CONCLUSION OF THE ECONOMIC PARTNERSHIP AGREEMENT

CONCLUSION OF THE ECONOMIC PARTNERSHIP AGREEMENT

 By BRIAN KAJENGO

After ten years of preparations and negotiations, the Economic Partnership Agreement (EPA) between the SADC EPA Group and the EU was ‘initialled’ by the Chief Negotiators on 15 July 2014 in Pretoria, South Africa.

 The initialing of the Agreement signals that the negotiations concluded. The timing is significant because it pre-empts the 1 October 2014 deadline imposed by the EU after which Botswana, Namibia and Swaziland would have lost preferential access to the EU market for their exports of beef, fish, sugar on which their economies depend heavily. The EU has assured us all that the act of initialling ensures that the current market access will continue until the agreement enters into force.

South Africa had two central objectives in the EPA negotiations. First, we sought an outcome that would preserve coherence in the Southern African Customs Union (SACU) in terms of maintaining the common external tariff that is at the core of the Union.

 Second, we sought to improve our access to the EU market over and above what currently obtains under the bilateral Trade, Development and Cooperation Agreement (TDCA). More specifically, we sought improved access for South Africa’s agricultural products.

The EPA outcome achieves these objectives. It preserves SACU’s functional coherence, particularly in regard to maintaining the common external tariff, although the EU continues to provide the other Members of the SADC EPA Group better access to its market than it offers South Africa. Nevertheless, the outcome marks an improvement for South Africa over the TDCA in important ways.

South Africa has achieved improved market access for 32 agricultural products, with a significant improvement in our access to the EU market for wine (110 million liters duty free), sugar (150,000 tons duty free) and ethanol (80,000 tons duty free). There is also improved access for our exports of flowers, some dairy, fruit and fruit products. These tariff concessions go some way to re-balancing the TDCA in our favour.

Furthermore, the EPA rules of origin improve on the TDCA as they will facilitate intra-regional trade and industrialisation across in southern and eastern Africa in particular. The new rules also contain provisions that will encourage South African clothing exports. Several other restrictive trade rules under the TDCA eased under the EPA.

 The EPA provides a degree of greater flexibility than the TDCA to deploy export taxes on eight products for a period of 12 years with some exception for exports to the EU. In addition, we obtained an agreement that the EU will eliminate export subsidies on agricultural goods destined to SACU, as well as more effective safeguards to address damaging surges of imports.

South Africa agreed to negotiate a Protocol on GIs because we have an interest in protecting the names of the many South African wines we export to the EU, and we have a growing interest to protect the names of specialised South African agricultural products (such as rooibos and honeybush).

 The outcome of the GI negotiations will not affect the product names currently used by producers in South Africa and importantly, for our stakeholders, we established a mechanism to address non-tariff barriers that inhibit trade in wine.

In terms of the process and timeframe for entry into force, the Agreement first subjected to a two-month legal vetting process. Thereafter, the Agreement presented to the Cabinet and, if approved, submitted to the South African Parliament for ratification. Once ratified, the Agreement be signed, and it will enter into force once all Parties have concluded their own respective national approval processes. The timeframe for this process is likely to be around eight months