Xavier Carim has been Deputy Director-General in the International Trade and Economic Development Division of the South African Department of Trade and Industry (DTI) since March 2007. Prior to this, he was South Africa’s representative to the WTO in Geneva (from September 1998 to May 2002), and subsequently Chief Director in the International Trade and Economic Division of the DTI, with responsibility for FTA and WTO negotiations. Before entering government service he was a Research Fellow at the Centre for Southern African Studies at the University of the Western Cape.
Q: What is the current state of play in the EPA negotiations, particularly with regard to agricultural trade relations?
From a South African perspective, this needs to take into account our underlying objectives in participating in the EPA negotiations and to be seen in the light of the existing EU–South Africa Trade, Development and Cooperation Agreement (TDCA), the tariff elimination commitments of which are now fully in place, in line with WTO legal requirements for a free trade area (FTA). Of course, given the existence of the Southern African Customs Union (SACU), the TDCA de facto embraces Namibia, Botswana, Lesotho and Swaziland.
South Africa entered the EPA process with the aim of promoting the regional integration agenda, consolidating a SACU-wide trade agreement with the EU and supporting the consolidation of duty-free access to the EU market for our SADC partners. We’ve been concerned about efforts to use the EPA negotiations to unduly limit space to pursue our developmental objectives in industry and agriculture development, and to impose disciplines that go beyond WTO requirements. As South Africa, we have sought to improve our own access to the EU market for our agro-food exports, given the relatively limited coverage of the TDCA in this area, arising from the partial scope of CAP reform at the time of the conclusion of the TDCA negotiations in 1999.
Much of the last 5 years has been aimed at rectifying the damage that was evident in the hastily concluded Interim EPA arrangements in 2007, which – thankfully – were not ratified by the members of the SADC EPA Group. Much progress has been made. Since then we have resolved differences on over 30 legal provisions, and we are now focused on two or three key issues, including export taxes and agricultural safeguards. On market access, we have the basis for a deal on trade in fish products, and we have made good progress on rules of origin.
As one might expect, agricultural market access issues are an ongoing subject of negotiations.
Q: Can you provide a little more detail on the state of the agricultural negotiations?
As I mentioned, negotiations are ongoing so I wouldn’t like to go into too much detail, but broadly speaking South Africa requested improved access to the EU on 21 agricultural products, of which the EU made an offer on 17 products. It is our hope that given the discrepancy between the treatment accorded to South Africa under the TDCA and recent EU FTA agreements, the EU will make further offers in the areas still outstanding where South Africa is seeking improved access, particularly in products where we have good export capacity.
The EU for its part also requested reciprocal access to the SACU market in a number of product groups. At the level of SACU, we have made progress in meeting the EU demands, and this is likely to be closely linked to one of the major outstanding areas in the negotiations, a specific agricultural safeguard clause. Here we appear to have consensus on the need for such a safeguard clause, but have so far been unable to agree on the detailed wording.
Q: To what extent can the difficulties faced in reaching a consensus on the specifics of an agricultural safeguard clause be linked to South Africa’s experience in the poultry sector, where EU exports increased nearly sixfold between 2010 and 2012?
The SADC EPA Group’s request for a special agricultural safeguard pre-dates the surge in poultry imports from the EU. The agricultural safeguard is seen on our side as an essential component of a balanced negotiating outcome to protect vulnerable sectors in our regional economy.
Q: Are there other areas in the SADC EPA negotiations which potentially affect the agro-food sector?
Yes, there are a number of areas that can be seen as cross-cutting. These include rules of origin, which, given the differential market access arrangements proposed by the EC for South Africa and the other SADC EPA members, could potentially be problematic. Illustrative in this regard are the discussions on derogations for South African fruit used in canning operations in Swaziland to ensure full capacity utilisation. There are of course other examples, given the specificity of rules of origin for certain livestock products, but these areas of course are further complicated by SPS considerations.
Our point of departure on rules of origin issues is that we need to be able to “cumulate” among all ACP/African countries, with appropriate, simple administrative arrangements being set in place to facilitate this. This needs to be seen in the context of the tripartite FTA negotiations and the wider aspirations for an all-Africa FTA.
The tripartite FTA and all-Africa FTA of course raise much more fundamental issues related to the compatibility of commitments made under different EPA agreements. It seems to me that different commitments are likely to undermine or at least complicate regional integration across Africa. But this needs to be the focus of a different discussion on the kind of measures that will be required to ensure that the EPAs contribute to – and do not impede – existing integration processes under way in Africa. This, however, needs to be taken up at the highest level in a pan-African context.
There is then of course the issue of export taxes – an ongoing, unresolved issue to which considerable importance is attached by both parties, for rather different reasons. We in the SADC are willing to accept provisions that make allowance for consultations over our use of export taxes as part of wider sector development strategies, where the EU may have particular concerns, but we are not willing to accept provisions that give the EU a right of veto over our use of this policy tool.
However, as a senior EC official pointed out at the recent seminar convened by the South African Embassy in Brussels, the issue of export taxes has been a make-or-break issue for the EU in other trade negotiations, with, if I recall correctly, the example of the Gulf Cooperation Council negotiations being cited. Nevertheless, the discussion on this matter continues.
Finally of course, in terms of these big issues, is the question of the most favoured nation (MFN) clause. From our perspective, the EU position is unsustainable because it creates a legal anomaly between the SACU Agreement and the EPA, as well as one within the EPA, as we have already agreed under the definition of parties that SACU will act as a bloc. Put simply, it is not possible to allow a differentiation in treatment between South Africa and the BLNS (Botswana, Lesotho, Namibia and Swaziland), as proposed, since this would undermine the functioning of the SACU common external tariff.
Q: Concerns exist in the SADC region over the possible agricultural trade disruptions that could arise from the non-conclusion of the EPA process – what is your take on this issue?
As I mentioned earlier, we’ve made substantial progress in narrowing the gap in our respective positions and this progress shouldn’t be underestimated. But while good progress has been registered in the negotiations, more time will be required to conclude the process to ensure a mutually beneficial and balanced outcome.
In this regard, the decision by the EU to terminate the regulation that grants ACP countries preferential market access into the EU on 1 October 2014 places a unilateral deadline on the negotiations. Countries that have not concluded an EPA by that time will lose access to the EU market. While this does not affect South Africa, Botswana, Namibia and Swaziland will be negatively affected.
It is also important to be aware that to ensure that exports for Botswana, Namibia and Swaziland are uninterrupted requires concluding negotiations well before 1 October 2014, given the extensive internal processes required by the EU for legal scrubbing of the text, translation into 22 languages and Parliamentary approval. In short, the new date places great pressure on the negotiating process.
Q: But you mentioned earlier that de facto, as a result of the full implementation of the TDCA tariff elimination commitments, a WTO-compatible free trade area is already in place between the EU and the SACU. Doesn’t this rather complicate the EU’s position when it comes to withdrawing duty-free, quota-free access from Botswana, Namibia and Swaziland (BNS) on the grounds of WTO incompatibility?
This is an important substantive point because, irrespective of whether the EPA enters into force or not, the BNS will continue to grant the EU preferential access to their markets by virtue of the TDCA. If the EPA is not in force by that date, however, these countries will lose their existing access to the EU market at a great cost to their economies. Such an outcome would be highly inequitable and unfair.