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’EPAS a threat to services, investment’

The Swazi Observer, Swaziland

’EPAS a threat to services, investment’

By Teetee Zwane

The European Union (EU) continues to come under fire for employing ’under-handed’ tactics to get African countries, including Swaziland, to conclude a comprehensive economic partnership agreement (EPA) with it.

While government has reaffirmed its commitment to the second phase of negotiations towards a full EPA, which pertains to trade in services and investment, economists still continue to point out that doing so would be detrimental to the domestic industry.

"If one looks at the EPA for what it really is, it is clear that it wants those things that are under the Doha Development Agenda, that is, trade in services and investment as well as government procurement," said Economist Thembinkosi Dlamini.

He said under the EPA, which requires reciprocity, there was just no way a company in Swaziland or the Southern African Development Community (SADC) could compete with a European company for trade in services.

"We have no offensive interest as far as services are concerned because there is just no way we can compete with Europe in this regard," stated Dlamini, adding "their services are years ahead of us in terms of development and there’s no way we can sell ours to them, instead, we need those services to come here."

The economist said the EPA would create a situation where European companies would be competing for government tenders with local ones, for instance.

He noted that government was the most significant driver of the country’s economy as it has a substantial amount of money to spend.

"Most people in Swaziland don’t produce certain items, but rather, buy to supply government. So, if we talk of the EU enjoying the same benefits in supplying government as Swazis do and opening that market, where does that put our local business community?" he wondered.

Dlamini said it was surprising how the EU seemed to be ’kicking’ away the same ladder it had used to get to the stage of development it currently boasts of as the EPA also does not allow contracting states to have open policy space.

"When we talk of protectionism, we’re talking of one of the drivers of development. We’re talking of the same driver the EU used for its development," he noted.

... detrimental to banking sector

The liberalisation of trade in services could also mean the services industry, especially the banking sector, would be adversely affected.

Economist Thembinkosi Dlamini said the European Union (EU)’s point of argument has been that liberalisation of the banking sector would probably lower interest rates, meaning cheaper credit.

"However, when we talk of investments, we refer to two types; hard core, which involves physical investment and loose investment in the form of financial liquid capital where investors just send money to a country," he noted.

He said the latter form of investment was a problem as the investors simply reap profits without adding any financial value to the local economy.

Dlamini pointed out that this was why regulatory measures were needed.

"The framing of the EPA is such that things like these will collapse because it also requires that we liberalise all financial services, which means the EU can come into the country and offer insurance as well as other financial services thus directly competing with local service providers," he observed.

"We would want monetary controls to continue, with the Central Bank controlling things, but we cannot do that under the EPA," he added.