SADC tariff deal with EU now ‘unlikely this year’
A RECENT update on trade negotiations between the European Union (EU) and African, Caribbean and Pacific (ACP) countries, hosted by the South African Institute of International Affairs, has exposed some stark contrasts.
The EU is negotiating economic partnership agreements (EPAs) with these nations to replace the Cotonou agreement, which is incompatible with World Trade Organisation (WTO) rules. A waiver on the agreement expires at the end of the year. If negotiations are not finalised by then, or if the waiver is not extended, some countries’ trade with the EU will be governed by the stricter generalised system of preferences.
Junior Lodge, the Caribbean regional negotiating representative in Brussels, describes negotiations that have made considerable progress. Caribbean countries are eager to conclude an agreement and have almost acted with “undue haste,” he said.
Aiming to lock in substantial benefits for their economies, they have made minor concessions, while pushing for optimum leeway from the EU on implementation periods for concessions on market liberalisation. Transition periods of up to 25 years have been mooted.
The tactic is working for the Caribbean. Lodge says a draft text for the agreement already exists but it needs some tweaking. There are a few sticking points — notably on development co- operation and tariff liberalisation — Caribbean countries expect to conclude an EPA by September.
A long journey lies ahead for the Southern African Development Community (SADC) countries.
Despite the deadline, SADC members and the EU have yet to have a proper, formal negotiating session, says Paul Kalenga, trade policy adviser with the Regional Trade Facilitation Programme and SADC secretariat.
This body appears to be at odds about what and how much it wishes to give. Observers have even hinted that they may not united at the negotiating table.
The likelihood of a deal before the end of the year appears remote, says Kalenga.
Further complicating the negotiations is a request from SADC in March last year that SA be included. The EPAs are broadly punted as trade deals with a development aim — a framework into which SA does not neatly fit.
It took exactly a year for the EU to process the request and finally agree to SA’s inclusion — further delaying the crucial talks.
SADC argues that SA’s inclusion will boost regional integration and help smooth the way for greater trade harmonisation in the region.
Some of the role players have accused SA of seeking to enhance its own access to EU markets while obtaining a greater measure of protection for its market by piggybacking on the EPA.
The regional integration argument also seems an ill-fitting jigsaw. All the members of the Southern African Customs Union are now included in a single EPA configuration, which is an important milestone. However, some SADC members are negotiating an EPA separately with the eastern and southern African group, while the Democratic Republic of Congo has slotted in with the central Africa negotiating bloc.
The EU attaches some important conditions to SA’s inclusions, calling for differential treatment of Africa’s economic powerhouse.
Its caution is understandable. The EU recently indicated it would dismantle all tariffs and quotas, offering full market access to ACP countries, excluding SA. Had it extended that offer to SA, it would have created a situation where the EU would open its markets to SA while some tariffs that had already been abolished under a trade, development and co-operation agreement governing SA’s trade with the EU, would have to be reinstated on some EU goods entering SA — clearly a reversal that EU bureaucrats are unlikely to be able to sell at home.
SA is also unwilling to negotiate on new generation issues — or services — which include trade issues such as government procurement, investment, transport and telecommunications. SA cites the absence of these on the multilateral trading agenda.
SA’s presence at the EPA negotiating table appears to have hardened the EU’s stance on the matter, which could force a stalemate, preventing the December deadline being met.
It may be argued that SA’s negotiating capacity may help its weaker neighbours in the region to conclude a fair pact. It could, however, hurt them if SA’s strong-arm approach prevents the deadline being met. Namibia, Botswana and Swaziland, in particular, stand to lose.
In the absence of an alternative system to govern their exports with the EU, the stricter generalised system of preferences will become the guideline, says Kalenga.
If these duties are applied, countries in southern Africa, not defined as least developed countries, face tariff hikes, or the imposition of tariffs, where none existed under the Cotonou agreement.
Least developed countries would be unaffected, enjoying duty-free access to EU markets.
SA’s trade relations with the EU are defined by a bilateral agreement since 2000.
If the EPA is concluded, SA will see some real benefits, the EU has indicated. But if the EPA is not concluded, SA will suffer no disruption, with its trade with the EU continuing under this agreement.
By Mathabo le Roux, Business Day, 17 april 2007
The EU is negotiating economic partnership agreements (EPAs) with these nations to replace the Cotonou agreement, which is incompatible with World Trade Organisation (WTO) rules. A waiver on the agreement expires at the end of the year. If negotiations are not finalised by then, or if the waiver is not extended, some countries’ trade with the EU will be governed by the stricter generalised system of preferences.
Junior Lodge, the Caribbean regional negotiating representative in Brussels, describes negotiations that have made considerable progress. Caribbean countries are eager to conclude an agreement and have almost acted with “undue haste,” he said.
Aiming to lock in substantial benefits for their economies, they have made minor concessions, while pushing for optimum leeway from the EU on implementation periods for concessions on market liberalisation. Transition periods of up to 25 years have been mooted.
The tactic is working for the Caribbean. Lodge says a draft text for the agreement already exists but it needs some tweaking. There are a few sticking points — notably on development co- operation and tariff liberalisation — Caribbean countries expect to conclude an EPA by September.
A long journey lies ahead for the Southern African Development Community (SADC) countries.
Despite the deadline, SADC members and the EU have yet to have a proper, formal negotiating session, says Paul Kalenga, trade policy adviser with the Regional Trade Facilitation Programme and SADC secretariat.
This body appears to be at odds about what and how much it wishes to give. Observers have even hinted that they may not united at the negotiating table.
The likelihood of a deal before the end of the year appears remote, says Kalenga.
Further complicating the negotiations is a request from SADC in March last year that SA be included. The EPAs are broadly punted as trade deals with a development aim — a framework into which SA does not neatly fit.
It took exactly a year for the EU to process the request and finally agree to SA’s inclusion — further delaying the crucial talks.
SADC argues that SA’s inclusion will boost regional integration and help smooth the way for greater trade harmonisation in the region.
Some of the role players have accused SA of seeking to enhance its own access to EU markets while obtaining a greater measure of protection for its market by piggybacking on the EPA.
The regional integration argument also seems an ill-fitting jigsaw. All the members of the Southern African Customs Union are now included in a single EPA configuration, which is an important milestone. However, some SADC members are negotiating an EPA separately with the eastern and southern African group, while the Democratic Republic of Congo has slotted in with the central Africa negotiating bloc.
The EU attaches some important conditions to SA’s inclusions, calling for differential treatment of Africa’s economic powerhouse.
Its caution is understandable. The EU recently indicated it would dismantle all tariffs and quotas, offering full market access to ACP countries, excluding SA. Had it extended that offer to SA, it would have created a situation where the EU would open its markets to SA while some tariffs that had already been abolished under a trade, development and co-operation agreement governing SA’s trade with the EU, would have to be reinstated on some EU goods entering SA — clearly a reversal that EU bureaucrats are unlikely to be able to sell at home.
SA is also unwilling to negotiate on new generation issues — or services — which include trade issues such as government procurement, investment, transport and telecommunications. SA cites the absence of these on the multilateral trading agenda.
SA’s presence at the EPA negotiating table appears to have hardened the EU’s stance on the matter, which could force a stalemate, preventing the December deadline being met.
It may be argued that SA’s negotiating capacity may help its weaker neighbours in the region to conclude a fair pact. It could, however, hurt them if SA’s strong-arm approach prevents the deadline being met. Namibia, Botswana and Swaziland, in particular, stand to lose.
In the absence of an alternative system to govern their exports with the EU, the stricter generalised system of preferences will become the guideline, says Kalenga.
If these duties are applied, countries in southern Africa, not defined as least developed countries, face tariff hikes, or the imposition of tariffs, where none existed under the Cotonou agreement.
Least developed countries would be unaffected, enjoying duty-free access to EU markets.
SA’s trade relations with the EU are defined by a bilateral agreement since 2000.
If the EPA is concluded, SA will see some real benefits, the EU has indicated. But if the EPA is not concluded, SA will suffer no disruption, with its trade with the EU continuing under this agreement.
By Mathabo le Roux, Business Day, 17 april 2007