Economic Partnership Agreement and SADC: The controversy continues

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By Percy F. Makombe

To say the Economic Partnership Agreements (EPAs) negotiations have been bedevilled by controversy is an understatement. Most African countries have expressed concern on the missing development links within EPAs. To date, only 10 of the 47 countries involved in the negotiations have signed an EPA. A further nine countries have initialled EPAs but have delayed signing them. EJN's Programmes Manager, Percy F. Makombe gives an update on the contentious issues around the EPA negotiations.

The delays have been precipitated by outstanding contentious issues. In places where comprehensive EPAs could not be agreed in time, interim EPAs were initialled which are now being signed. This was done ostensibly to safeguard preferences and move on with negotiations on comprehensive EPAs. In 2009 there were intense negotiations to get countries that initialled EPAs by the end of 2007 to sign them before the end of 2009. Some of the contentious issues include; the understanding of ‘substantially all trade’; Most Favoured Nation clause, Development Cooperation; the bilateral safeguards and rules of origin. The unresolved issues have led to some countries refusing to sign in the SADC region, for example Angola, Namibia, and South Africa.  In the Eastern and Southern African EPA grouping (ESA-EPA) grouping, Zambia and Malawi have refused to sign.  There are also countries that have signed EPAs but have not ratified them because of sub-regional concerns like Lesotho and Botswana who are in the Southern African Customs Union (SACU).  

In the SADC-EPA grouping, Botswana, Lesotho and Swaziland signed the Interim Economic Partnership Agreement (IEPA) on June 4, 2009.  They were followed by Mozambique who put their signature to the IEPA in Maputo, on 15 June. Namibia is still considering whether to sign. Angola and South Africa have not signed the Interim EPA.  As a Least Developed Country (LDC), Angola continues to receive EU preferences under the Everything-But- Arms (EBA) initiative. South Africa on the other hand has the Trade Development Cooperation Agreement with the EU.  Although Botswana, Lesotho, Mozambique and Swaziland have signed, there are still many areas of disagreement in the IEPA, including export taxes, quantitative restrictions, Food and the Most Favoured Nation clause.

Most Favoured Nation clause

South Africa still refuses to sign despite concessions by the EU to “sweeten” the deal. Previously the major point of disagreement has been EU’s insistence that a ‘‘Most Favoured Nation’’ clause be inserted into the agreement. This would bind South Africa to make sure that any trade concession that it grants to a country enjoying more than a one percent share of world merchandise exports - such as India for example - is automatically extended to the EU, too. South Africa enjoys excellent relations with the BRIC countries (Brazil, Russia, India and China) and is therefore not in a position to accept a deal that compels it to extend to the EU concessions it chooses to make to the BRIC countries. The MFN clause is problematic for all ACP countries because it limits their leverage to make deals with countries especially in the emerging economies where ACP exports are growing fast.

Namibia has not signed because it is unhappy at what it perceives to be the lack of proper consultations and what it beliefs are moves that undermine the partnership. Namibia’s Trade and Industry Minister, Hage Geingob is on record saying: “A partnership means that all partners are equal. Why else would you include the word partnership in the EPA? It also means transparency.” (The Namibian, 2009) Namibia is also not happy with the MFN clause for the same reasons as South Africa’s however EU Trade Commissioner, Catherine Ashton insisted that the MFN clause was important to safeguard the EU “in the future vis-à-vis other major trading partners” (ibid).

In February 2010, Southern Africa Customs Union Ministers wrote to the EC advising it that some of their members had legitimate concerns that were still the subject of negotiations:

We therefore call for an alternative approach that would accommodate this ongoing process without resulting in any country being worse off, or being forced to sign an agreement that does not serve their best interest...We are convinced that the damage that may be caused by an inclination to move towards notification, ratification and implementation of the Agreement will close interested SADC EPA states out, even for a temporary period. This, in our considered will constitute a great risk (SACU, 2010).

The EC response skirts around the issues raised and insists on the signing of the agreement even as it talks about: ‘the need to preserve the integrity of the SACU Common External Tariff’. In signing the IEPA, Botswana, Lesotho and Swaziland broke ranks with other members of the Southern African Customs Union (SACU) – South Africa and Namibia. This is a direct threat to the very existence of SACU. This is because SACU has a Common External Tariff (CET) and therefore forbids any single member to negotiate a trade agreement bilaterally.

Signing to avoid shut-out

 It seems that what has happened is that some SACU members have decided to prioritise their individual trade with the EU rather than reach a consensus within SACU. It would seem that the countries that signed were afraid that if they did not sign, the European market would be shut out for them. Botswana Minister of Trade and Industry said as much; “The decision to get into an interim EPA was simply to ensure that there would be uninterrupted flows from the ACP countries into the European market.” (The Namibian, 1 June, 2009)  

Loss of fiscal revenue

The liberalisation in goods commitments envisaged under the various interim EPAs will lead to a significant loss of revenue.

Table: Revenue implications of EU-ESA EPA countries

Country

Revenue shortfall

DRC

-24,691,828

Madagascar

-7,711,790

Malawi

-7,090,310

Mauritius

-71,117,968

Seychelles

-24,894,374

Zambia

15,844,184

Zimbabwe

-18,430,590

Source: WITS/SMART Simulations cited in Oxfam, 2006.

With limited sources of domestic revenue and limited tax bases, tariffs are one key source of revenue. According to the World Bank, tariff revenues in sub-Saharan Africa average 7-10% of government revenue (Hinkle and Newfarmer, 2005). Most ESA countries rely on import taxes to contribute to government revenue to finance public services. The loss of fiscal revenue fuelled by the liberalisation in goods commitments will have serious effects on public spending on for example health care and education.

Rules of Origin

Rules of Origin (RoO) in EPAs are still very restrictive and will continue to hamper the industrialisation of low income countries. They will even be more problematic in the in the SACU context where Botswana, Lesotho and Swaziland have signed an EPA with EU. This is because South Africa is considering tightening its borders with these countries. South Africa’s trade minister, Rob Davies believes this is necessary “to prevent European goods enjoying easier rules of origin or lower tariff levels in the signatory countries from entering South Africa as a result of the SACU regime,” (Hormeku, 2009).   If this were to happen it would be unfortunate and short-sighted and would be a triumph for the EU’s divide and rule tactics. The situation calls for responsible leadership because any retributive approach will push the smaller countries into the jaws of the EU. Swaziland and Lesotho receive over 60 percent of state revenue through SACU and an adverse action that reduces the revenue that they get would have disastrous consequences on the economies of the two countries.

Revising and signing interim agreements

The EU Commission insists that it is not possible to revise interim EPAs and goes so far as to say they must be signed in order to notify them to the WTO. The EU Commission further takes the position that while it is prepared to revise contentious issues in the interim EPAs, it can only do so in the context of continued negotiations for final EPAs and this on condition that ACP countries negotiate trade-related issues or services. Essentially this is using flaws in the initialled interim EPAs to pressure ACP countries to give more if they want their concerns to be addressed.

Non-binding cooperation clauses

There is also the problem of Non-binding cooperation clauses. EPAs have comprehensive but non-binding clauses on development cooperation. What this means is that EPAs make no firm commitments on finance for development on the side of the EU. This means for instance for all SADC countries there are no enforceable obligations for the significant revenue losses that are expected.

Export taxes

The issue of export taxes is also important as these taxes are a source of government revenue for African countries. In Swakopmund, Namibia there was a SADC text that was agreed to that are yet to be incorporated into the SADC EPA. The following box shows in bold the additions in the current SADC EPA text.

Article 24

 

Export duties

 

  1. No new customs duties or taxes imposed on, or in connection with exportation of goods, shall be introduced, nor shall those already applied be increased, in the trade between the European Community and the SADC EPA countries from the date of entry into force of this Agreement.
  2. In exceptional circumstances where the SADC EPA States can justify specific revenue need, protection of infant industries, protection of the environment or where essential for the prevention or relief of critical general or local shortages of foodstuffs or other products essential to ensure food security, these SADC EPA states may introduce, after consultation with the EC Party temporary customs duties or taxes imposed on, or in connection with the exportation of goods, on a limited number of additional products.
  3. 3.      In exceptional circumstances where the SADC EPA states can justify industrial developments needs those SADC EPA States may introduce temporary customs duties or taxes imposed on, or in connection with the exportation of goods, on a limited number of additional products, by mutual agreement with the EC Party as expressed in a decision of the Joint Council.
  4. 4.      The Parties shall ensure that any application of this provision does not result in an incompatibility of this Agreement with Article XXIV of GATT 1994.
  5. 5.      Any customs duties or taxes imposed on, or in connection with the exportation of goods, applied pursuant to this article shall be applied to goods exported to all destinations.
  6. 6.      Paragraph 2 shall not be applicable to South Africa.
  7. The Parties agree to review the provisions of the Article in the Joint Council no later than three years after the entry into force of this agreement, taking fully into account their impact on development and diversification of the SADC EPA States’ economies.

 

 

The EC has added “a paragraph that calls for SADC provisions on export duties to be compatible with Article XXIV of GATT. The EC has argued in the negotiations that export taxes and duties also constitute restrictions to trade” (South Centre: 2010, p13). Article XXIV calls for the liberalisation of substantially all trade in the FTAs. The EU has insisted on interpreting “substantially all trade” to mean 80% tariff liberalisation. This principle can only be justified where the EU negotiates FTAs with advanced industrialised countries and should not apply in negotiations between the EU and the ACP countries. In the Southern African context, Article XXIV must be read within the context of paragraph 29 of the Doha Declaration that states that: “The negotiations shall take into account the development aspects of regional trade agreements” (WTO: 2001).

EPAs insist on the elimination of export taxes or in some cases want to forbid the introduction of new taxes. Were this to be accepted, it would seriously limit the support that African governments can offer to their domestic industries. Export taxes are an important tool that can be used to promote food security through local production. Namibia has over the years been able to successfully support its beef and brewery industries. The glaring hypocrisy in the EC position is that EC subsidies in agriculture are not restricted in the EPAs nor brought under the remit of Article XXIV.

Free circulation of goods

The EU also seeks to ‘smuggle’ goods through the provision of the free circulation of goods. This is because under this provision EU goods imported in ACP would pay import duty only once or when they enter another country in the same customs union. As the Ministry of Trade and Industry has pointed out, this clause poses a challenge because it “ignores the individual customs territories of the SADC EPA parties, current regional trade arrangements unde SACU and SADC, as well as the regional economic integration programme in Southern Africa (Namibia Ministry: 2007 p3).  In the SACU context it means EU goods in Swaziland could potentially flood South Africa even those South Africa has not yet agreed to a deal with the EU.

Dispute Settlement Mechanism

Another area that has always been contentious even at the World Trade Organisation WTO) level is the dispute settlement mechanism. In the EPAs there is what is purportedly a different mechanism, but this is disingenuous because what is there are really the proposals that the EU has submitted to the WTO dispute settlement mechanism. A major contention with the suggested mechanism is that the only mode of remedy is trade sanctions. Given that SADC economies are by far smaller compared to EU’s, it means the SADC countries are in no position to impose trade sanctions on the EU. A progressive way forward would be to have provisions in the mechanism to financial compensate ACP countries for disadvantages suffered.

Infant industry protection

Industrialisation is important to addressing the developmental challenges faced by SADC.  Both SADC and ESA have in the re-negotiations on the infant industry come up with standalone infant industry provision. Countries in these two groupings had made the case during the negotiations for infant industry provisions that would not expire after 10-15 years as reflected in the old text. The understanding promoted by the old text created the impression that after 10-15 years there would not be any infant industries. Furthermore, the clauses were no more than ordinary safeguards that were really limited to mitigating the damage of import surges for existing sectors and did not cover for the building of new sectors. More than anything, the clauses were applicable for only a short time.

The new stand alone clauses from SADC and ESA although a big improvement to the old texts are still not without their challenges:

 

Box: ESA’s Stand-alone Infant Industry Clause – to be Incorporated into a ‘Full’ EPA

ESA States may temporarily suspend further reductions of the rate of customs duty or increase the rate of customs duty up to a level which does not exceed the applied MFN duty or introduce tariff quotas or a combination of these measures, where a product originating in the EC Party, as a result of the reduction of duties, is being imported into its territory in such increased quantities and under such conditions as to threaten the establishment of an infant industry cause or threaten to cause disturbances to an infant industry producing like or directly competitive products

2 (a) Where a ESA Signatory State takes the view that the circumstances set out in paragraph 1 exist, it shall immediately refer the matter to the EPA Committee for examination.

(b) The EPA Committee may make any recommendation needed to remedy the circumstances which have arisen. If no recommendation has been made by the EPA Committee aimed at remedying the circumstances, or no other satisfactory solution has been reached within 30 days of the matter being referred to the EPA Committee, the ESA Signatory State concerned may adopt measures in accordance with this Article.

(c) Before taking any measure provided for in this Article the ESA Signatory State concerned shall supply the EPA Committee with all relevant information required for a thorough examination of the situation, with a view to seeking an acceptable solution.

(d) In the selection of measures pursuant to this Article, priority must be given to those which least disturb the operation of this Agreement.

(e) Any measure taken pursuant to this Article shall be notified immediately to the EPA Committee and shall be the subject of periodic consultations within that body.

(f) In critical circumstances where delay would cause damage which it would be difficult to repair, the ESA Signatory State concerned may take measures provided for in paragraph 1 on a provisional basis without complying with the requirements of sub-paragraphs (a) to (e). Such action may be taken for a maximum period of 200 days. The duration of any such provisional measure shall be counted as part of the period referred to in paragraph 3. In taking such provisional measures, the interest of all parties involved shall be taken into account. The importing ESA Signatory State concerned shall inform the EC Party, and it shall immediately refer the matter to the EPA Committee for examination.

3. Such measures may be applied for a period of up to 8 years. Application of the measures may be further extended by decision of the EPA Committee.

Source: ‘Joint Conclusions’, EC-ESA EPA Senior Official Meeting, 28 August 2009, Mauritius

 

Box: ESA’s Stand-alone Infant Industry Clause – to be Incorporated into a ‘Full’ EPA

 

ESA

  1. Botswana, Lesotho, Namibia, Mozambique and Swaziland may temporarily suspend further reductions of the rate of customs duty or increase the rate of customs duty up to a level which does not exceed the applied MFN duty, where a product originating in the EC Party, as a result of the reduction of duties, is being imported into its territory in such increased quantities and under such conditions as to threaten the establishment of an infant industry cause or threaten to cause disturbances to an infant industry producing like or directly competitive products.
  2.  Measures adopted in accordance with the conditions of paragraph 1 by a SADC EPA State which is also a SACU Member State shall take the form of the levying of additional duties exclusively by the SADC EPA State invoking this provision.
  3. (a) Where a SADC EPA State takes the view that the circumstances set out in paragraph 1  exist, it shall immediately refer the matter to the Trade and Development Committee for examination.

(b)The Trade and Development Committee may make any recommendation needed to remedy   the circumstances which have arisen. If no recommendation has been made by the Trade and Development Committee aimed at remedying the circumstances, or no other satisfactory solution has been reached within 30 days of the matter being referred to the Trade and Development Committee, the SADC EPA State concerned may adopt measures in accordance with this Article.

     (c) Before taking any measure provided for in this Article the SADC EPA State concerned shall supply the Trade and Development Committee with all relevant information required for a thorough examination of the situation, with a view to seeking an acceptable solution.

(d) In the selection of measures pursuant to this Article, priority must be given to those which least disturb the operation of this Agreement.

(e) Any measure taken pursuant to this Article shall be notified immediately to the Trade and Development Committee and shall be the subject of periodic consultations within that body.

(f) In critical circumstances where delay would cause damage which it would be difficult to repair, the SADC EPA State concerned may take measures provided for in paragraph 1 on a provisional basis without complying with the requirements of sub-paragraphs (a) to (e). Such action may be taken for a maximum period of 200 days. The duration of any such provisional measure shall be counted as part of the period referred to in paragraph 4. In taking such provisional measures, the interest of all parties involved shall be taken into account. The importing SADC EPA State concerned shall inform the EC Party, and it shall immediately refer the matter to the Trade and Development Committee for examination.

  1. Such measures may be applied for a period of up to 8 years. Application of the measures may be further extended by decision of the Joint Council.
  2. Article 25 of the TDCA shall continue to apply to South Africa.
  3.  SACU Member States shall have the right to have recourse to Article 26 of the SACU Agreement 2002.

 

The South Centre has made a comprehensive analysis on the assessment of the re-negotiations on infant industry clauses that are worth quoting substantially:

South Centre analysis of ESA and SADC stand alone infantry clauses

The stand-alone infant industry clauses obtained by ESA and SADC are improvements in limited ways:

 

No Expiry of Infant Industry Clause. These are stand alone provisions (although they are yet to be incorporated) that do not expire after 10 or 15 years, as is in the current EPA texts.

Increased grounds for invocation. Both texts have broadened the circumstances under which the Infant Industry Provision can be triggered, as compared to the original Safeguard Infant Industry Provision. With the new language, the Clause can be activated when imports enter in such increased quantities or under such conditions as to ‘threaten the establishment of an infant industry’ (emphasis added). This is broader than the original Clauses where the infant industry clause is activated when imports ‘cause or threaten to cause disturbance to an existing infant industry’.

More room for trade restrictive measures of longer duration. Periodic review of safeguards within the EPA Committee remains a requirement. However, unlike the ‘old’ safeguard language in the current Infant Industry Clause, there is no language saying that these consultations should be with the view to establishing a timetable for the remedy’s abolition.

The rest of the language is similar to the original EPA safeguard texts – tariff increases without authorization from the EPA Committee can be taken for 200 days. Thereafter, the EPA Committee must examine the case. There is also the same caveat that countries can nevertheless go ahead if ‘no other satisfactory solution has been reached within 30 days’. The infant industry remedy can apply for up to 8 years. The new ESA text has the same remedies as ESA’s original infant industry clause.

 

 Inclusion of a reference to the infant industry clause in the SACU Agreement (paragraph 6 of SADC’s new language) seems to be a Pyrrhus victory. SACU’s own infant industry clause (Article 26, pasted in the Box below) is drafted in a more general way. It would allow countries more invocation grounds and higher remedies up to a rate that is sufficient to support their infant industry. It does not stipulate a ceiling to the tariff increase, which would imply that tariffs could be increased to the WTO bound rate or beyond if compatible with the multilateral trade rules. However, SACU members cannot use this clause in their trade relations with the EU or with non-SACU members (Mozambique, or possibly later, Angola), since this clause governs trade relations between SACU Members. Inclusion of paragraph 6 is effectively pointless since SACU member states would have had recourse to the SACU Agreement in any case, even if this was not mentioned in the SADC EPA. Therefore, strict reading suggests that paragraph 6 is redundant.

 

At the same time, SADC EPA states seemed to have lost the right to increase tariffs up to the WTO bound level. Paragraph 1 of SADC’s new language limits the remedy to i) suspending tariff reductions or ii) increasing the tariff to the MFN duty. The leeway to allow for increasing duties to the bound rate has been dropped, and also the possibility to introduce tariff quotas on the product concerned!

 

This result may be contrary to the intentions of the SADC states in the renegotiations. They would probably have read paragraph 6 as ‘SACU Member States shall have the right to have recourse to Article 26 of the SACU Agreement 2002, mutatis mutandis applied to imports originating from the EC Party (or European Union)’

 

Even if the SADC EPA States would publicly back this interpretation, for instance through a unilateral declaration, it would be uncertain whether tariffs could be raised up to the bound level and if quotas can be introduced vis-à-vis the EU. The Infant Industry Clause in the SACU Agreement speaks in more general terms about possible remedies (‘levy additional duties’) whereas the SADC EPA specifies the ceiling of those additional duties (‘increase the rate of customs duty up to level which does not exceed the applied MFN duty’). So, it would appear that the more specific interpretation would apply. On the other hand, the older SADC text does allow SADC EPA States to raise duties up to the bound level, and there should have been common understanding between the parties that this would remain so in negotiations aimed at resolving contentious issues. In conclusion, the reference to the SACU Agreement is not helpful and leaves behind the SADC EPA States in a legal quagmire. In hindsight, it would have been better to take elements from the SACU Infant Industry Clause and to transplant them into the EPA Infant Industry Clause.

 

 

Source: South Centre (2010)

 

Rendez-vous clauses

The United Nations Economic Commission for Africa (UNECA) has also pointed out that the interim EPAs contain clauses on the continuation of the negotiations. Some issues listed in these clauses are contentious, as their negotiation is not foreseen by the Cotonou Agreement, but only appear in the EU negotiating mandate and African countries have consistently opposed their negotiation. (UNECA: 2008, p8).

Non-execution clause

Cotonou Articles 96 and 97 have non-execution clauses that allow for the imposition of trade sanctions for political violations committed  in the exporting country. Article 96 allows for the imposition of sanctions in the case of failure ‘to fulfil an obligation stemming from respect for human rights, democratic principles and the rule of law’, while article 97 allows for sanctions in serious cases of corruption. The inclusion of this clause in the EPAs has been roundly objected to by ACP ministers, even ACP legal experts have advised the rejection of a non-execution clause (ACP Council:  2003 p 8)

Standstill clause

ACP countries are obligated to freeze their import tariffs at the current applied level.  This clause is there in all EPAs. However in the interim EPAs, it is only the SADC text that does not contain a standstill clause freezing all applied tariffs as soon as the EPA is in force. In some agreements the freeze extends to tariffs that are excluded from liberalisation.  In the ESA text for example “The parties agree not to increase their applied customs duties on products imported from the other Party” (Article 14, ESA text, 30 April 2009). This is problematic because tariffs that are excluded from liberalisation are meant to protect the most sensitive products. ESA countries should be allowed to increase these tariffs if changes in the market require them to do so in order to give adequate protection to the very sensitive products. ESA have asked for changes to this clause so that they are in the same situation with SADC where it applies only to products that have been liberalised. However it must be understood that even when the clause is applied to liberalised products which using Article XXIV of GATT means is 80% of countries tariff lines the clause is still contentious. The clause means that in the 15-25 years given for countries to implement tariff elimination they will not be allowed to increase tariffs. This is a threat to industry and agriculture and goes beyond Article XXIV which does not require countries to have a stand still clause. As the South Centre notes:

....at the WTO, countries have both bound and applied tariff rates. Countries cannot raise their tariffs above their WTO bound rates. However, they are free to raise their usually much lower applied tariffs to the bound rates at any time. The EPA, freezing African countries’ tariffs (those that will eventually be brought to zero) at applied rates until these tariffs are eliminated, would prevent countries from using a very important development policy instrument. (South Centre: 2010, p8)

 

Africa is fragmented in its negotiations with the EU. The issue of simultaneously implementing a free trade area (FTA) with both the Southern African Development Community and the Common Market for East and Southern Africa (COMESA) is a source of consternation.  In September 1995, it was decided at a SADC meeting that that membership of both COMESA and SADC was unsustainable. At the time, SADC states were asked to withdraw from COMESA. COMESA on the other hand has argued that it is not possible to conduct trade using more than one trade regime. In fact a joint COMESA/SADC study was to look at the harmonisation of the two organisations. The two organisations agreed on the need to promote integration in Southern Africa. While COMESA and SADC agendas overlap, there is the problem that South Africa which is an economic powerhouse in Africa is not a member of COMESA having turned down the invitation to join in May 1994.

The fragmented nature of all these negotiations and deals has the potential to scupper the proposed merger of SACU and COMESA into a single customs union under the Southern Africa Development Commission. This merger is supposed to take place before the end of 2010.

The African Union has approached regional integration within the five regions provided for by the Abuja Treaty. The Treaty divides the continent into five regional communities: North Africa, West Africa, Central Africa, East Africa and Southern Africa. This would rationalise the multiple memberships and more importantly strengthen the fragmented African voices and go a long way towards the establishment of an African Economic Community (AEC). The Lagos plan of action was adopted by the heads of states of AU. Under this plan, regional economic communities (RECs) are considered the best way forward to an AEC. In June 2008, the East African Community (EAC), and COMESA and SADC began negotiations for the establishment of one big FTA among them. This is an important step that would be positive for the inter-regional process of integrating the African continent.

It is evident from the table that follows that South Africa is the economic power house of Africa. The countries in the three regional economic communities have small economies looking at their GDPs. It is South Africa and Egypt that have the largest economies and they both account for more than half (58%) of the combined GDP of the 3 RECs.

Size of COMESA, SADC, and EAC Market, 2007

 

Country

GDP, US$’m

Population

millions

GDP per capita,

US$

GDP Country

share

AU

1,065,228

917,564

1160.93

 

COMESA

286,775

398,130

720.30

 

EAC

46,593

121,571

383.26

 

SADC

379,256

248,002

1,529.25

 

South Africa

277,581

47,391

5,380.60

40.84

Egypt, Arab Rep

128,095

75,397

1,425.57

17.21

Angola

58,547

16,391

2,686.41

7.05

Libya

58,333

5,965

8,435.88

8.06

Sudan

47,632

37,003

1,015.19

6.02

Kenya

29,509

35,143

602.85

3.39

Ethiopia

19,395

72,712

183.12

2.13

Tanzania

16,181

39,477

323.83

2.05

Zambia

11,363

11,862

919.49

1.75

Botswana

11,781

1,758

5,874.86

1.65

Uganda

11,214

29,874

312.04

1.49

Congo dem rep

8,955

59,338

143.97

1.37

Mozambique

7,752

20,144

377.68

1.22

Mauritius

6,363

1,253

5,146.05

1.03

Namibia

6,740

2,051

3,106.78

1.02

Madagascar

7,326

19,087

288.1

0.88

Zimbabwe

3,418

13,086

382.85

0.80

Swaziland

2,648

1,126

2,351.69

0.42

Rwanda

2,494

9,244

269.8

0.40

Malawi

2,232

13,163

169.57

0.36

Lesotho

1,476

1,789

825.04

0.24

Eritrea

1,085

4,538

239.09

0.17

Burundi

807

7,833

103.03

0.12

Djibouti

757

806

939.21

0.12

Seychelles

750

86

8,720.93

0.12

Comoros

403

614

656.35

0.06

Totals

624.368

527,131

50879.98

100

Source: World Bank, 2006 data

 

The three RECs all have Free Trade Areas and have made considerable efforts towards establishing customs unions. In addition the three have: “trade facilitation and trade policy measures to streamline trade and ensure fair trade practices” (Disenyana: 2009: p8). The EAC and COMESA systems have a lot in common. For example the structure of their customs union are similar “the EAC has adopted a CET with a three band structure as follows: 0% for raw materials and capital goods; 10% for intermediate goods; and 25% on finished goods” (ibid). COMESA and EAC rules are also similar and this goes for the two RECs rules of origin, documentation and customs procedures related to intra-regional trade (ibid). The SADC FTA which was launched in August 2008 envisages the elimination of tariffs, quantitative restrictions and Non-Tariff Barriers to trade. The elimination of all these was supposed to take place:

in a period of eight years of total intra-regional trade and twelve years for all trade. The Committee of Ministers responsible for Trade Matters (CMT) has been responsible for drawing up the timing of the phased elimination of tariffs and NTBs, taking into account existing preferential trade arrangements between and among members member States (2001: DPRU).

Given the progress that both COMESA and SADC were making towards the promotion of intra-regional trade, it is surprising that their member states have decided to have a piece-meal approach to the EPA negotiations with the EU. The approach that has been adopted in the EPA negotiations is counterproductive to regional integration. Un-harmonised tariff liberalisation schedules are being submitted   to the EU.  What this means is that ACP countries are making commitments to liberalise to the EU even before making good their commitments to liberalise to each other. In its Economic Development in Africa report, the UN Conference on Trade and development says regional integration is the key to sustained development in the continent. According to the report, Africa has the world’s lowest share of regional trade and investment having 9% of recorded flows of total external trade and 13% of recorded flows of total inward foreign direct investment.  

The UNCTAD report argues that a broad well designed regional integration strategy would strengthen productive capacity and intensify economic diversification as well improve competitiveness. It calls for African countries to strengthen their regional physical infrastructure such as roads, railways, telecommunications and airlines to promote regional integration. Since the launch of the COMESA FTA in October 2000, trade among COMESA members rose from US$3.2 billion to US$15.2 billion in 2009. COMESA secretary general Sindiso Ngwenya stresses the need for the region to speak with one voice in negotiations and negotiate as one (Lusaka Times: 2009). He further calls for the region to pool its resources together to fund some of its projects. He urged African countries to develop their own economic policies and not depend on foreign policies.

Developing countries should not be hurried through trade agreements without deep reflection of the full implications of signing these agreements. The countries in Africa have been polarised and now operate under the misguided belief that they can do it on their own. The point must be made that reciprocity is the language that ACP countries must talk only when asymmetries have been eradicated, otherwise the dream of equal relationships will remain just a dream. A look at the countries in the EU reveals that that their own development trajectory was for decades based on protectionism. Now ACP countries are being called upon to open up everything carte blanche. This is true not just on Economic Partnership Agreements but even at WTO level. While there has been progress on negotiations on issues like agriculture and non-agricultural market access which are on the priority list of developed nations, there has been little or no movement on issues like the Special & Differential Treatment (S&D) which are of importance to developing countries. Countries are different and the same rules should not apply to all countries because they are in different stages of development. It is not fair to require countries to make concessions and undertake commitments that are inconsistent with their development.

 

 

 

References

AU (2006) ‘Nairobi Declaration On Economic Partnership Agreements’ Conference Of Ministers Of Trade 4th Ordinary Session, 12-14 APRIL 2006. AU: Nairobi.

World Bank (2006) World Development Indicators. World Bank: Washington DC.

Cotonou Partnership Agreement http://www.acpsec.org/en/conventions/cotonou/accord1.htm

European Commission(2003) Economic Partnership Agreements: A New Approach in the Relations Between the European Union and the ACP Countries. European Commission: Belgium.

Hinkle L and Newfarmer RS (2005) ‘Beyond Cotonou: Economic Partnership Agreements in Africa,’ in Newfarmer RS Trade, Doha and Development: A Window into the Issues. The World Bank: Washington DC.

Hormeku,T (2009) ‘Africa on the brink of disintegration’, African Agenda Vol 12 No 2 TWN-Africa: Ghana.

Namibian Ministry 2007, Namibia Ministry of Trade and Industry, Press Statement: Outcome of the Final Round of the SADCC-EC EPA Negotiations, 5 December 2007.

Scott TB (2008) Economic Partnership Agreements Handbook. Cape Town: Tralac.

SACU (2010) ‘Notification and Provisional Application of the Interim EPA’ letter to Karel de Gucht, 11 February, 2010.

South Centre (2010) Contentious Issues in the Goods EPAs: What is the value of the 2009 renegotiations? Geneva: South Centre.

ACP Council 2003, ACP Council of Ministers and EC, Joint Report on All-ACP-EC Phases Negotiations, ACP /00/118/03 Rev. 1 October 2003.

UNECA 2008, Economic Partnership Agreements Negotiations: A comparative Assessment of the interim Agreements

The Namibian (2009) ‘Geingob Lays Into EU’ http://allafrica.com/stories/200906010608.html

WTO (2001) WTO Doha Declaration, WT/MIN (0)/DEC/1 14 November, 2001.

 

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Have compassion for all beings, rich and poor alike; each has their suffering. Some suffer too much, others too little. Buddha