Building capacity to help Africa trade better

Trade Governance Capacity for Implementing Safeguards


Trade Governance Capacity for Implementing Safeguards

Trade Governance Capacity for Implementing Safeguards

The domestic capacity of African States to implement their trade and economic integration agreements effectively and as rules-based arrangements is vital. The most obvious areas where improvements are urgent is trade facilitation, customs administration, dealing with Non-Tariff Barriers (NTBs), and the regulation of services and services providers. For the African Continental Free Trade Area (AfCFTA) to be successful trade governance advancement should be a priority. Reforms and upscaling to include digital trade solutions should include trade governance in the Regional Economic Communities (RECs) because trade in goods is highly concentrated in REC Free Trade Areas. They will, in terms of the design of the AfCFTA, continue to function as such.[1]

Indications are that intra-African trade in goods may become more “rules-based”. The investigation and implementation of trade remedies and safeguard measures are part of this trend. The African Continental Free Trade Area (AfCFTA) Agreement, for example, contains a detailed Annex on Trade Remedies and Safeguards. At present only two African countries (Egypt and South Africa) are regular users of multilateral trade remedies and safeguard measures.

In this Blog we briefly discuss the “trade defence” provisions in the EU-SADC Economic Partnership Agreement (EPA) as an example of how reciprocal trade agreements between external partners and African countries deal with this aspect. Since less than 20% of the goods exported by African countries are destined for other African markets, global markets remain important to African producers and exporters. The European Union (EU) is one such market. In 2001 it was granted a World Trade Organisation (WTO) waiver until 31 December 2007, “to permit the European Communities to provide preferential tariff treatment for products originating in ACP States … without being required to extend the same preferential treatment to like products of any other member”.[2]

Since the expiry of this waiver the EU is pursuing a policy of concluding reciprocal trade agreements with particular configurations of African countries. The EU-SADC EPA has been the first. It is provisionally in force since October 2016. The African Parties to this EPA are the five Member States of the Southern African Customs Union (SACU)[3] and Mozambique. Angola has the option to join this Agreement.

Other Members of the Southern African Development Community (SADC) will conclude their own EPAs with the EU. The EU is, for example, presently negotiating a comprehensive EPA with the Eastern and Southern (ESA) African States.[4] The United Kingdom (UK) has also concluded its own EPAs with groups of African countries as part of its post-Brexit trade policies. These UK EPAs are modelled on the EPAs of the EU that were concluded while the UK was still an EU Member.

As a result of the prominence of SACU in the membership of the EU-SADC EPA, this arrangement has unique features. Its definition of the Parties, for example, includes a specific reference to SACU, and that the SACU Members shall act collectively “as provided in the SACU Agreement” when the SACU Common External Tariff (CET) is at stake.[5]

The institutions established under the EU-SADC EPA (the Joint Council and Trade and the Development Committee) play an important role, as the entities that must be notified (sometimes in advance) about the intention to implement safeguard measures as provided for in this Agreement.

Articles 32 to 38 of the EU-SADC EPA deal with trade defence measures. Articles 32 says the rights and obligations of the Parties in respect of anti-dumping or countervailing measures shall be governed by the relevant WTO Agreements. In terms of Article 33 multilateral Safeguards also remain possible.[6] The provisions of these two Articles shall not be subject to the dispute settlement provisions of this EPA, where disputes between the Parties are to be settled through arbitration. The first dispute under this EPA (about safeguard measures under Article 34 imposed on poultry imports from the EU) has been declared.

Article 34 of the EU-SADC EPA deals with General Bilateral Safeguards and is probably the most important such provision. These safeguard measures may be taken if a product originating in one Party is being imported into the territory of the other Party or SACU in such increased quantities as to cause or threaten to cause serious injury to the domestic industry producing like or directly competitive products, or disturbances in a sector of the economy producing like or directly competitive products. They shall take the form of suspension of the further reduction of the rate of import duty for the product concerned or an increase in the customs duty on the product concerned up to a level which does not exceed the MFN applied rate at the time of taking the measure; or the introduction of tariff quotas. They shall be applied for two years, or another two years when the circumstances warranting imposition of safeguard measures continue to exist. Where a SADC EPA State or SACU applies this safeguard measure it may last for four years, and where justified, for a further four years. The Trade and Development Committee may make recommendations to remedy the circumstances which have caused the decision to impose such safeguards. Before taking any measure under Article 34 the Trade and Development Committee shall be supplied with all relevant information required for a thorough examination of the situation, with a view to seeking a solution acceptable to the parties concerned.

Article 35 dals with Agricultural Safeguards. They may be imposed if, during any given twelve-month period, the volume of imports into SACU of an agricultural product listed in Annex IV originating in the EU exceeds the reference quantity for the specific product. A duty which shall not exceed 25 per cent of the current WTO bound tariff or 25 percentage points may be imposed. Such duty shall not exceed the prevailing MFN applied rate. These safeguard measures may be maintained for the remainder of the calendar year or five months, whichever is the longer and may not be applied at the same time as a general bilateral safeguard measure in accordance with Article 34, a measure under Article XIX of the GATT 1994 and the WTO Agreement on Safeguards, or a special safeguard measure under Article 5 of the WTO Agreement on Agriculture.

Food Security Safeguards may be imposed under Article 36; where essential for the prevention or relief of critical general or local shortages of foodstuffs or other products in order to ensure food security of a SADC EPA State. Article 37 allows Botswana, Lesotho, Namibia and Eswatini to impose safeguard measures in the form of a duty on products listed in Annex V up to a level which does not exceed the MFN applied rate at the time of taking the measure or introduce a zero duty tariff rate quota. The BLNS State concerned shall notify the measure to the EU in writing. After notification, the BLNS State concerned has sixty days to provide all relevant information concerning the measure. These safeguard measures are allowed for a period of twelve years from the entry into force of this Agreement.

Article 38 deals with infant industry protection. Botswana, Lesotho, Namibia, Mozambique and Eswatini may temporarily suspend further reductions of the rate of a customs duty or increase the rate of a customs duty where a product originating in the EU is being imported into its territory in such increased quantities as to threaten the establishment of an infant industry, or cause or threaten to cause disturbances to an infant industry producing like or directly competitive products. They shall take the form of the levying of additional duties, may be applied for a period of up to eight years, and may be further extended by a decision of the Joint Council. SACU Member States shall have the right to have recourse to Article 26 of the SACU Agreement.[7]

The implementation of these safeguards requires domestic capacity in terms of collecting the necessary trade data, undertaking investigations, notifying the joint EPA institutions, and helping the private sector stakeholders to file applications with national investigating authorities. Where SACU acts as the relevant party, investigations are undertaken by the International Trade Administration Commission (ITAC) of South Africa. It is empowered to do so in terms of SACU Council decisions taken in 2005 and 2006.[8] Botswana, Eswatini, Lesotho, Mozambique (not a SACU member) and Namibia are presently taking steps to adopt their own laws and establishing national investigating authorities. They also have plans for training officials in the relevant Ministries and private sector stakeholders. This could enhance their national capacity considerably and will have a multiplier effect. A state needs only one investigating authority for undertaking such investigations and doing so for all trade agreements binding upon the relevant country, including the WTO and the AfCFTA.

[1] See Art 19(2) AfCFTA Agreement and Art 8(2) AfCFTA Protocol on Trade in Goods.

[2] WTO | Ministerial conferences - Doha 4th Ministerial - Decision on waiver for EU-ACP Partnership Agreement

[3] Botswana, Eswatini, Lesotho Namibia and South Africa.

[4] Six ESA countries – Comoros, Madagascar, Mauritius, the Seychelles, Zambia, and Zimbabwe – concluded an interim EPA with the EU at the end of 2007. In August 2009, Madagascar, Mauritius, Seychelles, and Zimbabwe signed this EPA. They have provisionally applied it since 14 May 2012. Comoros ratified and started applying it in Feb 2019. In January 2013, the European Parliament gave its consent to the agreement. The deal remains open to other countries who want to join later.

[5] Art 104(2) EU-SADC EPA.

[6] Art 33 EU-SADC EPA.

[7] This provision in the SACU Agreement deals with intra-SACU infant industry protection measures.

[8] The SACU Tariff Board has never become operational.

About the Author(s)

Gerhard Erasmus

Gerhard Erasmus is a founder of tralac and Professor Emeritus (Law Faculty), University of Stellenbosch. He holds degrees from the University of the Free State, Bloemfontein (B.Iuris, LL.B), Leiden in the Netherlands (LLD) and a Master’s from the Fletcher School of Law and Diplomacy. He has consulted for governments, the private sector and regional organisations in southern Africa. He has also been involved in the drafting of the South African and Namibian constitutions. He grew up in Namibia.

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