EPA : mixed reactions to free trade offer
The European Commission's offer last week to lift duties and quotas on all products from African, Caribbean and Pacific (ACP) countries - with phase-in periods for bananas and rice - has cast the economic partnership agreements (EPAs) being negotiated with these countries in a rosy light.
South Africa will, however, not fully benefit from the generosity, with indications from the European Union (EU) that it would retain import duties on a number of products from SA. Even so, SA will obtain greater market access to European markets than it now enjoys. But goods are only part of the agenda and the EU offer has detracted somewhat from other, more contentious, issues.
One thorny issue is the EU's determination to push through a deal that will see developing countries make firm commitments to liberalise so-called new-generation issues, which include financial services, government procurement, telecommunications and transport.
The commission argues that an agreement on services will create more homogenous standards across participating regions. This, it says, will enhance legal predictability, lower costs, enhance competitiveness and eventually translate into greater foreign direct investment in the region - all to the benefit of these economies.
The commission's thinking shone through clearly at a recent media briefing for journalists from ACP countries in Brussels on the status of the EPA negotiations.
Speaking at the Brussels briefing, EU Trade Commissioner Peter Mandelson was unequivocal about the framework he envisages for the EPAs. ACP countries, he said, were faced with an unsustainable dilemma of trading a "shrinking island of commodities in an ocean of global economy".
"Our current situation has given ACP countries the opportunity to tackle growth and we have to construct an economic arrangement to allow for that.
"Why should ACP countries be held back by some ideological view that services don't belong in a trade agreement?" he said.
Peter Thompson, the commission's director responsible for the EPAs, said: "The goods part of an agreement is important, but the rules part (services) is what will bring development. This is the area where growth is most rapid and an open and clean investment regime is more likely to attract investment that a closed and opaque one."
The thinking furthermore is that ACP countries are generally too small - and too reliant on a limited pool of exports - to see market liberalisation materially benefit individual economies. Greater regional integration, however, could bring about that advantage, literally extending markets. And for that a holistic approach is needed, with services forming the basis that would support other industries.
The commission envisages an asymmetrical approach, where the EU would liberalise trade almost immediately while concessions by ACP countries would be phased in over long transit-ional periods. Furthermore, it is making available funds to help build capacity and compensate for loss of revenues stemming from liberalisation.
South Africa is vehemently opposed to the inclusion of services in the negotiations.
Business in Africa, 17 april 2007
South Africa will, however, not fully benefit from the generosity, with indications from the European Union (EU) that it would retain import duties on a number of products from SA. Even so, SA will obtain greater market access to European markets than it now enjoys. But goods are only part of the agenda and the EU offer has detracted somewhat from other, more contentious, issues.
One thorny issue is the EU's determination to push through a deal that will see developing countries make firm commitments to liberalise so-called new-generation issues, which include financial services, government procurement, telecommunications and transport.
The commission argues that an agreement on services will create more homogenous standards across participating regions. This, it says, will enhance legal predictability, lower costs, enhance competitiveness and eventually translate into greater foreign direct investment in the region - all to the benefit of these economies.
The commission's thinking shone through clearly at a recent media briefing for journalists from ACP countries in Brussels on the status of the EPA negotiations.
Speaking at the Brussels briefing, EU Trade Commissioner Peter Mandelson was unequivocal about the framework he envisages for the EPAs. ACP countries, he said, were faced with an unsustainable dilemma of trading a "shrinking island of commodities in an ocean of global economy".
"Our current situation has given ACP countries the opportunity to tackle growth and we have to construct an economic arrangement to allow for that.
"Why should ACP countries be held back by some ideological view that services don't belong in a trade agreement?" he said.
Peter Thompson, the commission's director responsible for the EPAs, said: "The goods part of an agreement is important, but the rules part (services) is what will bring development. This is the area where growth is most rapid and an open and clean investment regime is more likely to attract investment that a closed and opaque one."
The thinking furthermore is that ACP countries are generally too small - and too reliant on a limited pool of exports - to see market liberalisation materially benefit individual economies. Greater regional integration, however, could bring about that advantage, literally extending markets. And for that a holistic approach is needed, with services forming the basis that would support other industries.
The commission envisages an asymmetrical approach, where the EU would liberalise trade almost immediately while concessions by ACP countries would be phased in over long transit-ional periods. Furthermore, it is making available funds to help build capacity and compensate for loss of revenues stemming from liberalisation.
South Africa is vehemently opposed to the inclusion of services in the negotiations.
Business in Africa, 17 april 2007