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SA fends off EU deals for SACU partners

Business Day (Johannesburg)

December 13, 2006

SA Fends Off EU Deals for SACU Partners

By Siseko Njobeni

SA IS resisting European Union (EU) efforts to treat it differently from its southern African neighbours — a move which could result in the country getting less market access for its exports.

This comes after the EU made a proposal that would see the union applying higher tariffs to South African exports compared with those from other Southern African Customs Union (Sacu) members.

SA’s competitiveness was behind the EU’s move to grant the country’s exports less market access than its neighbours, according to a Financial Times report.

"The motivation for the changes stems from the fact that both Sacu and the EU are customs unions. We have been proposing that we should be treated in the same way," said SA’s chief trade negotiator, Xavier Carim, yesterday.

Carim said that in terms of the Trade, Development and Co- operation Agreement (TDCA), the South African-EU free trade agreement, SA treated EU members the same. SA did not, for instance, make a distinction between Germany and France. "So the call for uniform treatment is a principle position," he said. "The EU should treat us as a region but it has established division. Our approach is a move to consolidate the region’s trade relations with the EU."

The EU has been negotiating an economic partnership agreement with the Southern African Development Community (SADC) since 2004 but SA is not part of the negotiations because of its existing relationship with the EU through the TDCA.

The South African-EU trade pact has been in place since 2000.

SA’s counterparts in Sacu — Botswana, Namibia, Lesotho and Swaziland — are involved in the economic partnership agreement negotiations as part of the SADC.

The economic partnership agreements are talks between the EU and six African, Caribbean and Pacific (ACP) countries with a view to integrating poorer countries into the global economy. The agreements are due to come into effect by 2008 and are meant to remove trade barriers between the EU and the ACP. Carim said in its push for similar tariffs, SA would guard against compromising the competitiveness of its neighbours’ exports, an indication that SA would accept higher tariffs in those circumstances.

Trade analyst Hilton Zunckel said yesterday: "The problem with the economic partnership agreement negotiations is that SADC is fragmented. SA, therefore, made a proposal to the EU to amend the TDCA and cater for the BNLS (Botswana, Namibia, Lesotho and Swaziland) countries.

"It is a dilemma. If SA and the EU cannot resolve the situation, the default is to stay where we are. That means the TDCA stays as it is and Botswana, Namibia, Lesotho and Swaziland negotiate the economic partnership agreement as part of the SADC configuration."

Zunckel said it would be cumbersome for these countries to negotiate without SA, their partner in the region’s customs union.