Southern African Countries, EU Sign Trade Deal

16 June 2016

On 10 June, six countries from the Southern African Development Community (SADC) – specifically, Botswana, Lesotho, Mozambique, Namibia, South Africa, and Swaziland – signed an Economic Partnership Agreement (EPA) with the EU in Kasane, Botswana.

Those SADC countries, also referred to as the SADC EPA group, will now have to ratify the regional agreement before it can enter into force. On the EU side, the EPA will be forwarded to both the European Parliament and the national parliaments of individual member states for their sign-off.

The other six members of the Southern African Development Community region – the Democratic Republic of the Congo, Madagascar, Malawi, Mauritius, Zambia, and Zimbabwe – are engaged with the EU through the EPA process as part of other regional groupings, namely Central Africa or Eastern and Southern Africa.

The signature of the EU trade pact comes almost two years after the SADC EPA group concluded negotiations with Brussels in July 2014, making the deal the first of its kind between the 28-nation European bloc and an African regional economic community in its EPA configuration.

“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,” said EU Trade Commissioner Cecilia Malmström.

Earlier this month, the EU Council authorised the signature and provisional application of the EPA between the two sides.

The process to establish EPAs between the EU and various regional groupings of African, Caribbean, and Pacific (ACP) countries began over a decade ago, with the goal of ensuring trade reciprocity, promoting sustainable development, and advancing integration between the parties involved.

Expected benefits

The trade deal secures access to the EU market without any duties or quotas for all members of the SADC EPA group, removing customs duties on 98.7 percent of imports from South Africa and eliminating them entirely for the other five countries.

South Africa will benefit from an extension of the current market access under the Trade, Development, and Cooperation Agreement with the EU, which has been in place since 2000. The new access includes better trading terms mainly in agriculture and fisheries, including for wine, fruit, ethanol, sugar, and dairy products as well as protections for geographical indications on Karoo meat and Rooibos tea being sold to the EU market.

Additionally, the agreement contains flexible rules of origin, which should enable a better sourcing of components from neighbouring countries and beyond. These terms should also allow for regional cumulation, which in turn could spur the development of regional value chains, explained Malmström.

In turn, all members of the SADC EPA group, except Mozambique, will remove duties on 86.2 percent of imports. These five countries together form the Southern African Customs Union (SACU). Mozambique, meanwhile, will lift duties on 74 percent of imports.

According to the EU, the regional pact comes at a time when SADC countries are diversifying their production base; as such, the facilitated imports of certain manufactured goods should support the industrial diversification of the region.

The EPA also contains various social and environmental standards aimed at fostering sustainable development in the region.

Status of other signature processes

To date, only the Caribbean region has signed and ratified a comprehensive regional agreement with the EU, which is currently being implemented.

Two other regional groupings – West Africa and the East African Community – have also concluded their negotiations with the EU, but those EPAs are still awaiting signature and ratification. (See Bridges Africa, 4 May 2016)

Cameroon is the only country from Central Africa which has ratified an EPA since 2014. Economic partnership agreements are being provisionally applied within the Eastern and Southern African region, which include Mauritius, Seychelles, Zimbabwe, and Madagascar.

Although West African leaders formally endorsed their EPA with the EU on 10 July 2014, the signature process has not yet been completed. After protracted negotiations, the final deal was briefly put in doubt after several African trade ministers openly sided with Nigeria against the EPA.

The latter had expressed concern over the deal’s potentially adverse economic impacts, arguing that the EPA could cause harm to its infant industries and jeopardise its development.  (See Bridges Africa, 15 May 2014)

Consultations on the EPA with Nigeria, particularly with the Manufacturing Association of Nigeria, are still ongoing, said the country’s Vice President Yemi Osinbajo in an interview with the Premium Times news outlet earlier this month.

As the only two non-least developed countries (LDC) in the region besides Nigeria, some stakeholders in Côte d’Ivoire and Ghana have raised concerns about the negative consequences that could arise from the lack of implementation of an ECOWAS-wide EPA. ECOWAS stands for the Economic Community of West African States.

In addition to Nigeria, the Gambia and Mauritania have reportedly not yet signed the agreement.

According to the EurActiv media outlet, the EU has reportedly undertaken the necessary legal preparations to eliminate the preferential access enjoyed by Ghana, Côte d’Ivoire, Kenya, Botswana, Namibia, and Swaziland by October 2016 should an EPA not be in place in the coming months.

ICTSD reporting, “Brussels to end preferential trade access for uncooperative African countries,” EURACTIV, 10 June 2016; “Three countries hold back West African regional EPAs with Europe,” NEWSGHANA, 11 June 2016; “West Africa: Nigeria Explains Why It Has Not Signed EU-Ecowas Trade Agreement,” PREMIUMTIMES, 5 June 2016.

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