EPA: SACU Members must Tread Carefully

Published on 27th July 2009

Three land-locked countries, Botswana, Lesotho and Swaziland who are members of the South African Customs Union (SACU) have recently signed an economic partnership agreement with the European Union (EU) without taking into their confidence the other members of SACU, Southern African Development Conference (SADC) and Community of East and Southern African Countries (COMESA). The EU is known to arm-twist and browbeat some poor countries into signing Economic Partnership Agreements (EPA’s). I don’t think these three SADC countries were intimidated into signing the agreements. 

The President of Botswana recently swam against the AU stream and announced that he would hand in Sudan President Omar al-Bashir to the International Criminal Court. I am mentioning the President of Botswana because it his decision and not that of the government of Botswana. The matter was not even tabled in the Botswana Parliament.

It is also not far-fetched that he was responsible for entering into an economic partnership agreement with the EU without a debate in his country’s parliament. Swaziland is also under despotic rule. Lesotho is politically unstable and its Prime Minister cannot claim he is popular because very recently he survived an assassination plot and a coup attempt. Therefore, it can be concluded that the move by these countries to sign an EPA with the whole continent of Europe does not enjoy popular support in those countries. 

There was a meeting in Victoria Falls, Zimbabwe in June to iron out some sticking points in the EPA’s and to come up with a common position. However, Botswana, Lesotho and Swaziland have undermined that African solidarity. 

It has been reported that officials of the East and Southern African countries were prepared to sign the EPA’s and already discussing the dates of such a ceremony when the outstanding and contentious issues in the interim EPA’s have not been addressed and resolved.  

Contentious issues are reported to involve far reaching commitments on tariffs reductions, the freezing of export taxes that East and Southern African countries have been using, the requirement that the ESA countries should not increase duties on products from the EU beyond what they have been applying (standstill clause), substantially liberalizing all trade, bilateral safeguards (for infant industry protection). All these issues are still under negotiations. 

Where would revenue come from when tariffs are reduced and export taxes frozen when there is such high rate of unemployment? Liberalisation is a fancy word for opening one’s markets to the rapacious multinational corporations of EU countries when European countries and the United States themselves practice protectionism, subsidise their farmers and deny African countries access to their markets.

European countries have insisted that the first priority should be the signature of the interim EPA. Their main interest is in market access which they may achieve in interim EPA’s. This limits the scope of focusing on the real issues of interest to ESA countries that need attention before the signing. The ESA countries were advised to resist the pressure of rushing to sign the interim EPA when it is clear that they will be mortgaging national and public assets to the European Community. 

It has also been reported that Africa remains a marginal player in world trade (6% in 1980 and 3% in 2008) since the continent’s trade structure still lacks diversity in terms of production and exports. As such, negotiations to liberalise their economies will be a futile and possible suicidal exercise until certain prerequisites are met and instituted within their economies. 

The emphasis on trade liberalization alone as a means to stimulating growth and development is misplaced. 

The United Nations Conference on Trade and Development put forward as prerequisites on addressing the structural constraints in ESA countries the following: 

• Increased public investment in research and development, rural infrastructure including roads, health and education. 

• Overhauling the basic productive infrastructure to make production more reliable. Power generation, water supply and telecommunications are three key areas that need attention In addition, building a competitive manufacturing sector will require the strengthening of the support infrastructure needs for exporting, including roads, railways and port facilities. 

•Encouraging cross-border trade infrastructure. 

It is unlikely that the manufacturing sector in Africa will grow to a competitive level if it is limited to small domestic markets. The three countries mentioned in the opening sentence ignored these important findings by the Southern and Eastern African Trade Information and Negotiations Institute, a reputable institute in Africa and the world at large. 

By Sam Ditshego 

Mr Sam Ditshego did a post graduate certificate in Development Economics and Policy Making with the Southern and Eastern African Trade Information and Negotiations Institute.

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