Swazi Observer (Swaziland)

20 November 2006

The implications of an Economic Partnership Agreement

By Cassandra Shaw

SWAZILAND, together with seven other Southern Africa Development Community (SADC) members is currently negotiating an Economic Partnership Agreement (EPA) with the European Union (EU).

These negotiations were launched in July 2004 in Windhoek, Namibia at the level of ministers and it was envisaged that these negotiations would be concluded at least by December 2007 and enter into fore by January 2008.

A brief background on the EPAs states that the agreement should comply with the relevant World Trade Organisation (WTO) provisions. The EPA negotiations derive from their mandate from the Cotonou Partnership Agreement that governs African Caribbean Pacific (ACP) and European Union (EU) relations.

The background reads that so far, the negotiations have covered issues of Sanitary and Phytosanitary measures (SPS), Technical Barriers to Trade (TBTs), including regional integration.

It also states that trade facilitation and market access negotiations would follow.

Dr. Mike Matsebula, Chief Executive Officer at the Swaziland Sugar Association (SSA) says the EPAs were between the ACP group of countries and the EU, adding that they were provided in the Cotonou Agreement of June 2001.

“Phase I was conducted at an ACP wide level and started in September 2002 and ended in September 2003 whilst Phase II started thereafter and will end in December 2007 and has been conducted at regional level. The negotiations should result in WTO compatible EPAs,” states the CEO in his remarks during a seminar on the Implications of Trade Agreements on Business.

Matsebula further explains that SSA supports the latest SADC framework proposal for the EPA negotiations.

He says SSA would like a review of the Trade, Development and Co-operation Agreement (TDCA) to accommodate sensitivities in sugar and sugar-based products.

Matsebula elaborates that these can be accommodated through slowing down the SACU tariff reduction rate and introducing meaningful safeguard measures.

What are the implications?

Much has been said and debated about the EPAs but will it have any negative effects in the country’s economy?

During the seminar on the Implications of Trade Agreements on Business, it came out the EPA will now make it possible for EU produce to enter the Swazi market and therefore compete on an equal footing with local entrepreneurs.

It was also revealed that Swaziland will be forced to open up her market to foreign EU exports as a result of an EPA.

This will have a devastating impact on local industries to the extent that they would have to adjust due to competition.

One stakeholder mentioned that EPA will result in losses in government revenue normally realised through customs duties.

The stakeholder further stated that the position of the EU was that Swaziland should include the question of adjustment costs under the country’s National Indicative Programme for financing considerations.

A report submitted by the SADC secretariat on the progress of SADC EPA negotiations with EU states that all the ACP group negotiating EPA are at various stages of the negotiations process but, all of them after the launch, they started with the preparatory stage followed by substantive negotiations and the final stage will be that of preparing the legal text of the EPAs to come into fore by January 2008 as stipulated in the Cotonou Agreement.

The report further states that so far, regional negotiations have focused on integration objectives and related trade, as well as development policies of each region.

Regional specific discussions will obviously reveal the difference between the issues and priorities for each region, as well as reflect their different structures, interests and trade patterns.

On a new approach to the negotiations, the SADC EPA side has submitted new proposals to the EC for trade negotiations.

The SADC secretariat report states that the main purpose of the proposed strategic framework for SADC in the EPA Trade Negotiations is to address the following specific objectives:

– Co-ordination of EPA negotiations
– Consolidation of EPA negotiations
– How the regions could advance towards establishing a single trade regime between SADC and the EU and retain the impetus for regional integration among the SADC Member states
– How to ensure that the trade arrangement with the EU is compatible to WTO
– To ensure the alignment between trade related technical assistance in the EPA and programming of EU development assistance