Botswana, Lesotho and Swaziland signed the Interim Economic Partnership Agreement (IEPA) on June 4, 2009.  They were followed almost two weeks later by Mozambique, which put its signature to the EU-Southern African Development Community SADC IEPA in Maputo.

Nevertheless, important disagreements remain.

EJN’s Percy Makombe tracks the twists and turns of the latest deliberations.  

The EU had set May 7 as the date for the signing of the IEPA in Brussels, but this was not met owing to disagreements. Botswana, Lesotho, Namibia, Swaziland and Mozambique had originally initialled (but not signed) an interim agreement with the EU.

The interim agreement includes provisions on market access and a commitment to continue negotiations towards a full and comprehensive Economic Partnership Agreement. Angola and South Africa did not initial 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 South Africa-EU Trade, Development and Cooperation Agreement (the TDCA).

Although Namibia initialled the IEPA, it is now refusing to sign, saying it wants the IEPA to be amended to reflect that their concerns on infant industry protection, food security and free circulation of goods will be addressed. Namibia’s Trade and Industry Minister, Hage Geingob, has gone to the extent of asking that the EU’s commitments be included in an annexed declaration to the existing interim EPA. This suggestion has been rejected by the EU.

Although Botswana, Lesotho, Mozambique and Swaziland have signed, there are still many areas of disagreement in the SADC-EU IEPA, including export taxes, quantitative restrictions, Food and the 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 the EU’s insistence that a ‘‘Most Favoured Nation’’ clause be inserted into the agreement. This would bind South Africa to make sure 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.

Namibia has also been irked by the lack of proper consultations and what it believes are moves that undermine the partnership. Geinggob said: “A partnership means that all partners are equal. Why else would you include the word partnership in the EPA? It also means transparency.”

Namibia is also not happy with the MFN clause for the same reasons as South Africa; however, EU Trade Commissioner Catherine Ashton insists on the MFN clause as it safeguards the EU “in the future vis-à-vis other major trading partners”. 

Another area of contention concerns Rules of Origin (RoO). The unfolding scenario means that EU producers will get improved RoO for access to Botswana, Lesotho, Namibia and Swaziland under the EPA compared to what they got under the TDCA.

In signing the IEPA, Botswana, Lesotho and Swaziland broke ranks with other members of the Southern African Customs Union (SACU); i.e., 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. 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 which signed were afraid that if they did not sign, the European market would be shut out for them.

Botswana Minister of Trade and Industry says, “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.”

Both Swaziland and Lesotho receive over 60 percent of state revenue through SACU; it is not clear how they intend to deal with the potential loss that could be brought about by the IEPA.

Food and agriculture are central to dealing with some of the problematic issues in the IEPA; this is especially so because it is important for governments in southern Africa to have an array of policy tools to use to promote agricultural development and food security.

In 2007 the EU used steamroller tactics and threatened African countries with loss of markets for their products unless they signed interim EPAs. Against a background of such threats, some countries rushed to initial the agreement. Now, it is already known that Namibia is unhappy that it initialled and is seeking to re-negotiate the deal.

It is therefore unfortunate that there are countries in SADC that have decided to sign.

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