SOUTHERN AFRICA: ISSUE OF SERVICES IS DELAYING EPA TALKS (22 October 2007)
22/10/07, (IPS)
Including the so-called new generation or Singapore issues in the economic partnership agreements (EPAs) will make the conclusion of the deals unlikely by the December 31 deadline.
Senior researcher with the South African Institute for International Affairs (SAIIA), Nkululeko Khumalo, told IPS in an interview that ‘‘the coercive approach adopted by the European Union on service liberalisation poisons the negotiating atmosphere’’. SAIIA is a non-governmental international relations research organisation based in Johannesburg, South Africa.
‘‘It harms the prospects for a possible breakthrough in concluding the EPA with the Southern African Development Community before the end of the year,’’ Khumalo said.
South Africa has been resolutely opposed to the inclusion of the new generation issues, which include liberalisation of the services sector, investments, competition policy and intellectual property rights. It has stuck to the view that the EPAs do not have to include these issues to be compatible with World Trade Organisation (WTO) rules.
Moreover, the argument goes, it is prudent to have the necessary legal frameworks and infrastructure in place prior to opening up local markets to competition with European companies.
The Southern African Development Community (SADC) EPA group has contended that ‘‘the gains from including services and the new generation issues are not automatic’’, according to a report by the researcher Talitha Bertelsmann-Scott presented at a conference held by SAIIA, the European Centre for Development Policy Management and the Regional Trade Facilitation Programme in Brussels earlier this year.
Delegates to this conference pointed out that that some critical preconditions are necessary for the EPAs to be successful. These included domestic legal, administrative and regulatory capacities.
Khumalo told IPS that the EU should remember that the EPAs are meant to enhance development. Demands for the liberalisation of services to be included before the end of the year defeat that objective.
Another hurdle involves SADC and the EU’s differential approaches to ‘‘Aid for Trade’’. The SADC EPA group has proposed the inclusion of a development chapter in the EPA for continued funding for trade capacity development.
It is intended as a guarantee of financial support from the EU for necessary structures and mechanisms to ensure that the EPAs yield meaningful economic development for the region, from SADC’s point of view.
According to Bertelsmann-Scott, SADC has asked for guarantees of additional EU funding towards development beyond the expiry of the Cotonou agreement in 2020. This rests on concerns that even with access to European markets, some SADC countries will still require more time to become competitive at a level that will produce benefits from international trade.
The EU has argued that any additional resources given in the new EPAs should be based on reciprocity. EU delegates at the Brussels conference pointed out that the Cotonou agreement already offers financial packages for ‘‘Aid for Trade’’. The view is that the EPAs are adequately funded.
The EU position is that reciprocal free trade agreements will provide development opportunities for ACP countries which stand to benefit from venturing into European markets.
EU opposition to the proposed development chapter is connected to the EU’s expectation of the liberalization of services. The EU has argued that it stands to carry a heavier burden in the liberalization commitments in the EPAs, compared to the ACP countries.
The possibility of not concluding the EPA negotiations by the end-of-year deadline is of considerable concern for those states in the SADC EPA group which are not categorised as least developed countries (LDCs). They are Botswana, Namibia and Swaziland.
The non-LDC categorisation excludes them from access to European markets as part of the ‘‘Everything but Arms’’ initiative. As such, they are expected to enter into new contractual reciprocal free trade agreements in the form of the EPAs to be compatible with WTO rules.
Inconclusive negotiations will lead to the expiry of the WTO’s waiver which allowed trade between the ACP and the EU to continue in terms of the preferential terms of the Cotonou agreement. ACP goods will then be subjected to financially crippling export tariffs from January 1 next year.
Khumalo observed that there is reason for concern for SADC non-LDC states -- especially among export companies which finalise their annual budgets a few months before the start of a new year.
Meanwhile, IPS has reported that the EU is willing to drop the insistence on the Singapore issues for now in its negotiations with the West African EPA group to ensure that an EPA on trade in goods is finalised by the December 31 deadline.
In a letter to the West African group, Peter Mandelson and Louis Michel, the European commissioners for trade and development aid respectively, said they would be willing to sign a less ambitious EPA.
The letter states that, ‘‘as a minimum’’, a deal relating to trade in goods should be completed this year. This would be a ‘‘stepping stone towards a full EPA’’, the commissioners added, ‘‘for which negotiations would continue in 2008’’.
The EU has so far argued that the EPAs should be concluded by December 31 and that they should cover issues such as trade in goods as well as services liberalisation, competition, investment, government procurement and intellectual property.
