In their current form, the Economic Partnership Agreements (EPAs) between the European Union (EU) and the Southern African Development Community (SADC) would limit the SADC region’s policy space to promote industrial and agricultural development, would hamper efforts to promote trade diversification, and would undermine regional integration processes, a top official has said.
Speaking at the Southern African Forum on Trade, Department of Trade and Industry (DTI) international trade and economic development deputy director-general Xavier Carim said that South Africa was committed to addressing these issues with the EU and other members in the SADC and the Southern African Customs Union, however, it was clear that there was a need to develop a common approach to effectively address this.
“We also need to see a willingness from the EU to prioritise its professed concern to promote regional integration, not just in broad declaratory statements, but in detailed outcomes of the negotiating processes,” he added.
The SADC-EPA group, comprising Botswana, Lesotho, Namibia, Swaziland, Mozambique, Angola and South Africa, split in June over whether or not to sign the interim-EPA offered by the EU. Botswana, Lesotho, Swaziland and Mozambique moved ahead with the signing, despite objections from other members, including South Africa. One of the underlying principles of the EPA is that it should complement and support regional integration initiatives.
SADC members had now established five separate negotiating configurations, in relation to the EU. “Each of these configurations has different tariff dismantling obligations, the products that are covered are different, the timing for the tariff reductions is different, the products that are excluded are different, and all of this is going to certainly complicate and possibly foreclose efforts to foster deeper regional integration in SADC,” Carim explained.
He added that it would certainly mean strengthening customs controls and rules of origins controls within the region as a result.
He added that the main motivating factor of the EPA negotiations was to ensure World Trade Organisation (WTO) compatibility, however, the provisions contained in the agreement were beyond WTO compatibility.
Carim said that the EPA has also threatened the functioning of 99-year old Sacu.
“We already see that the commitments on the ‘new generation’ issues are in place and that is also going to complicate work in Sacu. But also, unless we are able to address the differences in the trade regimes under the South African free-trade agreement with the EU, compared to the EPA, with respect to the tariff regime and the rules of origin, we are going to see Sacu itself, the coherence of Sacu being undermined.”
In fact, Carim added that going forward, the more serious divisions were emerging with respect to the divisions that could emerge in new generation issues - those of trade in services, in procurement, in competition, in investment. Not sure what you are saying?
“Simply from the fact that before the region has been able to develop regional approaches and develop regional rules and markets in these areas, commitments will be undertaken vis-a-vis a third party, and that is going to make it more difficult for us to build regional integration in these areas,” he added.
Carim emphasised that, from the South African government perspective, Sacu had “enormous potential to move beyond an arrangement based solely on a common external tariff and held together by a revenue sharing arrangement”.
“Sacu’s main value is not as a captive market for South African exports, as it was under the Apartheid regime. But in the current global context, Sacu’s value will lie in its ability to be transformed into a vehicle for advancing and deepening integration at a sub-regional level; to act as an anchor in the SADC regional project; and also as a platform for harmonising engagement in wider global trade relations,” said Carim.
He added that owing to the way in which Sacu was already established, it could allow the potential to advance to a common market, and eventually, towards a monetary union.
In order for this to happen, member states would need to spend much more time building common policy in the area of trade and industrial policies.
“We need a work progamme to overcome the current policy deadlock that we currently face, and the zero-sum approach, by building production value chains across all member state in agriculture and industry,” stated Carim.
He said that the region would also need to intensify the programme of work around regional infrastructure. Work was under way but needed to be intensified, particularly based around the spatial development initiative that was said to have registered some successes already.
“The common policy vision is a pre-requisite for strengthening Sacu institutions, including the proposed Sacu Tariff board, the Sacu tribunal, as well as an effective and a well-resourced secretariat. Progressive harmonisation of various institutional arrangements will also need to be complimented by harmonisation of policies in the areas of competition and standards over time,” emphasised Carim.
It was felt that Sacu could also act as an anchor for deeper integration in the SADC.
“For Sacu to realise its potential we also need some common understanding on how to position ourselves in a rapidly changing global economy. Shifting patterns of global trade, the rise of new economies require that we look beyond immediate and short term trade relations, to developing mutually beneficial trade relations with the new sources of global economic growth in the global economy,” noted Carim.
Common approaches to trade negotiation was viewed as vital, and Sacu members have agreed to hold strategic discussion at the next council meeting to take this issue forward.
“If we are not able to move along these lines, Sacu runs the risk of being stuck in a policy gridlock, and remaining what it has always been - a customs union structured around a revenue sharing arrangement that will be steadily rendered ineffectual by global developments beyond its control,” argued Carim.
He said that Sacu was “at something of a cross roads”, and either needed to move forward, in a more co-ordinated and harmonised way, or, find itself increasingly ineffectual.