Fisheries contribute at least 10 billion dollars to African economies every year and in Angola and Namibia they are vital economic drivers. Fishermen carry their boat in from the sea in Doring Bay, 350km north of Cape Town. Credit: Patrick Burnett/IPS

By Servaas van den Bosch
WINDHOEK, Jul 19 2013 (IPS)

Southern Africa has to settle in for another round of negotiations after talks on Economic Partnership Agreements failed to produce results in June, bringing countries closer to losing access to the lucrative European Union market.

A high-level visit to the region by EU Trade Commissioner Karel de Gught this week highlighted there are still many differences.

The troublesome trade negotiations between the EU and the Southern African Development Community (SADC)–EPA grouping that includes Botswana, Lesotho, Namibia and Swaziland (BLNS), as well as Angola, Mozambique and South Africa, have stretched five years past their 2008 deadline.

South Africa joined the negotiations two years back and is looking to improve the terms it has under the Trade and Development Cooperation Agreement, especially for agricultural products.

For the BLNS, which import about 80 percent of their trade from the continent’s economic powerhouse and are joined with Pretoria in the Southern African Customs Union (SACU), the entry of South Africa on the scene presents dilemmas, as well as opportunities for further negotiation and regional economic integration.

As the two economic heavyweights – South Africa and the EU – face it off, the smaller countries are stuck in the middle. From Jun. 14 to 21 senior officials talked in Brussels about clinching the long-awaited trade deal, but little progress was made.

“Basically we are where we were last year, nothing has changed in Brussels that would close the deal,” commented Rejoice Karita, senior trade advisor at the Agricultural Trade Forum, a Namibian company representing  the agricultural industry.

An impasse in the trade talks occurred between the EU and South Africa when the former indicated that the South Africans had not offered enough in terms of agricultural market access. The EU had requested market access for 67 tariff lines, but South Africa only conceded on 20 lines and put tariff rate quotas on some of them. According to negotiators, the EU responded that the offer fell short of closing the gaps in market access regulations and they needed to see improvement.

This stalemate jeopardises the discussion on agricultural safeguards, which are extremely important for the smaller economies in the region. Such safeguards allow countries to increase duties or put in place quotas if a sudden surge in imports threatens local agricultural production. The EU will need to see concessions on South African market access to give the green light for agricultural safeguards. But both parties are unwilling to move, with the South Africans keen to protect their dairy industry and processed products such as ham and confectionaries.

According to Karita, the next round of talks in September and October will be crucial. “The two blocs have strong positions and there is little movement forward. From the side of the European Commission new articles are being added to the text. Such negotiation tactics delay the process and eventually Namibia could be the odd one out,” she told IPS.

A major stumbling block is the issue of export taxes. Facing competition from China, the EU is eager to lock in raw materials, but the developing economies of Southern Africa want to be able to impose taxes to divert exports for local value addition and developing of the local economy.

European Union Trade Commissioner Karel de Gught was in Namibia and South Africa this week and said that the matter of export taxes is almost resolved with only industrial export taxes outstanding. Credit: Servaas van den Bosch/IPS

De Gught told IPS during a visit to the Namibian capital, Windhoek, that the matter of export taxes is almost resolved with only industrial export taxes outstanding. But Namibian negotiator Permanent Secretary Dr. Malan Lindeque said the issue cannot be merely ‘brushed aside’.

“Export taxes are a crucial issue for Namibia. We are primarily exporters of raw materials and need to reverse that situation. It’s crucial we move toward more explicit provisions on export taxes that meet our needs,” Lindeque told IPS.

Lindeque lamented an October 2014 deadline Europe imposed on the talks, after which Namibia will lose preferential market access.

“Because of this unfortunate deadline some circumstances cannot be properly accommodated in the talks. Still, we will only sign an agreement that is in our long term interest.”

He also warned that increased access of European agricultural goods into South Africa plays out in the Namibian market through the Southern African Customs Union.

“Already European products are extremely competitors. It is cheaper to import basic foodstuffs from Europe than to produce them locally. It is always an uphill battle for our producers to get their products on the local shelves let alone export them into the region,” he said.

In trying to reassert its grip on Southern Africa, Europe is trying to find the right tone. But the talks remain riddled with paranoia and accusations and the visit of De Gught made it clear that many stumbling blocks remain.

The latest round of talks in June were preceded by a courtesy call to Namibia by the Angel Carro, head of division for Southern Africa in the European External Action Service. The visit backfired somewhat as Carro, who came to extend the hand of friendship, was unceremoniously, and perhaps unfairly, labelled a “euro thug” by commentators when conceding in an interview that aid to Namibia would be reduced on the basis of its growing economy and upper middle-income status. In 2011 the World Bank reclassified Namibia as a middle-income country as its per capita income is 4,700 dollars. World Bank figures show that growth reached 4.9 percent in 2012.

The status of the former colonial masters has been dented in the region since the Eurozone crisis and some of the countries negotiating in the SADC–EPA, most notably Botswana, are faring much better than a couple of the EU member states.

On the other hand, growth in South Africa is stalling, coming in at a modest 2.5 percent last year, half that of Namibia. With a weakening exchange rate and investors shunning the country, because of labour unrest and political uncertainty, South Africa is painfully reminded it is still a deal-taker in the global economy and does not yet set the agenda for the continent.

Wine on Sale in a South African Supermarket. Wine is one of the product ranges which could benefit from a new liberalising trade deal between the EU and Southern Africa. Credit: John Fraser/IPS

By John Fraser
JOHANNESBURG, Apr 19 2013 (IPS)

There is growing optimism that the countries of Southern Africa are within months of concluding negotiations with the European Union on a major new trade deal, after years of hesitant progress and frustration.

The EU ambassador in Pretoria, Roeland van de Geer, told IPS that the agreement would form part of the bloc’s strategy of clinching regional trade pacts, known as Economic Partnership Agreements or EPAs.

“This could be the breakthrough year,” he said.

He recalled that once South Africa became a democracy under Nelson Mandela’s African National Congress, the EU negotiated an accord, which took a major step towards free trade with the African nation. This was done in a deal known as the Trade, Development and Cooperation Agreement (TDCA), which entered into force in May 2004.

Meanwhile, there are different EU trade arrangements for South Africa’s neighbours, depending on their degree of development, with the greatest access accorded to the least developed states.

Some of these arrangements are due to expire towards the end of next year, and will need to be replaced. And the EU is also hoping to update its trade relations with South Africa, going further down the road of trade liberalisation, while also ensuring that there is a more coherent accord covering the Southern African region as a whole.

If a deal is struck, there will be provisions to ensure that the poorest Southern African nations, which currently enjoy the best export access to the EU market, would retain such access.

The European Union ambassador in Pretoria, Roeland van de Geer says they are within months of concluding negotiations with Southern Africa on a major new trade deal. Credit: John Fraser/IPS

Van de Geer predicted that if there is a deal this year, it will boost South Africa’s access to the EU for fruit and vegetable products, some of which are excluded from the free trade provisions of the TDCA.

He said that agriculture is a labour-intensive sector of the South African economy, and any benefits that can be given to it will translate into more employment.

“If I could give South Africa two things, it would be jobs and basic education,” said Van de Geer.

“At the moment 90 percent of what South Africa exports to Europe is quota and tariff free, and we want to see how much farther we can go.”

The negotiations are currently very detailed, with product-by-product discussions.

“We are also looking at other related issues, such as Geographic Indications (GIs),” Van de Geer said.

GIs are a way of protecting niche agricultural products such as specialty meats, cheeses, wines and teas, and have not figured largely in South Africa’s trade strategy to date, outside the wine sector.

“We in Europe have more GIs than South Africa, as we are a far larger market of 500 million people,” explained Van de Geer.

“South Africa has fewer GIs, but can protect them in a larger market (the EU market) for products such as rooibios tea, honeybush tea and lamb from the Karoo region.”

The EU has traditionally found it difficult to make trade concessions because of its strong farm lobby. Van de Geer suggested that this is also the case in South Africa, where farmers are nervous about large surges in imports from the EU, and he gave the example of the South African poultry producers, who are calling for more protection against imports from Europe and elsewhere.

He stressed that the EU remains South Africa’s largest trading partner, accounting for around 25 percent of the country’s exports.

“If you take all of South Africa’s BRICS (Brazil, Russia, India, China and South Africa) partners together, you are still not at the level of the EU (in terms of exports from South Africa),” he stressed.

The deputy director-general for International Trade and Economic Development at South Africa’s Department of Trade and Industry, Xavier Carim, would not endorse the prediction that trade talks with the EU will wrap up this year, but he did not rule it out.

“We have made steady progress in the negotiations,” he told IPS.

“We have systematically been dealing with all the outstanding issues and have narrowed the gaps quite well. There are still a lot of outstanding issues, but the EU recently has been a lot more constructive in its approach.”

He confirmed the painstaking, detailed nature of the discussions, and said that there is a range of issues on which there is discussion.

“We are trying to improve South Africa’s market access to the EU, mainly in agricultural products – fruit, vegetables, wine and sugar.  There are 21 or so products we have been requesting,” Carim explained.

“The EU is prepared to consider this, but they want improved access to the markets of South Africa and the Southern African Customs Union.”

Carim said that if such access were given to Europe, it would be on the condition that action could be taken if there is a surge in exports from the EU.

There are also discussions on trade classifications known as rules of origin – which cover goods where one or more inputs come from outside the country of manufacture – and also on how to handle EU insistence that if South Africa gives any other trade partner better access than that currently enjoyed by the European bloc’s exporters, the concession would also extend to the EU countries.

Catherine Grant, the programme head for Economic Diplomacy at the South African Institute for International Affairs, a Johannesburg think tank, said it is in the interests of South Africa and of its regional neighbours to seek a better trade deal with the EU.

“South Africa has its own agreement with the EU; others have different arrangements,” she told IPS.

“This is a useful opportunity to get all our ducks in a row as one bloc.”

She said that South Africa stands to win better access to the EU market for its exports of processed agricultural products, such as canned food, when a new deal is struck with the EU.

She pointed out that the EU has a more generous trade regime towards Chile than it does with South Africa, and said South Africa should aim to close the gap.

“That would mean better access for South Africa, and I hope it will not be terribly opposed by European lobby groups,” she concluded.