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Botswana dodges a bullet in EPA talks

Mmegi Online, Botswana

Botswana dodges a bullet in EPA talks

By Mbongeni Mguni, Staff Writer

21 September 2012

Botswana has escaped the imposition of an amendment which would have charged higher duties on the country’s exports to the European Union after 2014 thereby dealing a deathblow to local sectors such as agriculture, minerals and manufacturing.

Last week, members of the European Parliament voted 322 to 78 to extend by two years, a January 2014 deadline which would have seen exports from Botswana and other African, Caribbean and Pacific (ACP) countries lose the duty and quota free access they have enjoyed since 2007.

With non-Diamond Trading Company exports to the EU amounting to P1.1 billion in 2011, the 2014 deadline was set to rob local exporters of their competitiveness in the EU, raising the extreme possibility of closures and redundancies. To comply with World Trade Organisation rules, Botswana and other ACP states have been negotiating reciprocal Economic Partnership Agreements (EPA) since 2007 as regions, a process delayed by numerous political and technical glitches over the years.

To force an agreement however, the European Commission last September proposed that negotiations towards EPAs end by January 1, 2014, sealing this by placing an expiry on the market access regulation that has enabled free access to the EU for Botswana and the ACP.

According to a proponent of the regulation’s extension, British EuroParliament member, David Martins, the EU should allow a "realistic timeframe" to work towards "fair and development-focused" EPAs. "No ACP country should be forced to sign an unsatisfactory EPA," EU news agencies quoted Martins as saying. "This is not the trade and development relationship we should have."

Had the two-year extension to the market access regulation been rejected, by 2014 Botswana and Namibia would have been hardest hit by the resultant imposition of duties, as the EU classifies them as upper middle income countries. "Botswana and Namibia, which are classified as Upper Middle Income countries would revert to the Most Favoured Nation rate, as applied to most countries including, for example the United States and Japan," reads a report compiled by Martins ahead of last week’s vote.

Cameroon, Fiji, Ghana, Ivory Coast, Kenya and Swaziland would have fallen back on to a scheme providing reduced tariffs compared with the Most-Favoured Nation (MFN) rate, but not as favourable as duty free-quota free.

Only countries classified as Least Developed would have continued to export duty and quota free to the EU, after 2014. Negotiations between the EU and the ACP states have hit gridlock on issues around reciprocity, with Africans in particular noting that their economies were still not developed enough to allow unbridled access by powerful EU exporters.

"The problem is that the EPAs as they stand, contain many problematic elements that will have an impact on African countries’ ability to develop and industrialise," said former Tanzanian leader, Benjamin Mkapa in a recent commentary.

"Our local and regional markets will be opened up even more than is currently the case to EU products. "We could end up damaging our local industries, stymieing their growth, and remaining as raw materials and primary commodities exporters."

Mkapa added that even the new 2016 deadline inadequately addressed challenges in the EPA negotiations."It does not go far enough as it does not address the fundamental problem that there are critical areas in the EPAs which the European Commission continues to insist upon which are unacceptable for Africa," he said.

"These include prohibiting African countries to introduce new export taxes; the overly high level of liberalisation EU wants of Africa and others. "If this is still the situation in two years, the same problems and pressures encountered so far will remain." While local EU and government officials were unavailable for comment, Trade and Industry Minister, Dorcas Makgato-Malesu last week told a delegation of visiting Nigerian businesspeople that the EPAs were being delayed specifically by issues of reciprocity. For Botswana, the 2014 deadline would have been a slap in the face as the country has been at the forefront of rallying the SADC region to agree to and ratify a comprehensive EPA in a timely manner.