The attack made last week by South Africa’s largest trade union, the Congress of South African Trade Unions (COSATU), on countries that have signed interim Economic Partnership Agreements (EPA) with the European Union (EU) was this week dismissed as baseless.
COSATU said countries that made trade agreements outside SACU sacrificed regional integration and the future of African integration in return for short-term benefits by increasing their exports to the EU.
This week, the Gaborone-based Head of Delegation of the European Commission to Botswana and SADC, Paul Malin, told Sunday Standard that EU is committed to supporting regional integration and believes that EPAs are the way to do this.
“One of the main objectives of the EPAs is to promote regional integration by promoting inter regional trade that is to say increase trade between SADC member countries,” said Malin.
“The EU has made concessions in the negotiations to safeguard the SACU common tariff and to ensure that the deal facilitates the region’s own integration processes.”
When, recently, some members of SACU, including Botswana, Lesotho and Swaziland signed an interim EPAs with the EU, there were concerns that it will lead to the breaking away of the regional customs union.
Malin said they believe that increased trade between member states will lead to increased production of goods and services and thus result in increased employment opportunities on a long term basis within the region and will create stronger, more competitive enterprises.
In 2008, total trade flows with the EU for Botswana, Lesotho, Mozambique and Swaziland (the signatories of the Interim EPA) were almost EUR 2.1 billion (P 20.5 billion).
All four countries enjoyed individual trade surpluses with the EU with the combined surplus standing at around EUR 1 billion.
In 2008, the main exports to the EU for the four countries were aluminium, diamonds, sugar, beef and fish. Their main imports from the EU were mechanical machinery, electrical machinery, fertilisers and vehicles.
The SADC region as a whole has been a net beneficiary of trade with the EU up to now and the EPA will allow the region to further improve competitiveness, diversify its exports, and build strong regional cooperation networks, the EU noted.
COSATU also raised concerns that EPAs would only create access for EU companies who would exploit African mineral wealth and to encourage deregulation and privatisation in those countries which had signed the agreements.
However, the EU observed its mission was aimed at creating conditions for free trade, free competition and an improved investment climate saying it is to be done in a development friendly way with a range of safeguards for infant industries, for food security and to avoid market disruption.
“We have no mandate to create or negotiate benefits as indicated by COSATU. The fact that for 25 years under the Lome and Cotonou Agreements and since 1 January 2008 under the specific Market Access Regulation for ACP countries in negotiations for an EPA, these countries have benefited from non-reciprocal access to EU markets should indicate to COSATU that we are not negotiating the EPAs to promote our own industry,” he said.
EU argues that the basic reason for the EPA negotiations is the fact that all signatories of the Interim EPA are WTO Members and the WTO rules do not allow for non-reciprocal trade arrangements.
Another reason is that the ACPs in general have not been able to benefit from the trade benefits and that both parties are agreed that ACP countries need to be integrated into the world economy system.
“We are, however, seeking to use the permitted asymmetry given in the WTO system to make it easier for our developing partners to comply with the new regimes. That means that SADC-EPA countries tariffs will be removed over a long period instead of overnight and that certain vulnerable products are removed from the liberalisation all together,” Malin added.
EU notes that South Africa has benefited from its relationship with the European Union saying trade between the EU and South Africa has grown strongly since the signing of the Trade, Development and Co-operation Agreement (TDCA) between the two sides in 1999.
TDCA is meant to create a free-trade area between South Africa and the EU over a period of 12 years, with the EU opening its market at a faster pace. In 2007, the EU exported around EUR 20.5 billion worth of products to South Africa (around 34% of total SA imports), and imported 30% of total SA exports (worth EUR 20.9 billion).
The TDCA has increased trade and revenue and benefited the whole region.