Johannesburg — NEGOTIATIONS on a bilateral trade deal between the European Union (EU) and the Southern African Development Community (SADC) have split the region down the middle, with SA and Namibia opting not to sign the economic partnership agreement (EPA), citing "unreasonable demands" from the EU.

The EPA talks have been acrimonious from the start and observers say that the fallout could be potentially damaging to SA's relationship with the EU.

But they are even more concerned about the regional rift it has caused.

Of the SADC configuration, Botswana, Lesotho, Mozambique and Swaziland all conceded to the European Commission 's (EC's) demands and signed the deal last month .

SA last year argued for its inclusion in the EPA negotiations, saying it would help advance regional integration. But that goal now seems compromised.

SA's representatives yesterday accused the EC of unfair demands that would put onerous obligations on SADC countries .

The g overnment, business and labour representatives in the National Economic Development and Labour Council (Nedlac) said that new 11th-hour demands from the EC, tabled under the threat of the year-end deadline, threatened to push SADC states that accepted the EPA "far beyond an acceptable outcome".

While observers agreed that some of the EC's demands were not entirely philanthropic, they also faulted SA for its stance in the negotiations.

Trudi Hartzenberg, executive director of the Trade Law Centre for Southern Africa , said while events over the past six months could potentially damage SA's ties with the EU, she was more concerned about the emerging intraregional conflict. "After a lengthy process they have ended up with a split SADC -- that is the real problem," she said.

SA opted out of the EPA primarily because it did not want to make binding commitments on new-generation issues (including financial services and telecommunications), arguing that the region was not ready to negotiate these matters.

However, Lesotho, Botswana and Swaziland by signing the EPA, committed to negotiating the issues.

"The logic breaks down.... Has SA been unreasonable? I think so," Hartzenberg said.

An EC representative close to the negotiations yesterday was dismayed at the turn that events had taken, saying the situation was "surreal".

"We included the most flexible terms to a point where our own interests would have been at stake but SA came with very cunning negotiating tactics.

"The way in which SA is treating the rest of the region is very difficult for the others. It is flabbergasting," the EC representative said.