EPA negotiations between the EU and SADC/SACU grouping: partnership or asymmetry?

Van der Holst, Marieke (2009-03)

Thesis (MA (Political Science. International Studies))--University of Stellenbosch, 2009.

Thesis

Europe and Africa share a long history that is characterized both by oppression and development. The relationship between the European Union (EU) and the African, Caribbean and Pacific (ACP) countries is a particularly important aspect of EU development cooperation policy. The developmental history between the EU and Africa started with the Yaoundé Conventions of 1963 and 1969, which were replaced by the Lomé Convention. Unfortunately, the favourable terms and preferential access for the ACP countries to Europe failed and the Lomé Convention was replaced by the Cotonou Partnership Agreement (CPA) in 2000. As a result of a WTO-waiver, the discriminatory non-reciprocal trade preferences, which were previously enjoyed under the Lomé Convention, continued until December 2007. The Cotonou Agreement points out that these trade preferences will be replaced by joint WTOcompatible Economic Partnership Agreements (EPAs). During the EPA negotiations, the EU preferred to negotiate on a regional basis instead of negotiating with the ACP as a whole or with individual countries. Consequently, Sub-Saharan Africa formed two negotiation groups; the Eastern and Southern Africa (ESA) EPA group and the Southern African Development Community (SADC) EPA group, represented by the five Southern African Customs Union (SACU) countries, together with Mozambique and Angola. Although Southern Africa is the region that leads the continent; from an economic perspective, the Southern African states show considerable disparities. Due to the economic differences between South Africa and the BLNS countries (Botswana, Lesotho, Namibia and Swaziland), the interests of the individual SACU countries are diverse and often contradictory, which resulted in complicated EPA negotiations. However, maintaining a favourable long-term trading relationship with the EU is of great importance to the economic and political well-being of the SADC, since the EU is the main trading partner of most African countries. By December 2007, an interim EPA (IEPA) was initialled by the BLNS countries as a result of the pressure to fall back to the unfavourable Generalized System of Preferences (GSP). Due to the bilateral Trade Development and Cooperation Agreement (TDCA) that is in force between South Africa and the EU, South Africa was not negatively influenced by the expiry of the WTO-waiver. The EPA will have a negative impact on regional integration within SADC and will promote distinction within the regional economic communities. Duty free, quota free access was offered to the BLNS countries, but the EU did not extend this offer to South Africa because of the developmental status of the country and the pre-existing TDCA. Consequently, South Africa will be required to export at higher prices and will experience increased competition within the region. The downside of the removal of import tariffs for the BLNS countries is that government revenues will decrease, which might result in income losses and will accentuate poverty. The standstill-clause of the IEPA prevents the SACU countries from diversifying economically and from developing new industries. The Most- Favoured Nation clause primarily impacts negatively on South Africa, since it prevents South Africa from negotiating freely with other countries such as Brazil and China. Furthermore, the strict intellectual property rules of the IEPA undermine access to knowledge and hereby fail to support innovation. The content of a chapter on liberalization of services, that will be included in the full EPA, is still being negotiated. Liberalization of services might lead to more foreign investments in the BLNS countries, as a result of which the quality of services will increase, leading to better education, infrastructure and more job opportunities. However, foreign companies will gain power at the expense of African governments and companies. South Africa is the main supplier of services in the BLNS countries and will therefore be confronted with economic losses when the services sector is liberalized. From an economic nationalist perspective, the EU included numerous provisions in the IEPA that were not necessary for WTO compatibility. However, the EU is aware of the importance of trade agreements for the BLNS countries and found itself in the position to do so to fulfil its own interests. By making use of the expiry date of the WTO waiver; the IEPA was initialled by the BLNS countries within a relatively short period of time. South Africa, in its own national interests, opposed the provisions of the IEPA, which has led to the negotiations deadlock. Because of the economic power and negotiating tactics of the EU and the selfinterested attitude of South Africa in this respect, regional integration is undermined and the poorest countries are once again the worst off. Although Economic Partnership Agreements have to be established, the partnership-pillar is, in my opinion, hard to find.

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