Southern Africa Region Makes Progress on EPA
The Southern African EPA region comprises Angola, Botswana, Lesotho, Mozambique, Namibia, Swaziland and South Africa. The latter five form the South African Customs Union, and all belong to the 15-nation Southern African Development Community (SADC). The eight other SADC members - DR Congo, Madagascar, Malawi, Mauritius, the Seychelles, Tanzania, Zambia and Zimbabwe - are negotiating in different regional EPA configurations.
Fearful of losing their privileged access to the European Union, Botswana, Lesotho, Mozambique, Namibia and Swaziland concluded an ‘interim’ EPA with the EU late in 2007. The agreement covers only trade in goods, and contains a commitment to continue negotiations on a comprehensive EPA, which will also include services (Namibia and South Africa have opted out of this commitment), investment, intellectual property and other areas. The interim agreement must still be formally signed and ratified in order to shield it from legal challenges at the WTO (see box for background).
Concessions on Export Restrictions and Taxes
During negotiations held in March, delegates cleared a number hurdles that had prevented the signature of the interim EPA on the SADC side. The most notable EU concession was the removal of text on quantitative restrictions (i.e. export or import quotas or bans), now only requiring such measures to comply with WTO requirements. WTO disciplines on export restrictions provide Members a fair amount of scope to pursue public policy purposes (Bridges Year 12 No.5 page 3). The EU also reportedly agreed to relax disciplines on existing export taxes, and indicated openness to discuss criteria for the introduction of new taxes.
Namibia, for one, had strongly objected to earlier, stricter provisions, arguing that they “fundamentally fail to understand the policy use of export taxes in the SADC region.” Many African countries use export restrictions and taxes in order get greater value-added from their raw materials and encourage industrial development. According to the European Commission’s Namibia representative Emma Mbekele, the EU also agreed to remove time limits for the elimination of infant industry protection.
These concessions reportedly convinced previously sceptical Namibia to lift its objections to signing the interim EPA. This would leave Angola and South Africa outside the pact. However, Angola’s trade preferences are safe under the EU’s Everything but Arms legislation, which grants full duty- and quota-free access to all least-developed countries. South Africa already has a bilateral trade agreement with the EU. South Africa Still Not Satisfied
Two points of major concern to South Africa remain unresolved. One is the ‘definition of parties’, i.e. the fact that the 15 SADC members are negotiating EPAs under four configurations. This could negatively affect seriously future regional integration. The country also sees problems arising for the South African Customs Union’ common external tariff due to different tariff reduction schedules under its bilateral FTA with the EU and the regional EPA.
The most-favoured-nation (MFN) clause, a standard feature in all EPAs, requires concessions made EPA partners in future trade agreements to countries whose trade exceeds more than 1 percent of world trade to be automatically extended to the EU. This provision is controversial in all EPA negotiations and beyond. Brazil, for instance, has raised questions over its effects on South-South trade in the WTO General Council (Bridges Year 12 No.1 page 8).
According to press reports, the EU offered to raise the threshold for the MFN clause to countries that account for 1.5 percent of world trade, and agreed to limit the requirement exclusively to customs duties. South Africa found the offer insufficient.
Nevertheless, the country’s chief negotiator Xavier Carim said there was scope for further progress, but other sources in the region suggested that the EU might sign the interim EPA with just Botswana, Lesotho, Namibia and Swaziland. Peydro-Aznar, the European Commission’s head of trade in Pretoria, stressed the need conclude an accord “because we need to address the WTO compatibility issue as a matter of urgency.” Emma Mbekele said that the priority should be to sign the interim EPA before mid-2009. A full EPA does not look in cards for the SADC-EPA region before mid-2010. (Bridges Year 12 No.5 page 19).
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