South Africa: Tricky Trade Negotiations Need More Discussion
EUROPEAN Union (EU) trade commissioner Peter Mandelson was in the region last month to attend a meeting of Southern African Development Community (SADC) trade ministers. Mathabo le Roux quizzed him about the economic partnership agreements (EPA).
There has been much acrimony between the EU and SA over the EPA and it seems to be at the expense of the region. Can you comment?
There are issues of concern for SA on the interim EPA (IEPA), but my impression is that there are also broader issues for SA: its own economic interests, its wider regional role, its south-south interests and its interests in the EU. Some of these may be conflicting and it will take time to work out these wider issues. It's important to keep the discussions going, though. SA is our main trading partner on the continent.
We agreed to keep each other informed to see how best to deal with regional integration concerns SA has, but not at the expense of development-friendly aspects of the IEPA, which I feel a sense of responsibility to SA's neighbours to maintain. If we all act in good faith I am confident we can succeed despite the complexities.
The SADC configuration is artificial as not all of SADC is represented. There's also a concern that the Southern African Customs Union (Sacu) is obscured in that configuration, putting regional integration processes at risk. Do you see Sacu in crisis?
I would not wittingly do anything to jeopardise the existence of Sacu, but the tensions and fragility of the union have not been created by the EPA negotiations. If anything we've moved through three overlapping trade regimes -- EBA (Everything but Arms), Cotonou and the TDCA (Trade, Development and Co-operation Agreement) -- to two: the EPA and the TDCA. And we're trying to, as far as we can, retrofit the terms of our EPA into the TDCA to make the two as smooth and harmonious as possible. But it does require everyone rowing in the same direction. I think we can repair the grave relations of the recent past and act together in a way that serves the cause of regional integration and Sacu's future, but it requires goodwill, give-and-take and recognition that the development needs of the region's most needy members must be paramount.
Can you comment on the intra-regional dynamic?
I think there's a genuine desire against the backcloth of SA's economic interests to pursue development strategies and ideas friendly to the region as a whole. I think president Mbeki is a man of genuine conviction in his development ideas and goals. But there are these wider issues about SA's economic interests, its desire to see greater regional integration, its development goals as well as its desire to see greater south-south integration, that SA needs to resolve as it approaches the next step to deepen the EPA so it gives more to the countries that need it most.
The whole idea of the EPA is to harness trade to the cause of development, to create opportunities for trade linked to capacity building and development cooperation, which offers a much better deal than the old-style tariff preferences of Cotonou.
I was struck by President Mbeki's real concern about the need to see greater foreign direct investment in its neighbours. The point is, that too is my concern. I would like to see greater investment in the region because that's the basis for future development, employment and economic growth.
That's why I've placed such an emphasis on services. They will put in place conditions of rules concerning investment that offer predictability and stability for investors in the region. To exclude services and investment and those rules is tantamount to saying the development of those countries would be slower and more haphazard. When ministers from these countries say this to me I have to pay attention. They want to address these issues for the sake of their development. If SA doesn't want to enter these negotiations I also have to respect that.
I don't think SA is pursuing its interests at the region's expense, but there will be a multiplicity of interests and how you reconcile them and tie them together to move forward as part of one strategy, one agreement, is challenging.
There are some concerns about the EC's insistence on treating SA differently from the region on market access. The argument is that Sacu does not discriminate between individual EU countries and because it is a customs union it should enjoy the same uniform treatment from the EU. Can you comment?
First, SA already has a privileged and preferential trade agreement with the EU. I think it would be wrong to try and use the EPA as a way of renegotiating that agreement, or as an opportunity for SA to pursue its own designs and ambitions either unilaterally or at the expense of others in Sacu.
Having said that, if we could re-engage SA in the negotiations for a wider and deeper EPA I hope it would be possible to build on the terms and find ways to increase SA's access to Europe's markets. I don't underestimate the sensitivity of this to some (EU members) but we would like to look for instance at some agricultural areas, or fisheries or industrial goods in which SA felt it would benefit directly and commercially from engaging in the EPA and help us to take that forward.
There were benefits and advantages for SA agreed to in the IEPA. I would hope those could be improved for SA in further negotiations. I am not sure that those were always recognised by SA and the business community as a whole. Frankly, I was surprised by the lack of recognition by some in the business community of the advantages for SA of entering the IEPA, even more so in the case of the wider EPA. I for instance don't understand, although I respect the decision, why SA should remove itself from the services negotiations.
In the WTO SA has taken a relatively ambitious position. Why should it want to deny itself the benefits of opening services in the EPA context?
On some of the contentious issues in the text -- why did you ask for the MFN clause?In denying ourselves access in the short term we were worried we would disadvantage ourselves permanently when countries engage negotiating partners with whom we are direct competitors, giving them benefits we had denied ourselves, and would lead to a permanent discrimination against us in local markets. That's why we asked for the MFN clause. Even then, the offer I made to SA was only to ask them to consult the EU in the context of these trade negotiations. It was a concession that went beyond my negotiating brief: I softened the request to bring SA on board and I gave SA's negotiators plenty of time to reflect and consult on this, but they chose to reject what was a very accommodating offer on my part.
The terms of services liberalisation are also controversial, because it seems the EC would have to approve sectors the region suggests to open. Isn't this interventionist?
The first sector to be liberalised is more likely to be one that is ready, where you can build up some experience. It's not a question of us trying to impose our will driven by our interests. You have to be sensitive and careful about the sectors you open: how you do it, how quickly and in what order. The whole point of services liberalisation is to be development-friendly, to underpin the development of the economy as a whole. It cannot be comprehensive, it cannot be overnight. My whole approach to services liberalisation is a progressive one in two senses of the term: progressive in the sense that it is in the interests of the majority of the people, but progressive also that it is incremental. The demand (for services liberalisation) is not a mercantilist one. I can't emphasise this enough. If I had really pursued Europe's interests I would have negotiated very differently. If it was a classic trade deal the outcome would have been different.
We want to see this region develop, not go backwards. It is in the interest of the region, it is in the interest of our partnership with this region and it is in our own long-term interest. To focus on some short-term market access instead of the longer term development of the economy as a whole would make no sense at all.
Secondly, we have our pride. We are the most development friendly set of developed countries in the world. Our markets are more open than any others in the world; we give more development assistance than the rest of the developed world put together ... our value system is on a par with our economic interests.
I'm not saying we are selfless. What I am saying, however, is that you have to see us and avow for the fact that everyone is going to judge us against a wider value system than simply our short-term interests.
