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New EU offer in SADC EPA negotiations in efforts to break deadlock

18 January 2014

In an effort to move forward the SADC EPA negotiations, the EU has offered South Africa improved access for its sugar and wine exports, a long-standing demand of the South African authorities in the SADC EPA negotiations. According to a Reuters report, the EU has offered a duty-free quota for sugar that “will fall short of South Africa's demands for a 320,000-tonne-a-year sugar quota”. On wine, the report notes that the EU “will propose expanding South Africa’s duty-free access of around 95 million litres a year”, adding that in 2012 South Africa exported nearly 410 million litres of wine, some 65% of it destined for the European market (266 million litres).

The report commented that “it is not immediately clear when South Africa would start enjoying increased access to the European Union, but [EU Trade Commissioner] De Gucht is believed to want to conclude negotiations early [in 2014]”.

The EU offer to South Africa on sugar needs to be seen against the background of the declining share of preferred ACP/LDC suppliers of EU sugar imports: sugar statistics published by the EC in November 2013 showed that in 2012/13, ACP/LDC suppliers accounted for only 52.5% of total EU sugar imports. Of non ACP/LDC suppliers in 2012/13, 783,000 tonnes came from Brazil, 326,000 tonnes from Balkan suppliers and 631,000 tonnes from various other suppliers.  

Editorial comment

Indications are that the joint SADC–EU negotiating session in November 2013 made no significant progress, and that there were still wide gaps between the two parties on a range of outstanding issues. No agreement has yet been reached on export taxes, agricultural safeguards, infant industry protection or addressing the needs of distressed industries. According to sources within the SADC EPA grouping, the EU offer on sugar and wine has done little to break the impasse.

There is a lack of clarity on the extent to which the wine quota will be expanded, given that the existing quota covers only 36% of South Africa’s current wine exports to European markets. Equally, there are concerns over the commercial value of the EU’s sugar sector offer. According to representatives of Tate & Lyle Sugars, some 30% of EU sugar imports are currently sourced from non-preferred supplies under the CXL quota arrangement, on which a levy of €98/tonne is paid (see Agritrade article ‘ Tate & Lyle Sugars reiterates its call for abolition of sugar import...’, 20 January 2014). In this context, full duty-free access for South African sugar would be necessary to make exports under any quota competitive with the current suppliers of non ACP/LDC sugar.

Substantive issues therefore still need to be addressed if the negotiations are to be completed before the 1 October 2014 deadline. 

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