Statement by C.H.G. Schlettwein

Minister of Trade and Industry

16 July 2014

Hon. Speaker

Hon. Members

I rise to provide an update on the negotiations between Namibia and the European Union towards the establishment of an Economic Partnership Agreement.

The Hon. Members will recall that we have been engaged since 2007 in an intensive process of negotiation towards a final Economic Partnership Agreement that would create a stable and reciprocal, but nevertheless asymmetrical, trading relationship between us and the EU. The Hon. Members would also recall that a number of important and strategic issues prevented Namibia from agreeing to the interim EPA that was concluded in 2007 and that Namibia in fact never signed this agreement. That decision was taken by my predecessors in this portfolio, notably the Hon. Immanuel Ngatjizeko and the Rt. Hon. Prime Minister Dr. Hage Geingob, and was based on an assessment that the demands from the EU would amount to an unjustifiable encroachment into our developmental policy space over and above our obligations in the WTO. 

We should be proud of the fact that Namibia as a member of the negotiating configuration took strong and consistent policy stances during the negotiations despite the threat of isolation or exclusion from market access, and at the risk of insurmountable divisions within the negotiating group. Our resolve was that the unresolved issues must be addressed to avoid that they would constrain Namibia's future trade and industrialization.

These matters were principally:

1. the Most Favoured Nation treatment that the EU insisted upon;

2. the abolition of quantitative restrictions upon entry into force;

3. the freezing of existing export taxes and the prohibition of new export taxes;

4. a highly restricted use of infant industry protection;

5. the limited nature of the bilateral safeguard mechanism proposed by the EU and the refusal of the EU to agree to a special safeguard mechanism for agricultural goods to be liberalized under the EPA; and in addition

6. Namibia refused to accept the right-of-first-refusal that the EU insisted upon regarding the use of leased fishing vessels for the catching of fish from Namibia’s Exclusive Economic Zone for entry into the EU market duty free and quota free.

With regards to these matters I am very pleased to inform the Hon. Members that we have made important advances regarding all of them.

1. As for MFN, we have negotiated that there is no automatic extension of the MFN treatment to the EU regarding any better treatment that we may in future negotiate with another major economy, thereby keeping options open for future South-South trading arrangements.

2. Regarding quantitative restrictions our position prevailed that we remain entitled to use such restrictions on imports as long as they are compatible with our obligations under the WTO. 

3. As for export taxes, we achieved a significant reversal in that Namibia would be able to apply export taxes without major restrictions for economic purposes including infant industry protection and revenue needs, despite restrictions on the use of export taxes for industrial development purposes as such.

4. With regards to the infant industry protection provision, we secured a permanent rather than a temporary duration of the option to implement this measure, as well as the entitlement to apply it according to the SACU agreement.

5. We have also achieved improvements and greater fairness in the bilateral safeguard mechanism to shield us from sudden inflows of larger quantities of EU goods and importantly, the EU has agreed to eliminate all subsidies on the goods exported to Namibia. For newly liberalized agricultural goods a special agricultural safeguard has been established. A temporary safeguard mechanism was also created for sensitive products from the smaller economies in SACU, including Namibia.

6. Concerning trade in marine products, we have established a transparent and predictable framework for the exports of fish products from our EEZ to the EU in recognition of Namibia’s fisheries management capacity. In addition, no right of first refusal is required any longer.

It is on the basis of these and other more technical but still important improvements which we have negotiated for since 2007 that our negotiating group has concluded the negotiations. Yesterday, the text was initialed in Pretoria, South Africa, marking the formal end of the negotiations and freezing the text. Hereafter the negotiated text, some 750 pages long, will be legally checked and verified. Following agreement on the final text, I will approach Cabinet to obtain concurrence on signature and thereafter its submission to this August House for ratification. If there would be any uncertainty or point of contention, the option remains to re-engage the EU at political level.

The time frame for these processes is not fixed and could extend to a year or more. I nonetheless wish to inform the Hon. Members that bilateral trade will not be affected. The EU had previously announced that middle income countries which had not entered into an EPA by 1 October 2014 would be excluded from the current transitional duty free quota free access to the EU market, a stance which we vigorously opposed. However, on the basis of the initialing of the agreement, the current market access will continue on duty free and quota free terms until the agreement has been ratified. Similarly, on the basis of the current Trade and Development Cooperation Agreement between the EU and South Africa, exports from the EU to SACU will continue and also enter our market because of the SACU trading arrangements. Once the EPA agreement is in force, all external tariffs will be harmonized within SACU regarding the EU.

Finally Hon. Speaker, allow me to thank my counterparts in the Ministries of Finance, Agriculture, Water and Forestry, Fisheries and Marine Resources, as well as the Attorney General and the Director General of the National Planning Commission, our negotiating team and all other staff members who participated and supported this process and who were able to obtain important improvements from the interim agreement. I also wish to thank the private sector who provided important input into the process and who stood together with us through thick and thin.

I thank you.