Following the signing of the Southern African Development Community (SADC) countries to negotiate an Economic Partnership Agreement with the European Union, the government has been warned to exercise its rights in making sure that threats facing the private sector are taken into consideration.
Addressing the BOCCIM workshop in Francistown on Tuesday, the Executive Director of Delta Diaries, consultant and member of BOCCIM, Dr Howard Sigwele, indicated that although there were benefits in this agreement in trying to enhance the private sector to participate smoothly in the foreign markets, there were possible threats such as unregulated entry of goods and subsidized European Union imports into Botswana, which might negate on the performance of the local business people and lead to some companies closing down.
He warned the private sector about the possible entry of goods of inferior standard into the country because of the perception that all goods from European countries were of greater value. He went further to establish that there was a possibility of importation of diseases and pests into the country if further caution is not taken.
Sigwele maintained that it was of utmost importance that BOCCIM made sure that stakeholders were familiar with the policies in the EPA agreement and why it came into place. He pointed out that under the SADC and EU (EPA agreement) there were some challenges which came with the initiative because the trade involved countries that were very developed, therefore there was going to be stiff competition.
“As the first reciprocal trade agreement between developing and highly industrialized countries, the SADC-EPA will pose major challenges for the government and the private sector as goods and services from highly developed countries and technologically advanced countries will be expected to compete on similar conditions with those from low income members like Botswana,” he said.
He illustrated further that the many and complex challenges facing developing countries like Botswana, reciprocal trade agreements with highly industrialized countries/region like the EU posed major policy concerns. He elaborated that, based on the high levels of technologies, easier access of finance and aspects such as technology in the European Union countries, EU exports to SADC EPA region would exert stiff competition to the SADC region.
However, on a positive note, Sigwele projected that the signing of the EPA agreement was a giant step in helping to lubricate trade between Botswana and the European countries as the country would be able to export goods and services at ease with no limits as long it is legal goods.
He stated that it would be of advantage based on the fact that the country would be able to benefit from the high technology of this developed countries.
Sigwele pointed out that the expanded EU would provide SADC and Botswana’s business sector with a bigger and integrated market, where possible transaction and transportation costs would likely to be lower. He added that access to duty and quota free market for exports from Botswana could increase the companies’ revenue and reduce costs.
“Expanded market access of Botswana’s exports to EU consumers with different per capita incomes in 27 member countries could provide niche markets for certain products in Botswana,” he said.
He went further to explain that this would provide Botswana’s private sector with a wider choice of imported goods, possibly at lower prices, adding that if this agreement was implemented, the countries which are signatories to this agreement would maximize trade benefits by producing and exporting those goods where they have comparative cost advantage due to favourable climates, natural resources, labour and capital costs.
“Botswana’s beef exports falls in this country and countries which do not cost advantage in beef will prefer imports whilst Botswana imports goods as equipment, machinery, fabric and some food commodities in which she is least cost competitive,” he said.
He added that this agreement would also help the country to attract foreign direct investment (FDI) to complement domestic resources for economic development, industrialization and employment creation. Dr Sigwele also projected that there will be trade revenues that would include royalty taxes generated, to be used to achieve the country’s development and Vision 2016 objectives.
The SADC EPA (Interim) originates from the Lome Convention of 1975 in which the European Union entered into non-reciprocal and preferential trade agreements with the African, Caribbean and Pacific (ACP) countries and subsequently the Cotonou Agreement.
The EPA was designed to be World Trade Organization (WTO) reciprocal and non discriminatory.
Currently, Botswana, Lesotho and Swaziland are the only members in the SADC group which have signed the Interim EPA.