According to an interview with a leading South African trade official, a number of negotiating issues in the SADC–EU EPA negotiations have now been resolved. In March’s issue Bridges Africa – a special issue on EPA negotiations in Africa – Xavier Carim, from South Africa’s Department of Trade and Industry, spoke about:
- the MFN clause: there is no longer “an obligation on the SACU to automatically extend advantages granted to other trading partners to the EU”. The EU may request negotiations to ensure that any advantage extended to a third party is also extended to the EU, but would “need to be prepared to offer a concession or benefit in exchange”;
- “provisions relating to the definition of parties, administrative cooperation” and similar technical issues;
- new generation issues (trade-related areas, procurement, competition policy and intellectual property rights): the negotiators have “left open the option for non-binding cooperation in these areas” at some future point.
Progress has also been made on “a mutually acceptable balance in the exchange of tariff concessions” and “appropriate rules of origin”, and it is considered that the concerns of smaller SACU economies related to specific sensitive sectors can be addressed.
Mr Carim noted the EC’s long-standing commitment to extending “any provision negotiated in one EPA that is seen to be beneficial” to other EPA agreements, should the concerned parties so request. In this context, the same edition of the Bridges Africa where this interview appears carries an article on the legal position regarding the MFN clause in the EAC–EU EPA. On a related issue, Mr Carim raised the question: “how would ACP countries be compensated when the balance obtained under the EPA is disturbed by an erosion of the value” of traditional ACP trade preferences, as a result of future third-country agreements negotiated by the EU?
Issues that still need to be resolved include “export taxes, infant industry, bilateral safeguards and agricultural safeguards”. These are considered “difficult issues”, with their solution “not obvious at this stage”.
According to Mr Carim, the issue of export taxes needs to be seen against the background of African aspirations to shift away from commodity-based growth towards a more sustainable development path that uses “the continent’s natural resource base as a platform for diversification and industrialisation”. In this context, export taxes have been used to support infant industries and attract foreign investment. Since “export taxes are not prohibited under WTO rules”, there is seen to be no reason why African governments should abandon the possible use of this trade policy tool. The Bridges Africa special issue also includes two articles on export taxes setting out the pros and cons of their use in the SADC–EU EPA context.
Mr Carim noted that there remain concerns over the deadline of 1 October 2014 for the completion of the EPA negotiations. (After this date, the current regulation, MAR1528/2007 –which provides duty-free access to the EU market on a transitional basis – will lapse.) It is thought that a situation could arise where the EU continues to enjoy duty-free access to the whole of the SACU market, as a result of the reciprocal provisions of the EU’s Trade, Development and Cooperation Agreement with South Africa (TDCA), while Botswana, Namibia and Swaziland are denied duty-free access to the EU market as a result of the termination of MAR1528/2007. Such an outcome, Mr Carim observed, would be “unquestionably unfair and inequitable”, and any subsequent moves by Botswana, Namibia and Swaziland to withdraw corresponding duty-free access for EU goods to their territories could “fracture the customs union in SACU”.
In the longer term, Mr Carim voiced the concern that the different provisions of the various African regional EPAs could also serve to “undermine Africa’s wider integration efforts”, with different tariff concessions and rules of origin coming back to haunt African trade negotiators. He considered that mechanisms could be put in place to address this issue by:
a) establishing “a mechanism through which African governments reserve the right to address any impediment to Africa’s regional integration that arises from commitments undertaken in the EPAs”;
b) establishing a “joint undertaking at the Africa and ACP levels, as well as with cooperation from the EU, to provide a legal basis for intra-EPA cumulation amongst ACP countries”.
Given that the SACU group includes a dominant economic powerhouse and much smaller national economies, infant industry protection and agricultural safeguards have been central to the SACU regional dispensation, with these tools being actively used to support the structural development of a number of agro-food sector value chains. These SACU provisions would be brought into question by certain EPA provisions, which thus remain a major source of disagreement in the EPA negotiations.
From the perspective of smaller SACU economies, the use of these SACU provisions impacts only minimally on EU exports, while posing serious challenges to these countries’ national efforts to promote dairy, poultry and cereal-based food product value chains.
Given this regional reality, these provisions can be seen as a critical test of the EU’s cooperation in assisting African governments by accommodating regional sensitivities and realities, as Africa embarks on the difficult path of regional trade and economic integration. However, it needs to be recognised that the EU has broader trade concerns that could be undermined by blanket exemptions.
In this context, allowing special dispensations, linked specifically to African efforts to promote regional trade integration, could offer a way out in terms of reconciling regional needs with wider EU trade policy concerns.
This could hinge upon the acceptance of general principles, while linking the implementation of specific measures to developments within intra-regional trade arrangements in Africa. This would ensure that EPA commitments are fully supportive of Africa’s own intra-regional trade integration efforts without setting a precedent for the unrestricted use of such trade policy tools by the EU’s other trade partners.