Botswana and members of the SADC-EPA negotiating block stand to lose out preferential market access to the European Union (EU) if an agreement cannot be reached before the expiry of the interim economic partnership agreement in 2014 as the world largest market takes a hard stance on African economies that are also being stalked by rising mighty China.
The EU Trade Commissioner, Karel De Gucht, warned on Friday that goods from Botswana face the possibility of being charged duties and quotas if a deal is not reached.
“I hope together we can conclude these trade negotiations as soon as possible,” de Gucht told reporters, adding that unless EPAs are signed Botswana goods will be charged duties on entry to the EU.
The deadline to strike a deal is the end of 2013 and agreement should be ratified by October 1, 2014, revealed de Gucht adding that what he sees in the table does not need months for an agreement to be reached.
“We are approaching the end of negotiations and everyone must make up their minds. The problem in the table I think can be resolved.
“After this date, Botswana would not be eligible for preferential treatment for its exports to the EU anymore – unless, it has concluded and ratified an Economic Partnership Agreement,” he said.
The SADC-EPA group chaired by Botswana has been deadlocked on the repercussions of the deal with a couple of the countries in the region initialing the EPA for trade continuity purposes after the expiry date of the Contonua Agreement on 31 December 2007.
Botswana, Lesotho, Mozambique, Namibia and Swaziland signed the interim EPA with the European Commission at the end of 2007 to allow for the smooth flow of trade, while the full agreement is being sought.
The EU-SADC is now negotiating a full EPA agreement with a lack of a deal expected to be costly for regional economies that see Europe as a trading partner.
However, the conclusion of negotiations faces a number of challenges including the bilateral trade agreements that EU already has with some member states. The disparity in the level of development in Botswana, Lesotho, Mozambique, Namibia, Swaziland, South Africa, Angola and Mozambique is another concern.
Already, South Africa has Trade, Development and Co-operation Agreement (TDCA); a bilateral agreement with the EU, a fallback position should EPAs fail. Africa’s largest economy has refused to initial the interim agreement arguing that SADC-EPA group was not reflective of the region.
The EU Trade Commissioner, however, is said to be taking a hard-line stance on South Africa as negotiations with Pretoria will be fast tracked.
“Of course, we also understand that there are a number of concerns about this trade deal in Botswana. The EU is listening and we are showing a lot of flexibility towards Botswana’s interests. I hope this goes to show our willingness to make this deal a reality. For example, the EU offers full free access to its market, while Botswana can open a lot less,” said de Gucht.
The Minister of Trade, Dorcas Makgato-Malesu, has pointed out that another concern is the level of development with other members being less developed and others more developed.
“It is difficult to coordinate this group,” admitted Makgato-Malesu, “Member groups are at different stages of development.”
The other stumbling block is market access for agricultural products. However, the EU said it is ready to open its market in an asymmetric way. Botswana will have free access to the EU market for agricultural products. “But in return we would like to see a certain degree of balance, too. Otherwise this is not a politically feasible deal for Europe,” de Gucht added.
Makgato-Malesu added that beef remains sensitive as it is a major export to the EU market. Botswana is not currently selling its beef to Europe following questions on the rules of origin.
EPAs are a World Trade Organisation (WTO) compatible trade regime being negotiated between the African Caribbean and Pacific (ACP) and member states of the EU.
The next negotiation round is expected in September and it is hoped that at this final round outstanding issues will be resolved. The EU Trade Commissioner was in Botswana where he met Vice President, Ponatshego Kedikilwe and Makgato-Malesu in a bid to see through the end to the impasse.
He said trade between the EU and Botswana is very healthy. Since 2000, trade has grown more than 400 percent with Botswana recording a trade surplus with the EU.
Botswana currently enjoys free access to the EU market ÔÇô its products do not pay duties at the EU’s borders and are not subject to any quotas. But this regime is based on a temporary instrument which will end on 1 October 2014, on the basis of WTO rules.