Johannesburg — Discussions on economic partnership agreements (EPAs) with the European Union (EU) were scheduled to resume next month in a bid to resolve outstanding issues that stalled talks for almost a year, Trade and Industry Minister Rob Davies said yesterday.

Davies said there was greater optimism that the next round would focus on the kind of trade relations that would give priority to integration of the Southern African Development Community (Sadc) . The EPAs should therefore have no special clauses that sought to split the region or discriminate between Sadc states.

One sensitive point in the interim EPA signed by Mozambique, Botswana, Lesotho and Swaziland is the EU demand that Sadc and the South African Customs Union (Sacu) accord it most-favoured-nation status or level treatment.

Davies said the most-favoured-nation clause remained an important source of discontent. While it did not apply to SA because the EU had decided not to give SA unrestricted free access to its markets due to the size of its economy in Africa, there was serious concern it could damage other Sadc members.

"The benefit of the clause to the EU is very minuscule to its large economy but the potential damage to our Sacu members will be big," he said. It meant some members would be allowed to trade in a particular way with the world and EU in particular, while others would be expected to adhere to certain restrictions and so to trade under different conditions .

"The clause really does get to the core of what could hold together or promote regional economic integration or serve against efforts to build regional growth," he said.

Business Day understands there have been discussions among Sacu members in preparation for next month's meeting with the EU which helped to revive solidarity .

Independent EU analyst Dr John Maree said such discussions were encouraging . He said South African trade with EU was likely to suffer if the issue was not resolved because SA was the major market, which the EU wanted more than that of other Sadc members.

He said he expected Sadc to look at compromising on some of its demands, such as SA agreeing to open its market to the EU's services and procurement industries, including products that were not necessarily competition to local manufacturers, in exchange for the EU relaxing the most-favoured-nation clause.

Only seven of Sadc's 15 member countries negotiated an EPA with the EU. The others are negotiating in other EPA configurations such as the East Africa Community.

SA had initially participated as an observer and in a supportive role for Angola, Botswana, Lesotho, Mozambique, Namibia and Swaziland. It formally joined negotiations in 2007. SA had chosen to be an observer because it has a separate deal with the EU called the Trade, Development and Co-operation Agreement .

Botswana, Lesotho, Swaziland and Mozambique signed the interim EPA in June last year. Although Namibia had initiated the agreement more than two years ago, it decided not to sign. Angola did not join either, because it had not yet tabled a tariff offer. As one of the least developed countries , Angola has duty-free market access to the EU under the "everything-but-arms" initiative .

However, the interim EPA contains a clause allowing Angola or SA to join rapidly.