16.SADC EPA Update
Botswana, Lesotho, Mozambique and Swaziland signed an interim economic partnership agreement (EPA) with the EU in June. The interim agreement covers only trade in goods and ensures that the preferential market access they currently enjoy will continue uninterrupted. The four countries also committed to negotiating a full EPA, which will include services, investment, intellectual property, government procurement and competition policy.
This leaves out Angola, Namibia and the regional powerhouse, South Africa, which together with the other four form the Southern African Development Community (SADC) group that has been negotiating a region-to-region EPA with the European Union for seven years. Namibia has ‘initialled', but not signed the interim deal, which makes its vulnerable to a WTO challenge. As a least-developed country, Angola has secure duty- and quota-free access, while South Africa trades with the EU under the Trade and Development Co-operation Agreement concluded in 1999.
Botswana, Lesotho and Swaziland's decision to sign the interim agreement divides the Southern African Customs Union (SACU), which also comprises Namibia and South Africa. SACU members have a common external tariff and thus should in principle negotiate trade agreements with third parties as a bloc. Some analysts see the signing as threat to the functioning and, perhaps, the very existence of the world's oldest customs union. Of great concern is that 70 percent of Swaziland's and 60 percent of Lesotho's state revenue is earned through the SACU revenue-sharing arrangement.
Namibia and South Africa have held off on the EPA partly because they object to the most-favoured-nation clause, which obliges all EPA members to extend to each other any better market access they grant to other countries in the future. Namibia is also insisting on a legally-binding commitment from the EU that it will respect concessions it made in March on export taxes and infant industry protection (Bridges Year 13 No.1 page 15).