…Scrutinising challenges and impact for Namibia
By Hilary Mare
THE historic signing of the EU-SADC Economic Partnership Agreement (EPA) earlier in the year against the backdrop of a comprehensive and protracted negotiation process brings Namibia closer to the biggest global market and makes a case for the development of the local manufacturing and production sectors.
Crucially, EPA takes account of the different levels of development of each partner as it guarantees Botswana, Lesotho, Mozambique, Namibia, and Swaziland duty-free, quota-free access to the European market. Furthermore, the agreement 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 is important to note that the ratification process in the EU can take a long time. Further complications may arise when the UK formally notifies its intention to exit the EU (BREXIT), given its importance as a trading partner to the SADC EPA states, more especially for South Africa’s wine, table grapes and citrus products as well as Botswana and Namibia’s beef which will be affected if current preferences are lost. Now that negotiations are complete and the EPA is being provisionally applied (pending full EU ratification), the road ahead is not an easy one.
Firstly, signing an agreement does not imply market access. There remain a number of challenges for the SADC EPA states to fully benefit from the EPA beyond existing market access (i.e. their interests in beef, fisheries and sugar) that was under threat if the negotiations had fallen through. Furthermore, determining the impact of the EPA will require monitoring. These were some of the issues discussed at a recently concluded workshop organised by the German Development Cooperation ‘Anchoring Sustainability in the Framework of EU Economic Partnership Agreements’ which aimed at guiding the formulation of the draft concept for a project on the implementation and monitoring of Economic Partnership Agreements (EPAs) in cooperation with partners from the SADC region.
According to a report on the SADC- EPA commissioned by the trade and law centre (Tralac) challenges have emerged in its envisaged roll out.
“EU requirements are high and costly to meet. Furthermore for SADC it is not a question of quality but more of certification. And here, the concern is that most SMEs who need to benefit from EPA may be excluded in short – medium term, which provides a role for trade facilitation.
“Most benefits for SADC EPA states will depend on their ability to diversify and produce value added manufactured products.
“SADC will have to tend to important issues around intra-regional trade and deeper integration; this may shift focus on EU as a market of choice for new products given the impetus to promote regional value chain in SADC and Africa broadly,” the report outlined.
South Africa’s Minister of Trade and Industry Rob Davies echoed the same concerns and recently was quoted saying: “They are concerned that the on-going negotiations on services and investment between the EC and some members of the SADC EPA Group, if concluded, will create a new generation of trade policy division in SADC and SACU.”
Total trade effect or increase in exports from the SADC EPA to the EU amounts to just over US$165 million, which is relatively small with respect to total EU imports.
Total trade effect for the EU when SADC EPA countries fully liberalise their markets to EU products amounts to about US$ 3.6 billion in trade with the SADC EPA state, 21 times more than the reciprocal trade effect for SADC EPA exports into the EU.
As can be expected, the main increases come from trade with South Africa due to its dominant market size. Trade with South Africa will result in a total trade effect of US$3.2 billion; about 78 percent is new trade, while the remainder is trade diverted as a result of the FTA. There is also an increase in trade with Mozambique resulting in a total trade effect of about US$270 million of which almost 70 percent is new trade.
This picture shows that any benefits will not accrue from existing trade patterns but SADC EPA states especially, Mozambique and the BLNS, need to find the SADC EPA’s ‘unique offer’ in order to fully benefit from the agreement. A starting point will be to look at their national development strategies and how they fit into the regional value chains agenda of SADC as envisioned in the revised RISDP, which sets out potential value chains to be developed and promoted in the region. Next step would be looking at the EU as a potential target market for these identified sectors and start building capacity to export to the EU given the simplified rules of origin requirements for access to the EU under the EPA.
Important to note is that developing and promoting regional value chains is not the panacea for increased trade with the EU and as such concerted efforts should be made to ensure the competitiveness of domestic suppliers, through elimination of barriers to entry into existing export sectors, support to SMEs, Government procurement, market intelligence and capacity building of both Government, private and civil society stakeholders.
Confidente. Lifting the Lid. Copyright © 2015