Saturday, February 21, 2009

EU-Southern Africa trade. Fact sheet

7 February 2009

The European Union and Southern African countries have built a strong trade and investment relationship. The Southern African Development Community (SADC) consists of 15 members. Seven of them are negotiating an Economic Partnership Agreement (EPA) with the EU as part of the "SADC EPA" Group. These countries are Angola, Botswana, Lesotho, Mozambique, Namibia, Swaziland and South Africa. South Africa initially participated as an observer and in a supportive capacity but formally joined negotiations in 2007. The other eight SADC Member States (DR Congo, Madagascar, Malawi, Mauritius, Seychelles, Tanzania Zambia and Zimbabwe) are negotiating in other regional EPA configurations.

At the same time, the Southern African Customs Union (SACU), consisting of Botswana, Lesotho, Namibia, South Africa and Swaziland now provides for a deeper level of integration amongst some of the countries of the SADC grouping. One of the key challenges in implementing an EPA with SADC, and for regional integration in Southern Africa, is to reconcile these various trade relationships for mutual benefit.

Trade

South Africa is the biggest economic player in the region, and the EU is South Africa's most important trade partner. Trade has grown strongly since the Trade, Development and Co-operation Agreement (TDCA) was signed between the two sides in 1999. The objective of the TDCA is to create a free-trade area between South Africa and the EU over a period of 12 years, with the EU opening its market at a faster pace. In 2007 the EU exported around EUR 20.5 billion to South Africa (around 34% of total SA imports), and imported 30% of total SA exports (worth EUR 20.9 billion).

In addition to the TDCA, separate agreements on wines and spirits were signed between the EU and South Africa in 2002. These agreements provide for the reciprocal protection of wine and spirits names, and cover issues such as oenological practices and processes, and product specifications.

The EU is also the largest trading partner for the other members of the SADC Group. In 2006, the value of total EU imports from them was about EUR 4.5 billion (8% agriculture; 10% fish; and 82% industrial goods). EU imports focus on few products such as diamonds (mostly from Botswana), petroleum ( Angola), fish and beef ( Namibia), sugar ( Swaziland) and tobacco. In 2006, total EU exports to SADC represented EUR 2.8 billion, giving a positive trade balance for the SADC Group. SADC exports are diversified but nevertheless remain largely confined to agriculture and primary goods.

EU-SADC Economic Partnership Agreement

The EU-SADC interim (goods-only) agreement contains:

* A single goods market access deal with Botswana, Lesotho, Mozambique, Namibia and Swaziland;
* A commitment to continue negotiating towards a full EPA including all countries of the SADC EPA Group;
* A fully fledged development cooperation chapter.

Ongoing negotiations for a full EPA cover Services and Investment as well as some provisions of the Interim EPA text (e.g. "Most Favoured Nation" or MFN clause, export taxes, free circulation of goods, sustainable development, infant industry and cumulation of origin). For competition and government procurement, it was agreed that negotiations would be put on hold until the region has achieved the necessary capacity. Full EPA Negotiations also cover tariff discussions between the EU and South Africa.