SA may be excluded from SADC EPA

Le Roux, Mathabo (Business Day, Johannesburg) 2009-03-17 

A meeting held in Swakopmund, Namibia last week between the European Commission (EC) and the Southern African Development Community (SADC) group failed to break an impasse over concerns raised by South Africa over the economic partnership agreement (EPA), despite significant further concessions by the European Union (EU) to sweeten the deal.

The EU is likely to sign an interim EPA with countries of SADC without South Africa.

According to a source close to the talks, it is likely the EU will ask to be given the go-ahead to prepare to sign the interim deal as all attempts to bring SA back into the talks have failed. This will see Botswana, Lesotho, Namibia, and Swaziland signing the deal, leaving South Africa, the only other member of the Southern African Customs Union (SACU), out of the deal.

The EU agreed to favourable terms for protection of infant industries which could see the countries in the SADC configuration exclude sectors earmarked for development from liberalisation. The EU also allowed existing export taxes, used to encourage beneficiation, to continue, giving scope for new export taxes to be introduced as well.

Brussels has also modified its demand on the quantitative restrictions on exports in favour of the SADC group, and the parties agreed on the free circulation of goods to facilitate trade in the region.

Sources say that Namibia, which shared South Africa’s concerns, has been won over by the EU’s concessions, indicating that it would sign an interim deal which would clear the way for the Commission to propose a date for signature to legitimate trade relations between Europe and the region.

The EU has been extending preferences to the region unilaterally in breach of World Trade Organisation (WTO) rules since the expiry of a waiver on the Cotonou Agreement in December 2008. Europe is anxious to bring its trade relations with SADC in line with trade rules in order to avoid a WTO challenge.

Jorge Peydro-Aznar, European Commission (EC) head of trade in Pretoria, was positive about the progress made at the meeting. “Good progress was made on most concerns. We remain hopeful of a deal, because we need to address the WTO compatibility issue as a matter of urgency”, he said.

South Africa’s chief trade negotiator Xavier Carim was also confident about the talks although indicated that no movement had been made on the most-favoured nation (MFN) demand and the legal status of the parties. The MFN clause states that concessions made to countries whose trade exceeds more than 1% of world trade, in future trade agreements, be automatically extended to the EU.

The other major issue that remained unresolved, of the eight discussed, was the fact that the SADC region is negotiating EPAs under four configurations, which SA argued would hamper plans for future regional integration.

“We did well on most issues. There is scope for further progress, but it is not clear if we will get another chance to talk”, Carim said.

The EC offered to raise the threshold of countries’ portions of world trade last week to 1.5%, and agreed to limit the MFN requirement exclusively to customs duties. South Africa said this was still not acceptable.

The EC was due to report back to member states on the status of the talks on Friday.