EU pressured Sacu, says SA Trade Minister
The world's oldest customs union may suffer damage after the European Union (EU) put pressure on three Southern African Customs Union (Sacu) members to sign the controvertial interim Economic Partnership Agreement (EPA), South African Trade and Industry Minister Rob Davies has said in an interview.
Asked by the Southern African Documentation and Co-operation Centre (SADOCC) in Vienna last month whether Sacu has been "practically broken" after Botswana, Lesotho and Swaziland signed the interim EPA, Davies said: "Well, not entirely, but unfortunately there are differences in terms of our relationships, in terms of the commitments that the different members of Sacu have agreed to."
South Africa and Namibia, the remaining members of Sacu, have so far refused to enter into the trade pact with the EU. As has Angola, which, together with Mozambique and Sacu, form the SADC configuration with which the EU negotiate the EPA.
Davies told SADOCC that "at least there is some understanding that we (Sacu) need to sort out the tariff and the rules of origin issues and to try to have a common basis on that". "But potentially the damage is that we will have inconsistencies in terms of the commitments," he said.
Illustrating the dilemma, Davies said "if some members of Sacu are obliged to give to the EU anything we may negotiate with China or anybody else out there and some of us are not, then that’s going to be some potential inconsistencies in the future. "We need to resolve these matters to keep the customs union going," he said.
Botswana, Lesotho, Namibia and Swaziland, BLNS countries, depend on yearly revenue from the Sacu pool to cover between 20 and 40 per cent of annual government spending.
Davies said the fundamental issue or problem was that the pressure from the EU has created this situation. "I mean, as I said before, very significant interests were at stake for the other countries in case they didn’t sign. So, some have done so, but I don’t think anybody thought that the agreement was good. It was just that some were more vulnerable than others. I think that’s the reality," he told SADOCC.
"One of the most important ones of these is that there is a provision in the agreement which says that any country or group of countries that you negotiate with and that has more than one per cent of world trade – if you give them anything better that you give to the EU, then you have to give the same to the EU.
"And the argument for that is that this is because the EU is offering duty-free, quota-free access. But it is not offering this to South Africa. So they say South Africa would just have to consult. But other members of Sacu would have to give the same to the EU while we would just have to consult.
"The problem is that we are all in the same customs union, so if one has to do one thing and somebody else has to do something else, we have an inconsistency, an incoherence in the customs union," Davies said.
He continued: "In the meantime – because some have signed and others have not signed – we have to do all kinds of technical work on rules of origin and on the tariff arrangements so that they don’t create inconsistencies in Sacu.
"But I have to say that the EPA process has not been a very happy process. It has been a little bit better under the regime of Baroness (Catherine) Ashton, and we will wait to see what happens with the new Commissioner. But unfortunately during the negotiations there was a process where the previous Commissioner just forced these things through, take it or leave it," Davies said, saying this was particularly tough on beef exporting countries. "It was a very heavy gun held at the head of some of these countries," he said.
Davies also singled out Namibia as "the one which is very vulnerable at the moment" because it has not signed the interim EPA.
South Africa has its own Trade and Development Cooperation Agreement (TDCA) with the EU, while Angola is a Least Developed Country (LDC), enjoying the Everything But Arms Agreement. These can act as alternatives to the EPA.
Namibia, however, has no other option. It provisionally initialled the interim EPA late in 2007, but has since stuck to its guns that it will not sign unless the EU addresses various concerns satisfactorily. So far, the initialling has ensured Namibia quota- and tariff-free access to EU markets for its beef, grapes and fish.
"Now, I think it is very important that Namibia is not paid to loose the preferences which it has got from initialling, by not signing," Davies said in the interview.
"We want to continue with the process of negotiations and continue to resolve the outstanding issues and create the conditions under which Namibian preferences in access to Europe could be secured. So it would be an unfriendly anti-developmental act if anybody would block Namibian access to the EU. Hopefully that would not happen," he said.
Davies was also critical of Namibia’s non-LDC status. "How is it that Angola is a LDC and Namibia is not? These are just calculations, but a huge number of people in Namibia live in dire poverty and the problem is that they really would need an alternative (to the EPA)," he said.
"You see, the situation is that South Africa has an alternative with the TDCA, and so does Angola. Angola is a Least Developed Country so it has Everything But Arms. We two have alternatives.
"In the end of the day we will have to look and see what does the EPA look like once it is finally negotiated through, how will it look like in comparison with the TDCA, is it worthwhile moving into the EPA. Those will be the kind of consideration we need to make as South Africa.
"Angola will have to do the same regarding their EPA. But Namibia is the vulnerable one because there is no more Cotonou nor is there any other arrangement," Davies said.
The Minister said South Africa, Namibia and Angola are refusing to sign the interim EPA is because there are a number of clauses in the interim agreement "that continue to impede on our necessary developmental policy space".
Some of the issues have been sorted out last year, "there is a number of matters which are still outstanding, and these are going to have to be resolved favourably to create the conditions for the three of us to want to sign", he said.
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