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SA may be excluded from EU partner deal

Business Day | 16 March 2009

SA may be excluded from EU partner deal

Trade and Industry Editor

THE European Union (EU) is likely to move towards the official signing of an interim economic partnership agreement, known as an EPA, with countries of the Southern African Development Community (SADC) that will exclude SA.

A meeting last week in Swakopmund, Namibia, between the European Commission (EC) and the SADC group failed to break an impasse over concerns SA has, despite significant further concessions by the EU to sweeten the deal.

A source close to the talks, who declined to be named, said it was likely the EC would ask to be given the go-ahead to prepare to sign the interim deal as all attempts to bring SA back into the talks had failed. This will see Botswana, Lesotho, Namibia and Swaziland sign the deal, leaving SA, the only other member of the Southern African Customs Union, out of the deal.

The EU agreed to favourable terms for infant industry protection, which could see the countries in the SADC configuration exclude sectors earmarked for development from liberalisation. The EU also allowed for existing export taxes - used by countries to encourage beneficiation - to continue and gave scope for new export taxes to be introduced.

The EU also modified its demand on the quantitative restrictions of exports in favour of the SADC group, and the parties agreed on the free circulation of goods to facilitate easier trade in the region.

Sources close to the process said Namibia - which shared SA’s concerns - had been won over by the EU’s concessions and indicated it would sign, clearing the way for the commission to propose a date for signature to legitimise trade relations between Europe and the region.

The EU has been unilaterally extending preferences to the region in breach of World Trade Organisation (WTO) rules since the expiry of a waiver on the Cotonou agreement in December 2008. Europe is anxious to bring its trade relations with the SADC group in line with trade rules to avoid a WTO challenge.

Jorge Peydro-Aznar, the European Commission (EC) head of trade in Pretoria, said the meeting was positive. “Good progress was made on most concerns. We remain hopeful of a deal, because we need to address the WTO compatibility issue as a matter of urgency,” he said.

SA’s chief trade negotiator, Xavier Carim, was also positive about the talks but said no movement had been made on the most-favoured nation (MFN) demand and the legal status of the parties. Under the MFN, concessions made to countries whose trade exceeded more than 1% of world trade would, in future trade agreements, be automatically extended to the EU.

“ We did well on most issues. There is scope for further progress, but it is not clear if we will get another chance to talk ,” Carim said.

The EC was to report back to member states on the status of the talks on Friday.

Eight major issues were discussed at the Swakopmund meeting and only two were unresolved - MFN and the fact that the SADC region was negotiating EPAs under four different configurations, which SA argued would hamper plans for future regional integration.

The EC last week offered to raise the threshold of countries’ portions of world trade to 1,5% and agreed to limit the MFN requirement exclusively to customs duties, but this was still not acceptable to SA.

 source: Business Day