The African, Caribbean and Pacific (ACP) states and the European Union (EU) countries have agreed to negotiate new WTO-compatible Economic Partnership Agreements (EPAs). These agreements should not be an end in themselves, but be first and foremost instruments for development, as provided for by the Cotonou Partnership Agreement. While these new free trade arrangements offer new development opportunities, they also pose considerable challenges for the ACP. To ensure that the development dimension of the EPAs is fulfilled, close monitoring will be of prime importance, of both the negotiation and the implementation of these new partnership agreements. This InBrief presents a preliminary overview of some methodological issues linked to the design of a monitoring mechanism for the EPAs.1

Why monitor the negotiation and implementation of EPAs?

As reflected in the provisions of the Cotonou Partnership Agreement, the parties involved in the current Economic Partnership Agreement (EPA) negotiations, namely the African, Caribbean and Pacific (ACP) countries and the European Union (EU), have agreed that the new free trade arrangements should, first and foremost, be instruments for development. However, the prospect of EPAs has raised serious concerns about their capacity to actually deliver on development. The impact of the EPAs on poverty and poverty eradication, on ACP regional integration processes and on the unity of the ACP group have been called into question, as well as the merits of reciprocal market opening, the capacity of the ACP to negotiate and implement EPAs and the linkages and coherence of the agreements with the ongoing Doha Round at the WTO.

To ensure that the development dimension of EPAs is fulfilled, it is of prime importance to closely monitor both the negotiation and implementation of the new partnership agreements. Many actors in the ACP and EU have suggested setting up an EPA monitoring mechanism, with the aim of assessing progress in EPA negotiations and implementation relative to the goals set out in the Cotonou Partnership Agreement.² In light of criticism that the EPAs may not be properly implemented and may actually contribute to the further economic marginalisation of ACP states, a sound and transparent monitoring process could play a role in keeping the EPAs focused on their ultimate objective (i.e. development, and not just trade). Monitoring might also help identify possible remedies should the EPAs deviate from their primary intended purposes. That said, the utility of monitoring should not lead those involved to underestimate the problems surrounding the establishment of a suitable monitoring mechanism.

This InBrief overviews and assesses some of the methodological issues associated with the design of a monitoring mechanism for the EPAs. It aims to inform and stimulate policy debate in this area and increase understanding among the parties involved in the EPA process. Since such a monitoring instrument would ideally enhance transparency and provide a basis for informed decisions, this InBrief should also assist ACP and EU stakeholders in the timely development of their own positions on the possible establishment of an instrument for EPA monitoring.³

While methodological concerns might be similar for the different countries and regions involved in EPA negotiations, no one-size-fits-all approach is likely to be found. In this respect, it is important to stress that this InBrief does not attempt to identify the precise mechanism, content and substance of an actual monitoring instrument. These details would depend on the specific goals and priorities pursued through the EPA concerned and would thus be expected to differ substantially between countries and regions, depending on their particular development strategies and negotiating positions.

Methodological challenges for the design of instruments for monitoring the preparation, negotiation and implementation of EPAs fall into two categories: (i) what to monitor and (ii) how to monitor. The former relates to what specific objectives are to be monitored and in what order of priority. The latter addresses what is a suitable approach for analysing and assessing EPAs, with respect to quantitative or qualitative assessment, objectivity, appropriate information (or lack thereof) and consultation and participation. Complementary issues include who should conduct the monitoring exercise and how its results should feed back into negotiation and implementation processes.

Irrespective of the design adopted, a monitoring mechanism should not only pay attention to the substance of an EPA (i.e. its impact), but also assess the process (i.e. its negotiation, EPA-induced reforms, adjustments, ownership, participation and consultation). The idea is, through monitoring, to improve ownership and transparency of the EPA process as a whole.


Defining the content: What to monitor?

Objectives of EPAs as indicative of broad monitoring areas

Before an EPA monitoring mechanism can be established, the ultimate goals of the EPA must be identified, complemented by more specific objectives, policy reform ambitions and required accompanying measures. This set of goals and objectives can be determined only by the stakeholders involved. Hence, any credible EPA monitoring mechanism requires a consultative and participatory approach, rooted in the realities of the domestic policy environment.

There is as yet no standard legal text for the EPAs currently under negotiation. Nonetheless, the Cotonou Partnership Agreement, the guidelines for EPA negotiations and public statements by both ACP and EU chief negotiators, provide a good initial baseline for identifying several broad monitoring areas:

• Poverty eradication. This is the overarching goal of the Cotonou Partnership Agreement (‘The partnership shall be centred on the objective of reducing and eventually eradicating poverty’, Cotonou Partnership Agreement, art. 1), including the new trade arrangements (Cotonou Partnership Agreement, art. 34.1). In negotiating and, especially, implementing EPAs, the parties will have to ensure, and hence monitor, that agreed EPA commitments and accompanying policies do indeed contribute to poverty alleviation.

• Social and environmental sustainability. Article 34.1 of the Cotonou Partnership Agreement conveys the notion that while economic development is the major channel to achieve the objectives of the EPAs, the trade agreements should also be socially (and politically) acceptable as well as curtail negative impacts on natural resources and the environment in general. The aim here is to deliver long-term benefits and incentives for implementation.

• Strengthened regional integration. This is a key concept underlying the EPAs.⁴ The EU and ACP partners will have to monitor trade and trade-related rules as well as accompanying measures within the EPA framework to ensure they remain in line with the respective ACP regional integration objectives and priorities.⁵

Other key guiding principles for the EPAs can be found in the economic and trade cooperation chapter of the Cotonou Partnership Agreement. In particular, article 35.3 of the agreement states that ‘economic and trade cooperation shall take account of the different needs and levels of development of the ACP countries’. Accordingly, the EPAs must provide the flexibilities and asymmetrical treatment required to cater to the heterogeneity of the ACP group.

A comprehensive, though not exhaustive, list of key areas to be monitored might include the following:

• Consideration of the level of development within the market liberalisation process of the ACP. Considering the economic and institutional weaknesses of ACP countries and the asymmetry between the EU and the ACP in their ability to cope with negative impacts and exploit new opportunities, market liberalisation in ACP countries is a key process to be assessed on a regular basis. “Special and differential treatment”,⁶ as well as asymmetry and flexibility during implementation of the EPAs, warrants close monitoring.

• EU market access for ACP states. In the context of the new trade arrangements, the Cotonou Partnership Agreement stipulates that no ACP country shall be worse off and ‘on the Community side trade liberalisation shall aim at improving current market access for the ACP countries’ (Cotonou Partnership Agreement, art. 37.7). The actual improvement of market access conditions for ACP exports into the European Union in the shift from the Cotonou tariff preferences to EPAs should therefore be monitored, including trade in goods and agricultural products, as well as trade in services.

• Development-friendly treatment of trade-related issues. Broad coverage by the EPAs, including non-tariff and technical barriers to trade, as well as a number of trade-related ‘behind-the-border’ measures, could strengthen the trade and investment environment in the ACP. Nonetheless, commitments here should be in line with national development strategies. Support for putting the appropriate regulatory framework in place is essential before the ACP countries implement trade-related commitments.

• Addressing supply-side measures. Supply-side constraints, such as poor economic infrastructure, an unfavourable investment climate, weak institutions and lack of skilled labour, prevent many developing countries from taking advantage of export opportunities created by trade liberalisation in developed economies. Stakeholders should therefore monitor that EPAs concretely address those constraints during both the negotiation and implementation stages. This is recognised in the economic and trade cooperation chapter of the Cotonou Partnership Agreement (art. 34.3), and specifically in the context of EPAs (art. 37.3).

• Support for economic reforms in the ACP. The EU and ACP partners should monitor that EPA provisions are supportive of, and do not contradict, other economic reforms that ACP countries commit to and effectively engage with, in order to ensure sustainable development.

• Effective delivery of development aid. The sequencing of liberalisation commitments and development support is crucial. The timely and effective delivery of (trade-related) assistance should be monitored to coincide with the needs and challenges faced by the ACP countries. In addition, the benefits and risks of specific funding instruments, management structures and aid coordination mechanisms require monitoring in the context of the EPAs.

• EPA negotiating and decision-making process. The quality of negotiations and other relevant decision-making processes will have to be monitored to ensure that local ownership, policy coherence and institutional preparedness lead to successful performance in the negotiations as well as in the implementation of the new partnership agreements.

• Participation of non-state actors. Involvement of a wide range of development actors, apart from governments, is vital to ensure the transparency, ownership and effectiveness of the EPA negotiations and implementation. The participation of non-state actors⁷ should therefore be specifically monitored.


From broad monitoring areas to specific goals

A monitoring instrument should assess the degree to which the EPA objectives are met. Yet the broad monitoring areas enumerated above are arguably too general to be effectively monitored. It is therefore important to identify per broad area a set of specific goals that would have to be met to fulfil each general objective. These specific goals would fall within one of three categories:

(i) economic and developmental outcomes,
(ii) institutional preparedness,
(iii) the EPA negotiation and implementation process.

Box 1 illustrates an approach to move from the broad monitoring areas to specific goals. Keep in mind that this is only one of the available options in terms of the different steps needed to establish an EPA monitoring instrument. The box presents the derivation of a non-exhaustive set of specific goals from the broad monitoring area “consideration of the level of development within the ACP market liberalisation process”.





The specific goals offered in Box 1 are by way of example and can by no means be considered exhaustive. Differences in specific goals will emerge both between and within the ACP and EU sides. The number of potentially relevant specific goals is very large. This is why no one-size-fits-all monitoring approach is likely to emerge. Prioritisation of the issues to be monitored and selection of a limited number of relevant specific goals will be necessary. The subset chosen will differ depending on the national or regional context and priorities.

Sequenced monitoring might be called for the different components of the EPA process. This implies first monitoring that the EPA process itself offers the necessary basic conditions for the next phases of implementation (of the EPAs and the related reforms). Brought to the extreme, this suggests that specific goals regarding process and institutional preparedness might actually be more urgent than the economic and trade objectives of the EPAs and that monitoring should focus primarily on those, given the limited time and resources available for establishing a monitoring instrument.

However, it could also be argued that the EPAs are, first and foremost, vehicles for economic and trade provisions. By that logic, when prioritising, the key economic and trade objectives should be monitored first; long-term institutional and capacity development goals that are not EPA-specific would then not be directly included in the EPA monitoring mechanism. In the short term, priority monitoring would relate to meeting the needs and preconditions for successful conclusion of the negotiations and the initial implementation of the agreements. Longer term interventions (and monitoring) would focus on implementation capacity and compliance with EPA commitments, as well as the local environment for commerce and trade, necessary reforms and networks and institutions for improving trade policy formulation and implementation.

If accurate definition of the content of a possible EPA monitoring instrument proves difficult, then the question of “what to monitor first” will not be straightforward either. Since the goals pursued through EPAs are regional as well as country-specific, and different stakeholders have very different priorities, more discussion among the actors involved on exactly what to monitor and when to monitor it is required before a credible EPA monitoring instrument can be established. Furthermore, flexibility should be a key feature of any monitoring instrument so that it can be adapted to changing conditions. Fixing a number of specific goals or choosing only those that are easily measured would not be helpful in that respect.


Final steps in designing a monitoring instrument: Information gathering and measurement

After the specific goals are identified, the final step in designing a monitoring mechanism for the EPAs is definition of quantitative indicators for the specific goals where statistical information can be used to assess whether the objectives have been reached. Where statistical information is unavailable or inappropriate for assessing a particular goal, qualitative indicators can be formulated and key questions posed to the stakeholders involved.

Most specific goals will be assessed with a mixture of quantitative and qualitative indicators. Specific goals in the ‘economic and developmental outcomes’ category are more likely to be measurable through statistics than those related to ‘institutional preparedness and improvement’ or the ‘EPA process’. Quantification will be difficult for goals concerning ownership, transparency and policy coherence within the EPA process and the quality and capacity of ACP institutions. In these cases, monitoring progress will be geared towards auditing specific institutional structures or analysing the perceptions and satisfaction of actors through consultations and surveys.

The design of an EPA monitoring instrument will be affected by the availability of information and by methodological complexities. It could be extremely costly and time-consuming to gather all of the information required to adequately monitor the goals identified, especially when consultation must be conducted at both the national and the regional level. But selecting only a few indicators for the sake of simplicity, and based on immediate availability of information, would probably result in an inconclusive assessment of actual EPA outcomes. Furthermore, for the monitoring to be meaningful, clear priority areas will have to be identified.


How to monitor?

The importance of transparency, local ownership and credibility of the monitoring exercise suggests that monitoring should be a consultative process rather than simply a statistical exercise. Moreover, the monitoring instrument cannot be a ‘black box’ constructed around a limited number of indicators, with quantitative inputs plugged in to obtain a clear-cut result such as ‘EPA on track’ or ‘EPA should be reviewed’. Quantifying the performance of the EPAs based exclusively on a matrix of indicators related to specific goals derived from broad monitoring areas is unlikely to capture the complexity of the surrounding issues.

EPA impact will be determined both by the exact content of the final agreements and by the national and regional development strategies that governments implement. Yet these aspects are unknown at present. Any monitoring instrument will therefore have to be flexible and continually adapted throughout the subsequent phases of the EPA process, taking into account the long-term horizon of the impacts envisioned in terms of social, economic and institutional effects.

Qualitative investigation will be essential to avoid developing a partial and static snapshot. Trade-related matters, accompanying measures, long-term adjustment costs and dynamic economic effects will all require monitoring. Consultations, interviews, audits and case studies are examples of appropriate qualitative means for reflecting on capacity building and institutional strengthening in ACP countries.

Quantitative indicators present availability, reliability and validity problems. The scope of the EPAs, their long-term horizon and the complexity of the issues involved raise data availability difficulties. It is not always straightforward to identify the most appropriate time frame for analysis; nor do indicators for monitoring a particular objective always present themselves. Apart from the difficulty of selecting the set of goals to be monitored, parties might disagree on the validity of the indicators chosen, as different indicators may lead to different conclusions regarding achievement of the same goal.

Even if all actors agree on a number of specific goals and methodologically appropriate indicators are found, the information required to measure the indicators chosen may not be readily available, or it may be too costly to acquire. Such difficulties are amplified when moving from the monitoring of economic impacts to social impacts, because issues of poverty, inequality, food security and environmental sustainability are more difficult to analyse, both theoretically and empirically. Further problems related to the identification of concrete indicators and the gathering of information and measures might arise due to data unavailability and unreliability.

Finally, when monitoring the impact of the EPAs, it is important to keep in mind that the areas monitored and the related indicators are simultaneously affected by factors outside the scope of the EPA provisions. Because the EPAs will be implemented in a dynamic environment, drawing conclusions about causal relationships is risky. For example, negative development of macro aggregates might have been even more negative without an EPA. Correlation of indicators, therefore, will not automatically imply causality.

It is impossible to exhaustively monitor all areas of interest to the parties involved. The overall final assessment of the degree to which EPA objectives are fulfilled will depend on the importance and weight given to each monitored area. Yet the weighting exercise itself is not value-free. For the credibility of the monitoring instrument, the underlying assumptions must be made explicit and the methodology clear and transparent (Box 2).

Box 2: The development benchmarks approach for monitoring EPAs The development benchmarks approach could provide an important analytical tool for addressing the difficulties inherent in designing an EPA monitoring instrument. The idea of establishing benchmarks for sustainable development through a wide consultative process was first suggested by the ACP-EU Joint Parliamentary Assembly in 2002. It has recently been reiterated in various ACP Council declarations. The approach is based on the idea of setting development objectives (to be agreed by ACP and EU stakeholders) and comparing expectations with actual provisions in the agreement. Benchmarks are thus used as points of reference for assessing the progress of EPA negotiations towards the development goal they should serve. Two separate phases of the development benchmarks process are distinguished. First, an appropriate set of sustainable development benchmarks is designed in a consultative or participatory manner. Definition of the set of benchmarks should be the responsibility of all involved local stakeholders to maximise credibility, transparency and ownership. Second, progress of EPAs is assessed relative to the earlier defined “development benchmarks”. The development benchmarks approach has a number of advantages. First, the benchmarks provide a tool for bridging different interpretations of the development dimension of EPAs and moving discussions forward on the content of the EPAs. Second, establishment of benchmarks on sustainable development clarify assumptions and values underlying the EPA monitoring exercise. Third, the use of development benchmarks facilitates consensus on the exact definition of the specific objectives to be monitored. In broad lines, it could constitute an overall methodology for use throughout the ACP, with regional and country-specific identification and prioritisation of the specific goals to be evaluated.8

Conclusion and a practical way forward

There is no ready-made approach for monitoring EPA negotiations and implementation. Those involved might be tempted to try to set up a monitoring mechanism quickly, based on general guiding principles and specific indicators. Yet the overview in this InBrief of methodological issues and the many dimensions to be considered stresses that a suitable monitoring approach will rest on a number of preconditions:

• clear identification of key EPA objectives,
• good understanding of the policy environment,
• identification of possible causal linkages between the EPA and the domestic (national and regional) environment,
• determination of transparent and objective criteria by which to assess the EPA and its impacts,
• use of both qualitative and quantitative criteria,
• monitoring of not only (static) impacts but also (dynamic) processes,
• establishment of a consultative and participatory process involving various stakeholders,
• regular and wide dissemination of the results of the monitoring exercise,
• routine reassessment and critical review of the monitoring approach.

Designing a monitoring mechanism is a complex process in itself. First, the focus of the monitoring must be agreed. This might be the negotiation process itself, or the implementation of the EPA.

Second, the purpose of the monitoring instrument has to be spelt out, as such monitoring can serve several objectives. Monitoring can be used to assess whether the parties are in compliance with the terms of the agreement or whether the development-related commitments are met. Results of a monitoring exercise can also feed into the policy process or be used for information and communication purposes.

Third, choices must be made on the level of transparency of the exercise and on which actors to involve. Monitoring may be carried out by a few independent experts or institutions in a non-partisan manner or by one party to the agreement, based on criteria relevant for that party. Monitoring can also be conducted jointly by all parties to an EPA. This, however, requires the EU and the ACP countries and regions concerned to agree on a set of objectives and indicators. Monitoring might also be carried out by a particular stakeholder or group of stakeholders with a vested interest in ensuring that the EPAs deliver on specific outcomes. For the credibility of the exercise, it is essential that the actors in an EPA monitoring process, and their goals, be clear. As a matter of principle, a participatory approach or consultative process is strongly recommended to bolster ownership of the exercise, particularly if it is to feed into the policy process.

Finally, the format of the monitoring mechanism has to be determined. This means parties have to agree on the legal basis and institutional setting. A monitoring mechanism can be set up as an independent “observatory” on the EPA process, as a sideline activity driven by one of the parties or interested stakeholders, or as a process formally linked to the EPA legal commitments.

Only after decisions have been taken on these issues can monitoring indicators be adequately identified.

Establishment of a monitoring mechanism should preferably start by initiating a broad consultative process on various aspects of a possible monitoring mechanism: objectives, scope, nature, content, target, process, format and timing. In this process, ACP stakeholders from national, regional and all-ACP levels; EU member states and institutions; civil society representatives and independent experts should be involved. Such consultation serves to build consensus, to find common ground on EPA monitoring and to identify areas of concern or divergence among key stakeholders.⁹ It can generate new ideas and raise the credibility of the monitoring instrument. Key modalities of the monitoring process must also be determined. Only then can specific monitoring indicators be derived, with a balance between quantitative and qualitative indicators to ensure the most accurate possible process and outcome.

Nonetheless, monitoring the EPAs will be complex and difficult, because these are not standard trade agreements. Their objectives centre on development rather than narrow provisions on trade. To be of any help, a monitoring mechanism must be transparent and thus relatively simple. To strike a balance between accuracy and simplicity, a broad consultation and participatory approach are essential to help identify priority issues and bolster ownership among concerned parties and stakeholders in the process.


Notes

1 This InBrief was made possible by a financial contribution from the Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ). It is based on a more extensive study: Bilal, S. & Rampa, F. (2006) Designing a Monitoring Instrument for Economic Partnership Agreements: Methodological Issues. (December). The authors are grateful to Kathleen Van Hove for her valuable comments and editorial guidance. www.gtz.de/de/dokumente/en-EPA-monitoring-instrument-2006.pdf
2 ACP Council of Ministers (2005) Resolution of the 81st Session of the ACP Council of Ministers Held in Brussels, 21 and 22 June. Brussels: ACP Secretariat. www.acpsec.org/en/com/cou81_decisions_e.pdf; Council of the European Union (2005) General Affairs and External Relations, Brussels 21 and 22 November. 14172/05 (Presse 289). http://ue.eu.int/ueDocs/cms_Data/docs/pressData/en/gena/87093.pdf; and Economic Partnership Agreements: Putting a Rigorous Priority on Development. Speech by EU Trade Commissioner Peter Mandelson to the Civil Society Dialogue Group. Brussels, 20 January 2005. http://ec.europa.eu/commission_barroso/mandelson/speeches_articles/sppm011_en.htm
3 The European Centre for Development Policy Management (ECDPM) and the German Development Institute (DIE) are currently conducting a joint project to identify pragmatic options for a monitoring framework for EPA implementation, in consultation with a broad range of concerned actors. Comments and suggestions are welcome (www.ecdpm.org/trade/epamonitoring).
4 The nature of the various overarching goals stated in the Cotonou Agreement are quite different. For instance, regional integration is not listed as an end in itself, but is pursued to achieve other goals, like peace and economic development. Poverty reduction is listed as an end in itself.
5 This is a challenging task given the numerous overlapping memberships of regional groupings which may have contradictory integration agendas – a phenomenon commonly referred to as the “spaghetti bowl” of regional integration.
6 This could mean allowing the ACP longer time frames for implementation, a slower pace of tariff reductions across a smaller range of products, the opportunity to exclude sensitive products and sectors and adoption of more favourable rules of origin.
7 According to article 6 of the Cotonou Partnership Agreement, non-state actors include the private sector, economic and social partners such as trade unions and organisations and civil society in all its diversity, according to national characteristics. One major challenge to a fully participatory approach, in the case of EPAs, as in general for economic policy-making in developing countries, is the fact that many potentially important producers are not well organised, because they operate in the informal sector of the economy, and are therefore hardly represented.
8 Researchers and civil society organisations interested in such a benchmark process have suggested that three sets of development benchmarks be developed to cover the main aspects of the new partnership agreements: market access, policy space and development resources. See ICTSD and Aprodev (2005) The EPAs and Sustainable Development: Benchmarks for Pro-development Monitoring of the Negotiations. Geneva and Brussels. www.aprodev.net
9 Current efforts by ECDPM and DIE to identify options for an EPA monitoring framework seek to contribute to this aim (see www.ecdpm.org/trade/epamonitoring).

Towards a Monitoring System for the ACP-EU Economic Partnership Agreements (EPAs) The European Centre for Development Policy Management (ECDPM) and the German Development Institute (DIE) are jointly elaborating options for monitoring the implementation and impacts of the EPAs. The project, partially funded by the German Ministry for Development Cooperation, has several aims: • developing a flexible set of methods for monitoring the implementation of EPAs and the development impacts of key EPA-related policies and measures, • identifying key factors that will affect the achievement of the EPA objectives, • exploring procedural options for the integration of a monitoring system in the EPA implementation process (design, implementation, analysis and use). The project will adopt a highly participatory approach, encouraging input from ACP and EU stakeholders (negotiators, officials, policymakers, experts, civil society and the private sector). In a pilot phase, national participatory workshops will be organised with potential users of the monitoring system in southern and eastern Africa. The workshops aim to identify the key policies and sectors to be monitored and contribute to development of appropriate mechanisms to assess the implementation and impact of EPA provisions. This includes the identification of an appropriate monitoring process, causal links and indicators, as well as sources of data and information. If you would like to share your views on possible EPA monitoring systems or if you would like more information on this joint GDI-ECDPM effort, contact the following: ECDPM San Bilal, sb@ecdpm.org tel: +31 (0)43 350 29 23 Francesco Rampa, fr@ecdpm.org tel: +31 (0)43 350 29 29 DIE Michael Bruentrup, michael.bruentrup@die-gdi.de tel: +49 (0)228 94 92 71 64 Tobias Reichert, tobias.reichert@gmx.net tel:+49 (0)30 60 03 16 88 www.ecdpm.org/trade/epamonitoring