EPA Negotiations: Where do we stand? - SADC - last update : July 2011

State of play

Out of the eight countries forming the SADC EPA negotiation group, only four of them have already signed an Interim Economic Partnership Agreement (IEPA) with the EU. Botswana, Lesotho, and Swaziland signed the agreement on the 4th of July 2009, shortly followed by the Republic of Mozambique on the 15th of June 2009.  Namibia initialed the agreement in December 2007 with reservations to re-open negotiations on the various anomalies and imbalances contained in the IEPA. South African and Angola have not yet initialed or signed the said IEPA, with South Africa still exporting to the EU under a “bilateral” Trade, Development and Cooperation Agreement (TDCA). Tanzania, on its part, was compelled to leave the SADC EPA group and continue with future negotiations in the East and Southern Africa (ESA) EPA group.

A key issue in the region is the coherence of tariffs towards the EC among SACU members. It was envisioned that the EPA would result in one trade regime between SACU and the EC, by rectifying the fact that there was the Cotonou Agreement for BLNS and the TDCA for South Africa. On 28 June 2010, the Council of the European Union adopted a decision to amend the provisions and annexes of the TDCA in an attempt to align about 53 tariff lines in the TDCA towards those negotiated between the EU and Botswana, Lesotho and Swaziland as set out in Annex 3 to the EC-SADC interim Economic Partnership Agreement.

EC officials consider the SADC EPA group the as the one with most chances of reaching an agreement on a full EPA anytime soon, with significant progress being made on a number of issues in late 2010 and early 2011. In the negotiations, however, a number of outstanding issues remain, such as the MFN clause, rules of origin (notably with regards to cumulation and fisheries), export taxes, services, and geographical indications (GIs). The EU side maintains its request for certain trade-related issues to be treated in a manner that goes beyond cooperation commitments, whereas SADC is reluctant to take binding commitments on many of these domains.

Recently, the EU responded positively to market access requests from SA on agriculture and industrial products. It conditioned this offer on a positive response to the EU requests for liberalisation of additional products and a binding agreement on GIs.

-> For details on the current negotiations, please consult our monthly EPA negotiations update.

Background

Negotiations restarted in March 2007 after being stalled for one year while the EU considered the proposal by SADC to include South Africa into the EPA, which was accepted. Initially, the inclusion of South Africa was not foreseen, as trade between South Africa and the EC does not fall under the Cotonou preferential regime but is regulated separately by the Trade, Development and Cooperation Agreement (TDCA).

Taking account of the inclusion of South Africa into the SADC EPA negotiating group, protocol 3 on South Africa of the Cotonou Agreement was formally revised by a decision of the ACP-EC Council of Ministers of 20 December 2007 .

Progress in the negotiations between the EC and the SADC EPA region has been slowed down mainly by differences in view on trade related issues and services. The EC considers these to be essential parts of an EPA while SADC has been taking the position not to include any binding commitments on new generation issues (trade facilitation, competition policy, public procurement, intellectual property) due to lack of common policies and institutional capacities to implement policies. SADC, with South Africa being a key player in the region, preferred not to include comprehensive provisions on services at this stage. However, the parties to the interim agreement endorsed the commitment to negotiate trade in services. They further decided to negotiate on competition and government procurement only when adequate capacity has been built.

Trade regime from 1 January 2008

A first step agreement has been initialled between the EU on the one side and Botswana, Lesotho, Namibia , Swaziland and Mozambique on the other side.

Botswana, Mozambique, Swaziland and Lesotho initialled this interim agreement with the EU on 23 November 2007.

Namibia , which had voiced concern about several provisions on 5 December, initialled the agreement on 12 December 2007 . Namibia initialled the agreement on the understanding that its concerns would be addressed through the negotiations towards a comprehensive EPA. A statement in this regard is annexed to the agreement, outlining that Namibia will sign and ratify the full EPA only if agreement on outstanding issues is found.

Angola has expressed its " intention of acceding to the full EPA once this agreement is concluded", but has not initialled the interim agreement and exports under the EBA initiative since 1 January 2008.

South Africa has not initialled the interim agreement and currently continues exporting to the EC under the TDCA. The non-participation of South Africa might have implications on the implementation of the interim agreement, as it forms a customs union with Botswana , Namibia , Lesotho and Swaziland under SACU.

Interim agreement between the EU and Botswana, Lesotho, Namibia, Swaziland and Mozambique

Text of the agreement:
Interim Agreement with a view to an Economic Partnership Agreement between the European Community and its Member States, of the one part, and the SADC EPA States, of the other part, published by the Council of the European Union as an annex to the Council Decision on the signature and provisional application of the agreement, 2 February 2009
-> see also corrigendum: Joint declarations added to the Final Act, signed on 4 June 2009.
-> liberalisation schedules:
* Customs duties applicable on imports into the EU of products originating in Botswana, Lesotho, Namibia, Swaziland (BLNS) and Mozambique
(part 1) (part 2) (part 3)
* Customs duties on products originating in SADC EPA states
* Customs duties applicable on imports into Botswana, Lesotho, Namibia and Swaziland of products originating in the EC
(part 1) (part 2) (part 3)
* Customs duties applicable on imports into Mozambique of products originating in the EC
(part 1) (part 2)
-> protocols:
Protocol 1 (rules of origin), see also: corrigendum to protocol 1
Protocol 2 (administrative assistance in customs matters)
-> Final act , see also: corrigendum to the final act

Summary of the agreement:
"On November 23 in Brussels senior negotiators from the European Commission and the Southern African Development Community initialled an interim Economic Partnership Agreement including a WTO-compatible market access schedule and provisions on development co-operation and other issues. This agreement will apply initially to the EU side and to Botswana , Lesotho , Swaziland and Mozambique on the SADC side. Angola made clear its wish to join as soon as possible. South Africa will determine its participation in the agreement in the coming weeks. This agreement was initialled by Namibia on December 11. EU and SADC negotiators confirmed that the agreement was open to other parties in the region to join when they wished. Both sides agreed to continue negotiations towards a full EPA in 2008 and a rendezvous clause is included in the agreement to this effect.

Goods Covered
The agreement allows for 100% liberalisation by value by the EU as of 1 January 2008 (with transition periods for rice and sugar) and 86% liberalisation by value by Botswana , Lesotho , Namibia and Swaziland . For 44 sensitive tariff lines liberalisation is envisaged by 2015. Three further lines will not be liberalised until 2018. The tariff offer from Mozambique covers 80.5% of trade, most of which is liberalised at entry into force. Some 100 additional tariff lines will be liberalised by 2018.

Goods Excluded
Exclusions focus on agricultural goods and some processed agricultural goods and are based chiefly on the need to protect infant industries or sensitive products in these countries.

Other features
A Development Cooperation Chapter has been included which covers cooperation on trade in goods, supply-side competitiveness, business enhancing infrastructure, trade in services, trade-related issues, Institutional capacity building, and fiscal adjustments. Parties agreed to negotiate on Competition and Government procurement only when adequate capacity has been built."
(Summary provided by the European Commission, 19 December 2007 )

Relevant documents and websites