Find­ing the courage to take the plunge

Af­ter 12 years of ne­go­ti­a­tions, the Eco­nomic Part­ner­ship Agree­ment (EPA) be­tween the EU and SADC came into ef­fect on 1 Novem­ber. The hope is that this move will in­spire other na­tions to also con­clude their own EPAs with Europe.

Finweek English Edition - - OPINION - Edi­to­rial@fin­ Peter Fabri­cius was for­eign ed­i­tor of In­de­pen­dent News­pa­pers for 20 years, writing on African and global is­sues. He has been writing weekly col­umns for the In­sti­tute for Se­cu­rity Stud­ies (ISS) since 2013.

in late Novem­ber, Chris­tian Lef­fler, deputy sec­re­tary gen­eral for eco­nomic and global is­sues at the Euro­pean Ex­ter­nal Ac­tion Ser­vice, and Xolelwa Mlumbi-Peter, a deputy direc­tor-gen­eral in South Africa’s de­part­ment of trade and in­dus­try, jointly toasted the launch of the SADC EPA at a re­cep­tion in Pre­to­ria.

The Eco­nomic Part­ner­ship Agree­ment (EPA) cov­er­ing South Africa, Botswana, Le­sotho, Namibia and Swazi­land – es­sen­tially the South­ern African Cus­toms Union (Sacu) – came into ef­fect on 1 Novem­ber af­ter 12 years of of­ten-bit­ter ne­go­ti­a­tions. Mozam­bique, a sixth mem­ber of the ne­go­ti­a­tions, will prob­a­bly join in later.

Lef­fler ex­pressed the hope that the launch of the SADC EPA “will in­spire oth­ers”.

In­deed. This EPA is one of seven in Africa, the Caribbean and Pa­cific, which were sup­posed to have come into ef­fect by 2008. But it was only the sec­ond. And the prospects of the oth­ers are murky.

The EPAs were sup­posed to rep­re­sent the next stage of evo­lu­tion of re­la­tions be­tween the EU and its old colonies. In 1975, not long af­ter in­de­pen­dence, Brus­sels signed the Lomé Agree­ment with the Africa-CaribbeanPa­cific (ACP) coun­tries (now 79), es­sen­tially giv­ing them all duty-free ac­cess for their ex­ports to the EU with­out hav­ing to re­cip­ro­cate.

That was sup­posed to en­gen­der many in­dus­tries in the old colonies. But it re­ally didn’t. The ACP coun­tries con­tin­ued to ex­port mainly just the usual agri­cul­tural goods.

In 2000, the EU per­suaded the re­luc­tant ACP that this non-re­cip­ro­cal Lomé trade ar­range­ment was no longer com­pli­ant with the World Trade Or­ga­ni­za­tion’s free trade rules. And so they re­placed it with the Cotonou Agree­ment, agree­ing to ne­go­ti­ate more nor­mal, re­cip­ro­cal free trade deals (while re­tain­ing many devel­op­ment ben­e­fits).

These FTAs, to be called EPAs, would be be­tween the EU and seven dif­fer­ent ACP re­gions, the Caribbean, the Pa­cific, West Africa, Cen­tral Africa, the East African Com­mu­nity, Comesa and SADC.

But nearly a decade past dead­line, rat­i­fi­ca­tion of the East African EPA has been de­layed un­til the end of the year, at the ear­li­est, be­cause of in­ter­nal dis­agree­ment, and the West African EPA looks in­creas­ingly un­cer­tain, largely be­cause of re­sis­tance from re­gional gi­ant Nige­ria.

The other EPAs are even less likely to hap­pen, some an­a­lysts believe, as non-Least De­vel­oped Coun­tries (who have most to gain from EPAs) have im­ple­mented in­di­vid­ual bi­lat­eral EPAs with the EU, while Least De­vel­oped Coun­tries have sim­ply con­tin­ued with the full trade ac­cess they had any­way.

Why the dis­mal record? Many an­a­lysts blame the EU for de­mand­ing too much. Mer­ran Hulse of the Ger­man Devel­op­ment In­sti­tute wrote re­cently that ACP lead­ers mostly felt the EPAs did not serve the long-term de­vel­op­men­tal in­ter­ests of ACP states, “that they will lock in poor trad­ing terms, and un­der­mine long-term am­bi­tions of in­dus­tri­al­i­sa­tion”.

Hulse added that this scep­ti­cism was ex­ac­er­bated by the EU’s use of the EPAs to push for ex­tra mar­ket ac­cess – such as in ser­vices, in­vest­ment pol­icy, govern­ment pro­cure­ment, and in­tel­lec­tual prop­erty – which they had failed to get at the WTO.

She also be­lieves that many ACP coun­tries have seen the rise of Chi­nese eco­nomic might dur­ing the years since Cotonou was signed and so have cho­sen “to adopt a ‘wait and see’ at­ti­tude, in the hope that shift­ing bal­ances of power can be played to their ad­van­tage”.

The re­al­ity is much more that most of the ACP coun­tries have sim­ply been look­ing for new ex­cuses. They have been dip­ping their toes ner­vously in the cold wa­ters of re­cip­ro­cal free trade for 16 years, with­out yet hav­ing plucked up the courage to take the plunge.

It is a cold plunge of course. No doubt about it. But it does seem in­evitable. And the EPAs seem to be the best way of eas­ing the ACP coun­tries in. They are not fully re­cip­ro­cal trade deals. They give al­most all the ACP coun­tries im­me­di­ate 100% duty-free ac­cess to the EU, while giv­ing the ACP coun­tries long pe­ri­ods to phase in the open­ing of their mar­kets to the EU and then not al­ways fully. With the Caribbean EPA, which launched in 2008, that pe­riod is 25 years.

South Africa is an ex­am­ple to the oth­ers. It was at first deeply sceptical about the SADC EPA and re­fused to join it. It com­plained that the EU was try­ing to dis­rupt re­gional in­te­gra­tion, that it was try­ing to bully its way into the re­gional mar­ket, that it was go­ing to tie Pre­to­ria’s hands on in­dus­trial pol­icy.

But it got a deal it now boasts about. It in­cludes in­creas­ing SA’s quota of bot­tled wine from 50m to 110m litres a year, a 150 000 tonne duty-free sugar quota, and an 80 000 tonne duty-free ethanol quota. It also won pro­tec­tion for such South African prod­ucts as rooi­bos and hon­ey­bush tea and Ka­roo lamb and many wines as “ge­o­graphic in­di­ca­tions.”

So, as Lef­fler says, let’s hope it does in­spire oth­ers. Deputy sec­re­tary gen­eral for eco­nomic and global is­sues at the Euro­pean Ex­ter­nal Ac­tion Ser­vice

They have been dip­ping their toes ner­vously in the cold wa­ters of re­cip­ro­cal free trade for 16 years, with­out yet hav­ing plucked up the courage to take the plunge.

Chris­tian Lef­fler

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