Linda Ensor
1 July 2009
Cape Town — The European Union (EU) has undertaken to deal with some of the issues that could have precipitated a break-up of the Southern African Customs Union (Sacu).
The collapse of the nearly 100- year-old union could have been calamitous for SA's neighbours as it would deprive them of revenue from the shared customs pool and would spell the end of regional integration, which is an important tool for global trade.
Trade and Industry Minister Rob Davies met European Union trade commissioner Catherine Ashton in Paris last week, and she committed the EU to review the rules of origin provisions at the heart of SA's problem with the interim economic partnership agreements signed recently by the EU with Botswana, Lesotho, Swaziland and Mozambique.
Davies had threatened to put up trade barriers in a bid to prevent cheap clothing from the EU entering SA through these countries.
At a media briefing before his budget vote speech in Parliament yesterday Davies welcomed Ashton's commitment as "significant".
She told him the EU would work with SA to align the rules of origin provisions in the interim economic partnership agreements with those in the trade development and co-operation agreement (TDCA) between SA and Europe.
Work had begun at a technical level to achieve this alignment, Davies told reporters.
The interim economic partnership agreements allow for the import of single stage manufacturing clothing imports into SA whereas the TDCA required a two-stage manufacturing process.
This prevented Europe being used as a conduit for cheap clothing imported from elsewhere.
Davies said if the rules of origin provisions in the partnership agreements were not amended, SA would have to put up border controls and demand rules of origin certificates.
This would make free movement in goods within Sacu more difficult.
An alignment with the TDCA would mean that no single-stage goods would be allowed into the Sacu market.
This would achieve policy coherence within Sacu "for now", although in the long term this could be undermined by issues such as export taxes, infant industry protection and more favoured nation status. Introduction of these provisions could result in Sacu becoming just a free-trade area rather than a customs union, Davies warned.
"As the full economic partnership agreements will require individual Sadc members to take on obligations with the EU in new trade- related policy areas such as investment and services, before the region builds regional markets and rules in these areas, they could impact on the future trajectory of integration," Davies said in his speech.
He hoped the competition authorities would expand their "activist" role in curbing anticompetitive conduct which remained "disturbingly pervasive" in the economy.
Davies was also critical of the poor performance in the distribution of lottery funds which he said was "indefensible" and unacceptable.
Regulatory changes would be discussed with stakeholders before being released for public comment. Nominations for a new lotteries board close on July 8.
A comprehensive review of the intellectual property policy would be undertaken to strengthen protection and promote affordable access to products of innovation.
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