doclib/docs/20… …

Most African countries are on zero tariffs for everything bar guns and ammunition. The few remaining are on General Scheme of Preferences (GSP), like Nigeria, or EU Association Agreement, and two cases of no reduction.

Countries on the UN's Least Developed Countries (LDC) list automatically qualify for Everything But Arms (EBA) and are therefore on zero duties and quotas for everything bar weapons and ammunition. This map shows the LDC countries in blue.

Most of the remaining sub-Saharan countries have Economic Partnership Agreements (EPA) with the EU, either bilaterally or though a regional trade groups. This map shows you that relationship for each country.

EPAs grant tariff free, quota free access to EU markets. Here for example is the EPA for Ghana. trade.ec.europa.eu/doclib/docs/20…

EBA, also known as GSP Annex IV is an extension of GSP (General Scheme of Preferences), GSP grants extensive tariff relief under an EU scheme first initiated in 1971. trade.ec.europa.eu/doclib/docs/20…

As well as GSP Annex IV (EBA) another extension of GSP is GSP+, this grants duty free and quota free access to EU markets under a scheme which promotes good governance and sustainable development. Cape Verde are on GSP+.

trade.ec.europa.eu/doclib/docs/20…

The rate of tariff relief for standard GSP, GSP+ and EBA can be seen here. unctad.org/en/Publication…

In the original Treaty of Rome (1957) the colonies of the founding nations were granted associated membership of the EEC with tariff, free quota free access EU markets, in a non-reciprocal manner. This is under Part 4 of the Treaty of Rome.

ec.europa.eu/romania/sites/…

In Article 133, paragraph 1 refers to the duty free access to member states' markets and paragraph 3 says that the associated territories will protect sensitive areas from market liberalisation. In other words they are free to impose thief own tariffs in those market sectors.

The territories which were associated members and beneficiaries of this arrangment were listed in Annex IV of the original 1957 Treaty of Rome.

By the mid-1960s these had become independent nations so the Yaoundé Convention established a new relationship with these nations granting them continued tariff free access to EEC markets.

aei.pitt.edu/34505/1/A674.p…

The signatories to Yaoundé were as follows. epg.acp.int/fileadmin/user…

Yaoundé had expired by 1975 (after an earlier renewal) and by this time the UK had joined the EEC, so a new Convention was laid down for what were by now known as the ACP (African Caribbean and Pacific) former colonial nations.

The Lomé Convention: en.wikipedia.org/wiki/Lom%C3%A9…

Under Lomé the ACP countries received preferential market access to the EEC, tariff free on 97% of exports. Furthermore core agricultural products, including sugar and bananas were allowed entry to the EEC market under quota at above world market prices.

ageconsearch.umn.edu/bitstream/1885…

This was most significant for sugar which was sold from the ACP countries into the EEC (later EU) at 2-3 times the world price.

ageconsearch.umn.edu/bitstream/1885…

This list shows the ACP countries which were beneficiaries the 97% tariff relief under Lomé in 1977.

aei.pitt.edu/60103/1/BN_15.…

And this map shows the ACP countries as of today.

acp.int/content/secret…

Now these non-reciprocal preferential arrangements were not entirely compatible with GATT/WTO rules. They breached the MFN principle which states that you have to treat other members exactly the same, no preferences. wto.org/english/docs_e…

There are exceptions to this rule laid out in GATT Article XXIV. These are Regional Trade Agreements in the form of Customs Unions and Free Trade Areas.

wto.org/english/docs_e… …

GATT compatibility of the Yaoundé Convention was the subject of discussion in GATT meetings. wto.org/gatt_docs/Engl…

The EEC argued that it established free-trade area under the terms of GATT Article XXIV, but others disputed this and said that the provisions required a special waiver. This issue was not immediately resolved. wto.org/gatt_docs/Engl…

By the mid 1960s it became clear the MFN rules were inappropriate for developing nations. This is partly why the ACP-EU/MFN incompatibility remained.

In 1964 the first UNTAD (United Nations Conference of Trade and Development) conference was held in Geneva and the issue adressed

At the 1968 UNCTAD conference a Generalised System of Preferences (GSP) was proposed by the Sec. General, Raúl Prebisch. In ‘64 it was adopted. It allowed developed nations to create exemptions to MFN/ GATT Article I for developing countries, so long as it was applied generally.

By generally it meant not favouring countries for historical or cultural reasons, but rather on the level of development and across a broad range of goods, rather than core agricultural commodities.

The EEC’s GSP scheme in 1971 improved market access, reducing tariffs for all developing countries, not just those with former colonial links as per ACP.

trade.ec.europa.eu/doclib/docs/20… …

The United States implemented their own GSP scheme in 1976.

Today the following now grant GSP preferences: Australia, Belarus, Canada, Iceland, Japan, Kazakhstan, New Zealand, Norway, the Russia, Switzerland, Turkey and the USA, and the EU.

Each GSP scheme differs in the scope of tariff relief, but the EU's is the most comprehensive.

A comparison of EU and United States GSP from 2015.

www1.essex.ac.uk/economics/docu…

The system was reformed several times and now works with just a sensitive (tariff reduction of 30% or 3.5 points) and non-sensitive (tariff elimination) classification. unctad.org/en/Publication…

Products that previously received a more favourable preference retain the preference of the older system. This is why the tariff on roasted coffee for GSP countries (e.g. Nigeria) is 2.6%. It's a 65% reduction on 7.5%.

Roasted coffee tariff for Ghana which has an EPA and is GSP.

Just in case it's not clear the lowest tariff 0% applies, due to the EPA.

Without the EPA agreement it would classify as a GSP and be on a 2.6% tariff and if it dropped out of GSP income criteria, and had no EPA, it would be on the full tariff of 7.5%.

Before reform in 2014 the list of countries receiving GSP was extensive. macmap.org/Documents/ALL_…

Beneficiaries of the EU's GSP were countries that had not been classified by the World Bank as a high-income country for three consecutive years.

It thus included China, Brazil, India and Saudi Arabia among others.
digitalcommons.law.msu.edu/cgi/viewconten…

In the last decade MFN tariffs had come down considerably and tariff relief of standard GSP for the lowest income beneficiaries was eroded by some of the wealthier beneficiaries receiving the same level of relief. So the GSP beneficiaries criteria was deemed ready for reform.

In July 2014 reform came into effect. The number of beneficiary countries was reduced from 177 to 88, removing Saudi Arabia, China Brazil, Russia among them from the list.

unctad.org/en/Publication…

So just to recap. Since 1957 many African countries have been beneficiaries of zero tariffs into the EEC/EU, formally established under Lomé in 1975 for ACP countries including former British colonies.

In additions lower income nations have received tariff relief under GSP.

The ACP-EU relationship was not theoretically compatible wit GATT/WTO.

In contrast he GSP scheme was sanctioned under WTO rules, (initially via a waiver) and by 1979 by a new "enabling clause" in the GATT Treaty.

en.wikipedia.org/wiki/Enabling_…

Exceptions to MFN can be seen in the following table. Trump's application of tariffs on steel and aluminium is utilising the security exception, though this is under challenge.

ecampus.wto.org/admin/files/Co…

The ACP preferences came under threat when US companies Dole, Del Monte and Chiquita with large interests in fruit plantations (particularly bananas) in Latin America, objected to this preference. Latin American producers were subject to tariffs while ACP producers were not.

In 1997 the WTO ruled against the EU over the banana issue, and the threat of a more general ruling against the whole ACP preference system loomed. theguardian.com/world/1999/mar…

Lomé had effectively expired due to the WTO ruling, so a new EU-ACP trade relationship had to be found and in 2000 the Cotonou Agreement proposed WTO compatible FTAs known as known as Economic Partnership Agreements (EPA) with the ACP countries.

en.wikipedia.org/wiki/Cotonou_A…

The key difference from the previous ACP arrangment was that the new one was reciprocal and so WTO compatibility. However, this wasn't suitable for the all countries. So a new level of GSP was created for tariff free access to countries on the UN's least developed countries list.

So countries on the UN's list of Least Developed Countries list automatically qualified for Everything but Arms, which is part of GSP under Annex IV. Offering unconditional tariff free and quota access to EU markets.

But this is not without controversy. Some African countries like Kenya have been the on the non-reciprocal tariff elimination scheme since 1975, but as that's now gone and they are not poor enough for EBA they have two choices, 1. Accept EPAs or 2. Fall back to standard GSP.

Accepting an EPA means they get full tariff elimination but it also means opening up their own markets to EU products in the same way to be MFN compatible. Tariffs imposed by African nations are generally very high, so it's a major issue.

Well, there's a bit of a window on all this as there's a 10-year transition from Lomé arrangements to the new Cotonou ones. But in about 2009 the EU get several African nations to agree in principle to EPAs and the tariff free access to the EU is provisionally applied.

The provisional continued access to EU markets was under Market Access Regulation (MAR) 1528/2007.

europarl.europa.eu/meetdocs/2009_… …

With the EPAs initialled but not yet formally signed or ratified the ACPs on EPAs received the benefits provisionally, but their own markets remained unliberalised to imports from the EU.

This continued until 2014 when the EU called time on the matter. tralac.org/news/article/5…

The EU says sign/ratify the previously agreed EPAs or drop back to the next best option. For some countries this is EBA, but for others like Kenya this is GSP.

In the case of Kenya they delay until its too late and for two months in late 2014 drop back to standard GSP.

This is when you get all the hyperbolic reports about the "EVIL EU" threatening to impose tariff on Kenyan cut-flower producers. Like this one in the Guardian. theguardian.com/sustainable-bu…

Kenya agreed to sign the EPAs in the end they went back to the same tariff free, quota free access to the EU under an EPA, but in order to be WTO compatible they have to open up their markets too.

Sensitive areas of the EU partner's economy are protected from libereralisation by either excluding sectors completely or having a long lead-in time to tariff elimination

trade.ec.europa.eu/doclib/docs/20…

More detail on Kenya's trade relationship with the EU can be found here. eeas.europa.eu/archives/deleg…

So historically most African countries, principally the former colonies, had extensive tariff elimination through the ACP-EU relationship, and others through GSP.

And as of now most have extensive tariff elimination through EBA and EPA.

Here is a list of countries benefitting from non-reciprocal tariff elimination through EBA (in red), or GSP+ in yellow, or on standard GSP tariff reductions (in green).

And here is a list of countries that benefit from tariff elimination through FTAs.

To verify these images, you can compare with this list of countries on this UK Government website. gov.uk/government/pub…

And you can check the tariff for specific goods and countries on this UK Government website. trade-tariff.service.gov.uk/trade-tariff/s…