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TRADE: EC Urges SADC on About EPA as ‘‘Time Is Not on Our Side’’

Servaas van den Bosch

WINDHOEK, Apr 7 2009 (IPS) - Southern African countries remain mum on the interim economic partnership agreement (EPA), despite a letter from European Commission (EC) trade commissioner Catherine Ashton urging them to sign.

‘‘We need now to agree on a way forward in order to sign the interim EPA, notify the WTO (World Trade Organisation) and move on with the negotiations of the final EPA. Time is not on our side,’’ Ashton wrote in a letter to all trade ministers in the Southern Africa Development Community (SADC) EPA grouping.

The correspondence, in possession of IPS, is dated 20 March. So far the commissioner’s plea has met with a deafening silence from southern African capitals.

The European Union’s intention to forge ahead with an EPA with Botswana, Lesotho, Namibia and Swaziland (the BLNS countries) plus Angola and Mozambique – but without South Africa – is confirmed in a separate dispatch to Pretoria.

‘‘We now need to proceed with the signature of the interim EPA with those SADC members that have initialled the agreement. This has become a matter of urgency,’’ Ashton wrote to South African trade minister Mandisi Mpahlwa. Interim EPAs include agreements on goods alone.

She added that: ‘‘I have done all I could, both in terms of substance and timing, to accommodate the concerns expressed by the ANSA group.’’

Angola, Namibia and South Africa (ANSA) in January asked the European Union (EU) for time to reflect on the interim EPA because of a range of contentious issues. This request was denied.

Angola joined the negotiations with an eye on future participation but is not a signatory. South Africa also never initialled the interim EPA. The country has an existing deal with the EU called the Trade Development and Cooperation Agreement (TDCA) which is valid until 2012.

This puts the ball in Namibia’s court. Whereas Botswana, Lesotho, Swaziland and Mozambique have indicated a willingness to sign the interim EPA, Namibia refused because of concerns shared with South Africa.

The country’s position is pivotal since Southern African Customs Union (SACU) Article 31.3 prohibits any member of solely entering into an agreement with a third party.

A point-blank refusal to sign might find the EU back at square one.

An EU-SADC meeting in the Namibian coastal town of Swakopmund last month to iron out the differences has not yet produced an agreement.

Namibia has indicated it will make its position clear after a conference call between Ashton and its trade minister, Hage Geingob, that was supposed to happen soon.

According to Ashton’s letter, agreement was reached on ‘‘most of the major concerns’’ while she suggests that the remaining issues can be resolved in the negotiations on a full EPA.

So far the EU has agreed to allow export taxes for food security and industrial development needs. Infant-industry protection will no longer be time-bound, while quantitative import restrictions will be in line with WTO rules with an extra provision for safeguard measures against imports for food security reasons.

EC products will not pay import duty twice when circulating through SACU and the EU will assist in the flow of goods and simplification of customs procedures between the signatory states.

The key issue of maintaining the integrity of the common external tariff of SACU in the light of the different regimes of the TDCA and the EPA is met by retrofitting TDCA tariffs for all SADC members. This is ‘‘a practical way that fully preserves the integrity of the SACU customs external tariff,’’ Ashton wrote.

But trade experts ask exactly what number of tariff lines will be retrofitted and what part of total trade these constitute.

The EU hasn’t caved in on the ‘‘definition of parties’’ issue, which critics argue would require SACU to legally include Angola and Mozambique in the union, effectively destabilising it and threatening regional integration in SADC.

The other contentious issue is the most favoured nation (MFN) clause, which obliges the SADC countries to give the EU the same preferences it extends to other future trade partners as long as the latter contribute 1.5 percent to world trade.

This is ‘‘a simple question of fairness’’ meant to ‘‘prevent discrimination against the EU’’, according to Ashton in her letter. This perception is not shared by the ANSA countries that argue that this clause will severely impede South-South trade.

The European Parliament decreed two weeks ago that the European Commission (EC) should ‘‘demonstrate flexibility’’ on the MFN.

According to insiders, Namibia is trying to get some 19 other issues that the EU refused to discuss in Swakopmund back on the agenda.

‘‘It seems countries try to use the momentum to pull these items back into the interim EPA,’’ Joris Heeren, head of the trade section of the EC delegation in Windhoek, told IPS.

‘‘However, in Cape Town in February it was jointly agreed to leave these minor issues for the full EPA and concentrate on the contentious ones. In Swakopmund the Commission showed a lot of flexibility.’’

The EC has also, apparently, mellowed on the ‘‘Singapore issues’’ and inclusion of services.

‘‘I can guarantee that there will be no opening of public services, no pressure for privatisation. The explicit right of the ACP (African, Caribbean and Pacific countries) to regulate their own markets will be recognised,’’ Ashton told EPA sceptics in the European Parliament recently.

Despite European pressure to close the deal, Southern Africa is in no particular rush to sign. ‘‘A World Trade Organisation challenge at this point is unlikely,’’ argued one Namibian analyst. ‘‘The WTO has its hands full with rising protectionism and saving the Doha Round. The SADC EPA countries could probably drag this on until mid-2010.’’

The European Parliament would like the EPAs resolved by the end of the year. ‘‘But there is no legal deadline, as was the case in 2007 when the WTO waiver expired,’’ admitted Heeren.

Meanwhile Ashton’s softly-softly approach has earned her credits in Strasbourg. ‘‘I have absolutely no interest whatsoever in negotiating agreements with ACP countries that make any country poorer,’’ she stated recently.

The trade commissioner’s charm offensive saw the members of the European Parliament signing off on the full EPA with the Caribbean configuration and the interim EPA with Ivory Coast in a crucial indication that the parliament is backing the EC.