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SA refusal to sign EPA ‘damaging’

Business Day, South Africa

SA refusal to sign EPA ‘damaging’

By Mathabo le Roux, Trade and Industry Editor

3 December 2008

A trade analyst says SA’s objections to an economic partnership agreement (EPA) with the European Union (EU) were “smoke and mirrors”, and that SA’s stance was damaging to the region.

At the end of last year, SA refused to initial an interim EPA, citing unfair demands. Botswana, Lesotho, Namibia and Swaziland , which make up the rest of the Southern African Customs Union (Sacu), initialed the deal.

One of the most contentious issues was the EU’s demand for most-favoured nation treatment.

The most-favoured nation clause requires Sacu to automatically extend to the EU preferences made in future trade deals with major countries . But a trade analyst close to the negotiations, who refused to be named, said SA’s position on the most-favoured nation clause was wholly indefensible.

In terms of the Trade, Development and Co-operation Agreement (TDCA) , under which SA trades with the EU, tariffs on all goods, except agriculture, chemicals, clothing and textiles and cars, will be fully liberalised by 2012.

SA’s plans to diversify trade related to its pursuit of south-south partnerships. SA is exploring the viability of trade pacts with major economies such as India and China, while it has already concluded a preferential trade deal with Mercosur, comprising Brazil, Argentina, Uruguay and Paraguay.

However, it was impossible that SA would extend preferences to these trading partners in the sensitive sectors, shielded to the EU, the analyst said. Moreover, the goal of a trade deal with Mercosur was scaled back. During the talks Brazil sought easier access for cars - a request SA refused.

“Would SA want to extend preferences to China on clothing and textiles? Or to India on chemicals? SA has no leg to stand on,” the analyst said.

A source close to the negotiations said a mere 21 agricultural and agro-processed products would offer better treatment under the EPA than the TDCA. These products under both agreements would be fully liberalised by 2012, meaning the tariff structure would be in harmony, negating criticism that two different trade regimes would exist with the EU.