EU signs Economic Partnership Agreement with Southern African countries

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EU signs Economic Partnership Agreement with Southern African countries

EU signs Economic Partnership Agreement with Southern African countries

This development-oriented agreement is the first of its kind with an African region pursuing regional economic integration.

The European Union and six countries of the Southern African Development Community (SADC) today, 10 June 2016, signed an Economic Partnership Agreement (EPA), the first of its kind between the EU and an African region pursuing the objective of economic integration. The signature took place in Kasane, Botswana. The agreement was signed by Commissioner for Trade Cecilia Malmström, on behalf of the EU.

In a comment, Commissioner Malmström said: “Trade is a tool to spur economic growth and sustainable development. It’s also an important factor for integrating regions and forming stronger bonds between countries. With the Economic Partnership Agreement that we are signing today, we want to base our trade relations with our partners in the Southern African region on commonly agreed, stable rules. Trade has helped lift millions of people from poverty throughout the years. Thanks to agreements like this one, we are preparing the ground for that process to continue.”

Commissioner for International Cooperation and Development, Neven Mimica, added: “Fully utilising the economic potential of the private sector and further strengthening the trade is critical for the new global development agenda of the Sustainable Development Goals. Today’s agreement can help us to tap this potential.”

The Economic Partnership Agreement (EPA) with Botswana, Lesotho, Mozambique, Namibia, South Africa and Swaziland – the so-called “SADC EPA group” – is a development-oriented free trade agreement. This is the first such agreement to be signed between the EU and an African region pursuing the objective of economic integration. Other regional agreements could also soon be signed with West Africa and the East African Community. At the signature ceremony in Botswana today, Commissioner Malmström held a speech on the benefits of the agreement.

The EPA takes account of the different levels of development of each partner. It guarantees Botswana, Lesotho, Mozambique, Namibia, and Swaziland duty-free, quota-free access to the European market. South Africa will also benefit from enhanced market access, going beyond the existing bilateral arrangement. Furthermore, the agreement signed today increases the flexibility of Southern African producers to put together products from components from various countries, without the risk of losing their free access to the EU market. It also provides for a number of protective measures, for instance for nascent, fragile industries or for food security reasons.

The Southern African markets will open gradually and partially to EU exports, in an asymmetric way. In the process of diversifying their economies and broadening production, imports of certain goods are important for Southern African countries – certain industrial parts, seeds and machinery, for instance. The import duties on many of these so-called intermediary goods will be significantly reduced, making the products more easily accessible to Southern African entrepreneurs. For the South African market specifically, particular advantage has been granted to EU producers of traditional quality products with a worldwide reputation – for example wines and food products – that will now get the exclusive right to use their traditional names, or ‘geographical indications’, in South Africa.

Correspondingly, several South African geographical indications will, from now on, be protected on the EU market, such as different types of South African wine such as Stellenbosch and Paarl, along with Rooibos tea and other products.

By signing the agreement, all participants commit themselves to act towards sustainable development, including by upholding social and environmental standards. The EPA also establishes a consultation procedure for environmental or labour issues and defines a comprehensive list of areas in which the partners will cooperate to foster sustainable development. Civil society will have a special role in monitoring the impact of the agreement. In addition, a detailed chapter on development cooperation identifies trade-related areas that could benefit from EU financial support.

The EPA creates joint institutions to support dialogue, smooth handling of all trade issues, and monitoring of the impact of the trade deal. The EU will work with its SADC partners to ensure smooth implementation of the agreement, together with regional and national development cooperation bodies.

The EU Council of Ministers took the decision to authorise the signature of the Economic Partnership Agreement on 1 June. Following the signature, the agreement will now be submitted for approval to the European Parliament, and for ratification in the 28 EU Member States according to national ratification procedures and in the Southern African countries.


EU partnering with Southern Africa

by Commissioner for International Cooperation and Development, Neven Mimica

Most common exports from Namibia to the European Union include fish, beef and table grapes. However, without an agreement, when these products enter Europe, they immediately become between 15 and 100 percent more expensive with the addition of customs duties. If nothing is done, the same would soon apply for many important exports from the Southern African region to the EU, e.g. for sugar exports from Swaziland. That would be bad news for both African producers and European consumers, and it’s certainly not the relationship that the EU wants to have with Southern Africa.

But change is underway. Today, we sign an Economic Partnership Agreement (EPA) that brings together six countries of Southern Africa and the European Union – the start of a new era in the trade relationship between us. As of today, common goals on trade will unite the 28 nations of the EU with Botswana, Lesotho, Mozambique, Namibia, South Africa and Swaziland.

Today’s signature is a sign of the joint willingness of the EU and these Southern African countries to strengthen the ties between us, while basing our trade relations on a predictable business environment. Commonly agreed rules include areas such as customs procedures, sanitary measures, and technical barriers to trade. That, in turn, prepares the ground for economic growth and sustainable development.

Getting rid of customs duties for African exporters, big and small, is one reason why it is so important to get this agreement in place – the free, long-term and stable access for Southern African products to the EU market. Much of the existing procedures for trade between the EU and several countries in the region are about to expire.

A high priority of many countries in Southern Africa is also to diversify their economies – to broaden production to include a wider range of products and services. In this process, imports of certain goods become vital – industrial parts, seeds and machinery, for instance. Now import duties of many so-called intermediary goods will be significantly reduced, becoming more easily accessible to Southern African entrepreneurs.

Today’s Economic Partnership Agreement is of an entirely new species – it is the first trade deal that directly supports the economic integration of a specific region. As we in Europe have experienced through trial and error over many years – the regional integration of markets is one of the most powerful drivers of prosperity, stability and growth that mankind has devised. So together, we have shaped this economic partnership in a way that favours closer links within the six Southern African nations involved.

We have also agreed on flexible so-called “rules of origin” for the Southern African producers. It will make it easier to put together products from components from other countries without risking losing one’s free access to the EU market – something that will be important for countries such as Mozambique and Lesotho, for example. When producing and exporting canned fruit, for instance, the fruit can be now harvested in one country, then preserved and canned in another. Products in these value chains can also come from other so-called least developed countries, such as Zambia and Tanzania.

At the same time, while negotiating this deal we took full account of the economic and societal differences between the countries involved. This led us, from the EU side, to commit to eliminating much more of our customs duties than our Southern African partners. In short – the EU opens up its markets far more, and far faster, providing free market access to the African countries involved. The markets of the six Southern African nations, meanwhile, are going to be only partially and very gradually opened to European products. The Southern African countries also retain their right to invoke protective measures – for instance to protect nascent, fragile industries or for food security reasons – safeguarding the region’s right to pursue policies as it sees fit.

The overarching goal of our agreement is to spur sustainable development. In doing this, we build on principles of rule of law, respect for human rights, and democracy enshrined in the Cotonou Agreement of 2000. A specific chapter upholds workers’ rights and covers environmental protection, for instance by supporting best practices in forest management and sustainable fishing. Civil society will have a special role in monitoring the impact of the agreement.

After today’s signature, we must make sure that the agreement actually delivers. The European Union is ready to assist its African partners to overcome challenges in putting this agreement in place. Going forward, our new, joint institutions will ensure the smooth handling of all trade issues and support a deepened dialogue between us. Today’s signature marks the end of a long process, but it is rather a beginning – we are creating a partnership in the true sense of the word.


Background

Trade and Economic Partnership Agreements are an essential pillar of the ACP-EU Cotonou Agreement. The SADC EPA Group consists of 6 out of 15 members of the Southern African Development Community (Botswana, Lesotho, Mozambique, Namibia, Swaziland and South Africa). Angola has observer status and may join the agreement in the future.

The EU is the largest trading partner of the SADC EPA group. In 2015, the EU imported goods worth almost €32 billion from the region, mostly minerals and metals. The EU exported goods of the nearly same value, mostly engineering, automotive and chemical products.