SADC turns the trade tables on EU

Trade negotiators will struggle to finalise a controversial economic partnership agreement (EPA), which it is hoped will lead to better access for South African agricultural exports to Europe before the end of the year.

President Jacob Zuma reiterated this week that the aim is to sign the EPA, which has been dragging on since 2002, by the end of the year.

However, there are several outstanding issues and, while negotiators are expected to make significant progress by December, the final agreement is only likely to be signed next year, said an official at the department of trade and industry.

Market access for agricultural products remains a contentious issue, with SA insisting on better access, particularly for ethanol, cut flowers and wine, to the European Union (EU). In return, the EU wants better access for meat, dairy, products honey, certain cereal products, wine and cheese.

SA, which has a separate trade and development co-operation agreement (TDCA) with the EU, is participating in the negotiations as one grouping of Southern African Development Community (SADC) countries - Botswana, Lesotho, Namibia, Swaziland, Mozambique and Angola.

The EU is negotiating EPAs with all its former colonies in Africa, the Pacific and the Caribbean.

Should SA sign the EPA, the TDCA will fall away. Under the TDCA, SA opened 81% of its tariff agricultural market to EU imports, while the EC opened up 61%.

At full implementation of the TDCA, SA will retain protection on 108 tariff lines, while the EU will enjoy protection on 615 lines.

"Clearly there is an imbalance. On both sides, the excluded items are the most sensitive. An acceptable outcome will need to attenuate this imbalance. Squaring this may be difficult, but essential to concluding the deal," deputy-director-general Xavier Carim said in a discussion document.

The Southern African countries also want an agricultural safeguard in the EPA, which would allow countries to increase tariffs products should the EU start "flooding" their domestic markets.

It is unlikely that officials will reach an agreement on the most favoured nation (MFN) clause, which is expected to become a political issue to be dealt with on ministerial level, the department official said.

According to the MFN clause, seen to be a deal breaker from the SADC group, any trade concessions given to countries that contribute more than 1.5% to world trade in future will have to be extended to the EU.

"This is seen as the EU trying to tie SADC's hands when negotiating with countries like Brazil, India and China," said Dr Peter Draper, senior research fellow at the South African Institute of International Affairs (SAIIA).

The EU will also have to take negotiations on new generation issues, such as government procurement, services, competition policy and intellectual property rights off the table if it is serious about making headway with the negotiations, the DTI official said.

While SA, Namibia and Angola have already indicated that they will not participate in these negotiations, other countries have signed an interim EPA committing to negotiating with the EU on these matters.

SADC is highly critical about firm negotiations on new generation issues as legislation in many countries on these issues is lacking.

Signing agreements with the EU without SADC having a common position on these issues can also undermine regional integration.

"I think the EU is sort of realising that, if they want to bring in these issues, they'll have to do it SADC's way," the department official said.