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Africa-EU economic agreement stalls

Oxford Analytica | 08.12.10

Africa-E.U. Economic Agreement Stalls

Talks have been weighed down by procedural problems and a conclusion still seems far away.

The six years of tortuous negotiations over an Economic Partnership Agreement (EPA) between the EU and seven (out of 15) Southern African Development Community (SADC) members have been dogged by procedural and substantive wranglings, resulting in only limited progress.

In December 2007—the original deadline for the conclusion of the EPA—only five countries initialed an ’interim’ agreement (iEPA): Botswana, Lesotho, Mozambique, Namibia and Swaziland. Angola and South Africa demurred.

Procedural uncertainties. The disarray reflected in these split decisions persisted into the next phase of the negotiations, with Angola, Namibia and South Africa (ANSA) prioritizing the resolution of the unresolved and contentious issues from the first phase, and the others wanting to move further along the agenda. However, the deadline of December 2008 for signing the interim agreement was also missed, and it was not until March 2009 that any of the ANSA concerns were substantively addressed:

1. Agreement on parties. At the outset in 2004, the European Commission (EC) had sought to restrict South Africa—which already had a separate Trade and Development Cooperation Agreement (TDCA) with Brussels—to observer status. However, Botswana, Lesotho, Namibia and Swaziland (BLNS) are co-members with South Africa in the long-standing Southern African Customs Union (SACU), and are therefore bound by many of the trade-related aspects of the TDCA. It took until March 2007 before the EC finally accepted South Africa as a full member of the SADC EPA group, with the further implication that the tariff schedules in the TDCA and the EPA would need to be mutually consistent.

2. ’MFN clause’. ANSA—especially South Africa—objects to the iEPA clause requiring any signatory that concedes more favorable market access through an FTA with ’any major trading economy’ (defined to include most major emerging markets) to offer the same access to the E.U. Although currently applying only to free—as opposed to preferential—trade agreements with third parties, South Africa argues that this clause potentially limits its ability to diversify its trading relations.

3. Undermining regional integration. A major criticism of the E.U.’s approach has been that it has acted almost consistently to undermine, rather than promote, regional integration. Leaving aside the implicit threats to the unity of SACU, the six years of EPA negotiations have done nothing to facilitate integration within the wider 15-member SADC grouping. In all, SADC’s membership is engaged in four distinct sets of negotiations for EPAs with the E.U.

iEPA progress. By June 2009 enough progress had been made to induce four countries—Botswana, Lesotho, Mozambique and Swaziland—to sign the iEPA. As at the initialing stage, the four signatories were strongly influenced by the need to retain duty-free and quota-free (DFQF) access to the EU for their exports. In consequence, they now have a single-market deal with the E.U., and a mutual commitment to negotiate a full EPA. However, for the ANSA three, the outstanding contentious issues were still viewed as deal-breakers.

Outlook A meeting in Brussels in late July set a new—and ambitious—end-2010 deadline for conclusion of a full EPA agreement. However, as only four countries have so far signed an interim EPA, conclusion of a full agreement still appears a distant goal.

 source: Oxford Analytica