Development Policy Review, 2008, 26 (5): 529-553  The Authors 2008. Journal compilation  2008 Overseas Development Institute. Published by Blackwell Publishing, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA. The Economic Partnership Agreements: Rationale, Misperceptions and Non-trade Aspects Louise Curran, Lars Nilsson and Douglas Brew * The European Union and the African, Caribbean and Pacific (ACP) countries entered a new era in 2008. The Cotonou trade regime and the WTO waiver legitimising it have expired, and the long anticipated, and much debated, move to Economic Partnership Agreements (EPAs) has begun. This article explains the background and analyses the ‘alternatives’ to EPAs, in order to tackle common misperceptions. Moving on from what has been the focus of debates, namely, the reciprocal liberalisation required under WTO rules, it sheds some light on the non-goods trade aspects of EPAs which, while integral to economic policy, are inherently hard to quantify and often skimmed over in existing studies or addressed in ideological terms. Key words: Economic Partnership Agreements, rationale, misperceptions, WTO, non-trade aspects 1 Introduction The European Union has a long history of partnership with the countries of the Africa, Caribbean and Pacific (ACP) grouping, including trade relations stimulated by highly preferential market access to the EU under the Cotonou Agreement or the Everything but Arms (EBA) initiative. Over 95% of ACP exports entered the EU duty-free in 2006. However, despite this preferential treatment, ACP trade with the EU has not diversified and has steadily declined over the last 30 years. Clearly, preferential market access alone has not been adequate to stimulate export-led growth in the ACP. At the same time, non-ACP developing countries have not been granted similar treatment. This is incompatible with the principle of most favoured nation (MFN) treatment set out in Article I of the GATT and with the ‘Enabling Clause’ covering special treatment of developing countries. The EU was therefore forced to seek a series of waivers from other World Trade Organisation members to enable its special trade regime for the ACP to continue. The latest of these waivers was only agreed in Doha in * Louise Curran is at the Toulouse Business School; Lars Nilsson and Douglas Brew are in the DG Trade, European Commission, Rue de la Loi, Wetstraat 200, B-1049 Brussels (lars.nilsson@ec.europa.eu). They would like to thank Yves Bourdet for comments on an earlier draft of this article and to acknowledge the support on statistical extractions provided by Claudio Gasparini and Michael Pajot. The article represents the views of the authors and not the position of the European Commission.