SA ready to tighten screws as EU trade row turns ugly
2009-06-05 Ensor, L; Le Roux, M; www.businessday.co.za
Resources > By Topic > REGIONAL TRADE ARRANGEMENTS > EPA
SA was prepared to set up trade barriers with Botswana, Lesotho Mozambique and Swaziland to stop a flood of cheap imports entering the country.
Trade and Industry Minister Rob Davies sounded the warning yesterday after SA’s neighbours broke ranks and signed trade deals in the form of an interim economic partnership agreement (EPA) with the European Union (EU).
Davies’s warning is the strongest sign yet that the almost 100-year-old Southern African Customs Union (SACU) is in jeopardy, as its rules prevent signatories from entering separate trade agreements with other countries.
The EPA deal signed in Brussels yesterday — 17 months after the original deadline — could also see the customs union torn to shreds by policy conflict. Talks on the interim EPA, marked by bitter recrimination among the parties, have led to a deep rift among SACU members.
SA, Namibia and Angola (which like Mozambique is not a member of SACU) withheld their signatures and also declined an invitation by the EU to attend the signing ceremony.
Davies said yesterday SA would step up border controls with Botswana, Lesotho and Swaziland (BLS) to prevent goods with easier rules of origin treatment or different import tariffs entering SA from the EU.
One of the significant changes to trade rules under the EPA is that of more favourable rules of origin for clothing and textiles, a sector SA wants to protect. In terms of SA’s trade development and co-operation agreement (TDCA) with the EU, garments need to undergo two stages of conversion to be allowed into the local market. The EPA rules of origin eases obligations to single-stage conversion. This would mean that cheap products imported into Europe could simply have labels or buttons added to gain access into the southern African market, Davies contended.
“We will not be admitting things which do not comply with the rules of origin under the TDCA.
“We will not be allowing them to come into the SA market, and if that means that we have to introduce border control issues with Botswana, Lesotho and Swaziland and they have to do likewise, then so be it,” he insisted.
The BLS decision to break ranks and sign the interim EPA still holds major implications for the future of the customs union.
SA’s chief trade negotiator Xavier Carim said SACU would also have to reassess the distribution of revenues from the customs revenue pool. Such a change may hurt the countries that have signed the interim EPA because of their deep dependence on customs revenue to prop up national income.
“The impact of this has not been thought through yet, but there could be implications for the customs pool and the way customs revenue is shared between the members, because the pool functions on the assumption that the common external tariff is intact,” Carim said.
The signature in itself would not change matters as the agreement still needed to be ratified by the parliaments of the countries party to it. However, once this has happened “these issues will become very pertinent and real”, he said. “The future of the customs union will have to be thought through very carefully.”
SA refused to sign the EPA because of objections related to SACU’s trade policy. While the declaration signed with the EU in Swakopmund, Namibia, in March dealt with most of these concerns, SA is concerned it would not be incorporated in an EPA.
The European Commission’s head of trade in Pretoria, Jorge Peydro-Aznar, said he hoped for “continued and open engagement” between the parties.
Published in: Resources > By Topic > REGIONAL TRADE ARRANGEMENTS > EPA