Thursday, July 9, 2009

SADC caught in EU-SA crossfire

July 8, 2009 - By Banele Ginindza

Countries in the Southern African Development Community (SADC) are caught between a rock and a hard place as South Africa and the EU sling it out over the continuity of trade blocs in the region.

At issue is allegiance in the over a century-old Southern African Customs Union (Sacu), after division brought on by the signing of a separate economic partnership agreement (EPA) with the EU by three Sacu members.

This is complicated by the intended formation of a SADC customs union, due to be launched next year.

The EU's splitting of Sacu, with the signatures of Botswana, Lesotho and Swaziland on a separate EPA, was forcing South Africa's hand in endorsing a SADC customs union, said Peter Draper, the head of the Development Through Trade Programme at the SA Institute of International Affairs (SAIIA).

"The EU is throwing its weight around in the region and there have been accusations both ways," Draper told Business Report yesterday. "Others are caught in between.

"The EU is quite heavily constrained by its members. It is concerned about its stand on the World Trade Organisation.

"It's not good for it not to have these signatures."

He said the EPA talks had been very difficult for the EU, as it was looking for a success story.

Having the three signatures would constitute a success, he said, referring to the outstanding signatures of South Africa, Angola and Namibia.

"The splitting up of the (customs) union was not good news; you would assume the EU did its calculations about pushing for those signatures," he said.

Draper added that for its part, South Africa was apparently trying to discourage a SADC customs union as even Sacu carried more obligation than benefit for the country.

He said South Africa's fiscal position was under pressure due to the global economic downturn, and there were large chunks of the common revenue pool that the country topped up, making it necessary to push for increased tariffs and protection.

"What would happen if we broke from Sacu - what are we getting out of it? There are strong forces pushing in that direction. Some people see it as a case of being freed of the Sacu shackles," he said.

Draper agreed that South Africa's marginalisation could spell the end of Sacu, which is set to celebrate its centenary next year.

Nkululeko Khumalo, a senior researcher of trade policies at SAIIA, said there was a conflict of allegiance among southern African countries in the various trade blocs, including SADC, Sacu, the Common Market for East and Southern Africa and the east African blocs to which some SADC countries were tied.

"There are even new structures whose legal status is not clear, such as the SADC EPA. Some countries see this as not being conducive" to free trade, he said. "It is best to liberalise across the eastern and southern region. Just have a free trade area for all."