Johannesburg — SOUTH African trade negotiators have, at least for now, backed off from their threat to break up the Southern African Customs Union (Sacu) in a standoff with other member states over a divisive economic partnership agreement (EPA) being negotiated with the European Union (EU).

At a crucial meeting of Southern African Development Community (SADC) trade ministers in Gaborone which ended on Tuesday, SA was less confrontational than a week earlier. Last week, Foreign Minister Nkosazana Dlamini-Zuma, in anticipation of the meeting, accused the EU of "using the EPAs to regain ground they think they have lost in their quest for hegemony in Africa".

An observer at the meeting said SA's approach was more emollient and was thought have been on the orders of President Thabo Mbeki, who met EU Trade Commissioner Peter Mandelson at the weekend before the Gaborone meeting.

It was not clear whether SA's stance was a "genuine retreat or a tactical one", the observer said.

However, SA had not relented on its concerns about the content of the interim EPA, and remained outside the negotiations.

It is understood that other members of Sacu, notably Botswana, Lesotho and Swaziland, flexed their muscle at the Gaborone meeting, demanding that SA's concerns be addressed collectively in the customs union before being put to the EU. They were apparently supported by Mozambique which is also party to the EPAs, but not a member of Sacu.

A trade commentator, who declined to be named, said the situation was politically sensitive, with Botswana, Lesotho and Swaziland for the first time challenging SA's unilateral approach in the region.

"Botswana, Lesotho and Swaziland have revolted. Politically, the situation is very, very sensitive."

The trade and industry department -- the custodian of trade negotiations and the regional integration process in SADC and Sacu -- would be unable to break up the customs union, without putting the issue to the treasury, which signed off on the Sacu Agreement of 2002.

The foreign affairs department, as custodian of foreign policy, has to be involved, the commentator said.

"This then becomes an issue for the cabinet," he said.

Speaking after the meeting, Mandelson said: "The atmosphere was better and there is a real resolve among all the members to press ahead with the negotiation of the EPA.

"I hope Namibia and SA will come on board and that we can re-engage them as we go forward.

"If they are prepared to negotiate in good faith, the others would welcome them on board."

The European trade chief was, however, emphatic that the original interim text, which had been signed off at the end of November by Botswana, Lesotho, Namibia and Swaziland, would not be renegotiated and that timelines for the second phase of the negotiations (on services liberalisation) would not be changed.

The South African trade and industry department could not be reached for comment.

Sacu was split last year when Botswana, Lesotho, Namibia and Swaziland broke ranks with SA and signed the interim EPA to replace the Cotonou agreement.

SA opted out of the agreement, citing concerns about demands in the text. SA's biggest objection, however, was to a provision to negotiate the liberalisation of services and investment issues.

Namibia threw in its lot with SA and opted out of the services liberalisation part of the negotiations, which is scheduled to take place this year.

Botswana, Lesotho and Swaziland, which have agreed to negotiate services, are mostly importers of services.

Trade specialists think services liberalisation would introduce competition into their economies, which would help to facilitate trade.

Mandelson said in an interview the EU had put emphasis on the negotiation of services liberalisation because this would put in place conditions for investment that offered predictability and stability for investors in these countries in the region.

"To exclude services and investment and those rules is tantamount to saying the development of these countries would be slower and more haphazard," the EU trade chief said, adding that "trade ministers of these countries say to me they want to address these issues".