Wednesday, September 30, 2020

Botswana fails to meet demand as EU opens unlimited market access

When the European Union (EU) started negotiations for economic partnership agreements (EPAs) regime with the Africa, Caribbean and Pacific (ACP) countries in 2004, the idea was to have a reciprocal trade regime that would open unlimited access for Botswana goods in that lucrative market.

And days after Botswana and other SADC-EPA groups signed an interim agreement with the EU, government officials this week confirmed fears that Botswana private sector will need to jerk-up capacity to meet the demand.

Trade and Industry Minister, Neo Moroka, told Sunday Standard at a press conference that the country is currently enjoying the highest prices on textiles and beef since the EU scrapped the 8 percent levy that Botswana paid before the EPAs.

“Botswana private sector is still at its infancy and we need to build capacity,” Moroka, who also chairs the SADC-EPA group, stated.

“The challenge is now for the Botswana Meat Commission (BMC). Actually, we are failing to supply. The challenge is for the private sector to produce more,” he added.

Botswana gets about P500 million on its beef exports to the EU and between P300-P400 million on textiles while the SADC region can export up to 3 billion Euros worth of goods to the European market.

Moroka added that Botswana could “only bite into that if it increased capacity”.

Asked what they are doing to increase capacity, Moroka added: “We will be carrying out sectoral studies but I do not know to what extent we will assist, I do not know.”

Moroka’s comments come a week after Botswana, Lesotho and Swaziland signed an interim EPA with the EU although members, like South Africa and Namibia, did not.

The EPAs are to make trade between EU and ACP countries compatible with the World Trade Organisation (WTO) rules because the previous regime (Contonou Agreement) did not have reciprocity condition.

Under the Contonou Agreement, goods from the ACP countries were allowed duty free access into the EU while the other party did not enjoy preferential treatment when their goods entered ACP markets.

Under the existing Cotonou trade provisions, Botswana benefited from the beef protocol, which granted it a tariff quota of 18,916 tonnes per year with a 92 percent reduction in customs duties.

Although trade figures were not established at the time of going to press, Trade and Industry officials stated that revenues from signing EPAs and opening markets are higher than the ones from the Customs Union.

Moroka explained that Botswana put its signature on the interim economic partnership agreements because the EU is the single biggest market for the country’s goods, especially beef and textiles.

“We had an assured market and our people will be employed. The livelihood of many Batswana is centered on cattle: this was a very significant thing. As a country, we wanted to diversify our economy from diamonds,” he observed.

The agreement covers trade in goods and other related trade areas while the second phase of negotiations that covers services and investment that started last year are ongoing.

A Senior Research Fellow at the Botswana Institution of Development Policy Analysis (BIDPA), Dr Joel Sentsho, warned in 2007 that if Botswana did not sign an agreement, it was going to lose preferences.

“Botswana will be forced to compete with (other meat-exporting) countries like Brazil,” he said then.

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