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National body to monitor flood of imports

Botswana Gazette

National body to monitor flood of imports

Consultations ongoing

By Aubrey Lute

4 August 2010

The Ministry of Trade and Industry is in the process of establishing a national body under the 2002 Southern African Customs Union (SACU) Agreement.

Once operational, the body will be responsible for, among other things, investigating and evaluating applications with regard to alleged dumping or subsidised exports into Botswana, safeguards measures as well as amendment of customs duties/ tariffs and recommend appropriately to the SACU Tariff Board.

According to Mrs Mosiieman of the Ministry of Trade, the national body will also determine eligibility for infant industry protection and regulate imports and exports of restricted goods.

The Department of International Trade has been holding consultative workshops with stakeholders in order to inform them and have their input in the process of establishing the national body. The consultations took place in Francistown, Kasane and Maun between 27th July and 30th July.

Ever since Botswana initialed the Economic Partnership Agreements (EPAs) there has been a concern that some sectors will be particularly vulnerable as SACU economies are opened to European Union (EU) competitors. But University of Botswana (UB) economist, Dr Emmanuel Botlhale argues that South Africa also entered into a trade agreement with the EU which compromised the position of SACU in 1999.

"The flood of imports of subsidised EU agricultural products will definitely impact negatively," said Botlhale, noting that a majority of the population in the SACU region is employed in agriculture. He argues that the export of cheaply priced agricultural goods by the EU to SACU countries amounts to "dumping" because of the generous subsidies under the EU’s Common Agricultural Policy.

Botlhale further points out those that SACU producers especially those in the Botswana, Lesotho, Namibia and Swaziland bracket could face difficulties in the range of a loss of domestic market share to EU producers in certain sectors, to a loss of region-wide (SACU) market share and, in some sectors, complete loss of the South African market.

In April 1999, a European Commission (EC) report conceded that some SACU sectors “might suffer adjustment costs" and that certain sectors may need continued protection. For example, throughout the trade pact negotiations, Namibia, in particular, was worried about its beef industry, with meat products accounting for some 70 percent of the country’s exports. Swaziland was worried about its sugar sector, which provides 17 percent of its export revenue.

Some observers had argued then that the exclusion of sensitive sectors like beef and sugar from any free trade agreement between the EU and South Africa was "the most effective defensive instrument." Consequently, beef and sugar were both excluded from the final trade accord. Moreover, the pact includes a safeguard clause that can be invoked to protect infant industries in the SACU region.

But the exclusion of beef from the free trade agreement will not protect Namibia’s beef sector from cheaply priced EU beef products, predicts the SAF study, which notes that highly subsidised beef from the EU is already used in 70-80 per cent of all canned meat in South Africa.

Botlhale said there is an expected increase in EU exports of products containing sugar (such as beverages and biscuits) to SACU countries under the TDCA will further lower demand for local (SACU) sugar.

While mechanisms could be put in place to monitor the situation, Botlhale says there might be some teething problems with having safeguard mechanisms in place, the fact that SACU is a common market really makes it difficult to monitor where these products land and how they actually flow in the market.