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TRADE: Zimbabwe Overshadowed Development Issues at EU-SA Summit

David Cronin

BRUSSELS, Jul 28 2008 (IPS) - The friendly atmosphere at the first ever European Union-South Africa in Bordeaux, France, at the end of last week may largely be attributed to how South African President Thabo Mbeki had helped convince Robert Mugabe, his Zimbabwean counterpart, to negotiate directly with Morgan Tsvangirai, leader of the opposition Movement for Democratic Change, a few days earlier.

Although Mbeki had been heavily criticised at home and abroad for not taking Mugabe to task over a wave of violence and intimidation against his political opponents, the European Union (EU) officially declared its full support for Mbeki’s mediation efforts.

Because Zimbabwe dominated the discussions, the tensions that have previously surfaced over trade issues were not the focus of attentions. Peter Mandelson, the European commissioner for trade, last year alleged that South Africa was trying to block other countries in its regional surrounds from signing economic partnership agreements (EPAs) with the EU.

Yet, with Mandelson preoccupied with talks taking place at the World Trade Organisation’s (WTO) headquarters in Geneva, it fell to Nicolas Sarkozy, the French president, to sound a more emollient tone.

Sarkozy, the current holder of the Union’s rotating chairpersonship, said that the purpose of the EPAs was to ensure that Africa could be in a ‘‘privileged situation’’. He indicated that the EU is seeking to use both the EPAs and the WTO discussions to give Africa greater preferences than economies such as China that are experiencing faster growth.

‘‘Don’t ask us to give the same treatment to every country in the world,’’ Sarkozy added.

Data released ahead of the summit conveys the impression that the EU and South Africa enjoy a mutually beneficial relationship and that a free trade agreement signed by both sides in 1999 has proven fruitful.

According to Eurostat, the EU’s statistics office, the value of exports from the 27 countries now comprising the Union to South Africa grew from 12 billion euros in 2000 to 20.5 billion euros last year. Exports from South Africa to the EU, meanwhile, rose from 15 billion euros to 21 billion euros over the same period.

The net effect was that the EU’s deficit in trade with South Africa fell from 3 billion euros to about 400,000 euros.

Some organisations who have examined the trade relationship say that the true picture may be more nuanced, however.

Vicky Cann from the World Development Movement (WDM) in London noted that the EU’s principal imports from South Africa include raw materials such as metal, coal and diamonds. By contrast, more than 50 percent of the Union’s exports to South Africa are manufactured goods, particularly cars and machinery. The non-governmental WDM does research and advocacy to end poverty.

This imbalance illustrates why it is essential that South Africa resists calls from the EU to dramatically cut its taxes on industrial imports during the WTO talks that are currently taking place in Geneva, according to Cann.

‘‘Certainly these figures show that the bulk of South African exports to Europe are basic commodities such as minerals, coal, and metals. The current high prices of these may well be distorting the overall picture,’’ she told IPS. ‘‘South Africa is locked into a relationship with the EU where it exports primary materials, not so much value-added goods. That is a critical issue.

‘‘Meanwhile, right now in Geneva, South Africa is defending its domestic manufacturers at the World Trade Organisation very firmly, and these figures indicate that it is right to do so, considering the growth of European manufactured exports to South Africa in recent years.’’

While South Africa refused to sign an EPA before an end-of-2007 deadline set by the European Commission, some of its neighbours accepted what Brussels officials described as ‘‘interim’’ deals that mainly covered trade in goods. These include Botswana, Namibia, Swaziland and Lesotho. All four are part of the Southern African Customs Union (SACU), to which South Africa also belongs.

Mareike Meyn from Britain’s Overseas Development Institute (ODI) argued that the EU’s willingness to conclude separate deals with South Africa and its bordering countries could have profound implications for regional integration. ODI is a think tank on international development and humanitarian issues.

She pointed out that SACU’s own rules require its member countries to enter jointly into trade agreements with the outside world. ‘‘SACU, the only fully functioning customs union in Africa, has been split,’’ she told a European Parliament hearing earlier in July.

Her observation came despite numerous statements by the European Commission that one of the most important objectives of the EPA is to foster greater cooperation at regional level in Africa.

Paul Goodison from the European Research Office, which monitors the EU’s trade policies, also said that clauses in the interim EPAs accepted by some of South Africa’s neighbours are inconsistent with the agreement on which SACU operates, particularly how it established a common external tariff.

Goodison noted that the interim agreements would require Botswana, Namibia, Lesotho and Swaziland to levy different tariffs on goods from the EU than those set down in the free trade agreement that the EU had previously signed with South Africa.

‘‘The point is that if South Africa is not included in the (EPA), you have got a situation where the EU is undermining the common external tariff of SACU,’’ he said. ‘‘How do you sustain a customs union when you don’t have a common external tariff? It is fundamental.’’