What Are the Benefits of an Economic Partnership Agreement?

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Economic Partnership Agreements open trade between Europe and nations in the ACP.
Economic Partnership Agreements open trade between Europe and nations in the ACP. (Image: Map of EU on globe image by patrimonio designs from <a href='http://www.fotolia.com'>Fotolia.com</a>)

The European Union (EU) implemented Economic Partnership Agreements in January 2008. The agreements strive to progressively dismantle tariffs and other trade barriers between the EU and the African, Caribbean and Pacific (ACP) nations. Proponents of the Economic Partnership Agreements contend that the pacts will help foster economic growth in the ACP and increase the competitiveness of African countries, as well as the Caribbean and Pacific island nations.

Economic Diversification

Economic Partnership Agreements represent liberalized trade between the EU and the ACP, enabling the ACP nations to export more goods to European consumer markets and opening the ACP to more imported goods from the EU. Proponents of the agreements, such as the European Commission’s General Directorate of Trade, contend that the increase in imports will provide cheaper raw materials from Europe and will promote economic diversification in the ACP. Many ACP nations depend too heavily on a limited number of commodities and lack diversified economies.

Increased Competition

Dismantling trade barriers opens formerly protected domestic industries to competition from foreign producers, who may be able to produce goods at a lower cost. The Economic Partnership Agreements between the EU and the ACP intend to foster competition among producers of goods in both regions.

Lower Prices

Tariffs, quotas and other trade barriers limit the availability of certain consumer goods, resulting in higher product prices. Many nations apply tariffs and other barriers to imported goods to protect domestic industries from having to compete with cheaper foreign goods. The Economic Partnership Agreements call for a progressive removal of tariffs and other trade restrictions, making a broader range of goods available to consumers and businesses in Europe and the ACP.

Trade Rule Compliance

The Department for International Development reported that since 1976, trade agreements between the EU and ACP allowed ACP goods access to European markets, but protected ACP producers from European competition. This kind of one-way access, allowing ACP producers to export but protecting them from EU competition in their home countries, violates World Trade Organization (WTO) rules. WTO rules state that developed regions such as the EU can apply one-way access only to all developing countries in the world or only to the poorest nations. Some developing nations outside the ACP have challenged the EU for not complying with this rule. Consequently, the WTO gave the EU and ACP until the end of the 2007 to comply. Economic Partnership Agreements will comply with WTO rules by opening previously protected ACP markets to goods from Europe.

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