12 October 2011

Namibia: Government to Box Economic Partnership Agreement in Lesotho

Windhoek — Namibia is expected to come out firing on all cylinders "if not throwing it toys out of the cot" at next month's scheduled meeting in Lesotho on an Economic Partnership Agreement (EPA) with the European Union (EU).

Until last month, Namibia was certain the EU would bow and address concerns raised regarding competition and market liberalisation before asking for a fully signed EPA, with the Minister of Trade and Industry, Dr Hage Geingob, saying the next ideal step is for a permanent EPA instead of an interim EPA agreement only for the European Union to spring a surprise on Namibia, with a de facto ultimatum to sign the EPA within the next two years or face paying full duties and taxes on agricultural imports into Europe.

Unlike South Africa that has a bilateral trade agreement with the EU, Namibia has no other trade agreement to fall back on if it decides not to sign the EPA.

Even the General System of Preference regulations has been changed and would not help Namibia's exports into Europe then.

Botswana who signed the interim EPA has not yet implemented the agreement, something that the EU is also asking by 2014.

Implementing the agreement would shake the Southern Africa Customs Union (SACU), and the member states' first priority is to sort out the intra-trade policy and strengthen cohesion within the union.

At present, SACU does not have a common policy on competition issues.

The main concern on implementing an interim EPA is the overall effects on other member states. Individual countries are pushing for the promotion or protection of specific sectors and without a collective approach it leaves the future of member states in limbo.

Compounding the problem is the likelihood of South Africa implementing fully the Trade, Development and Cooperation Agreement (TDCA) next year, the bilateral trade agreement with the EU.

A full implementation of TDCA means South Africa opening up the market to nearly 90-plus of European goods, while the European market would open up to 80-something of South African goods.

Currently, it is half implemented and the Namibian private sector mourns the dumping and unfair competition of European products that end up in Namibian markets.

SACU member countries are now scared that a full implementation of TDCA would severely distort markets, just as they were afraid of market distortion if Botswana and Lesotho implemented the interim EPA.

"We know there will be a number of European products coming into our market via South Africa, most of which are subsidized," commented Namibia Chamber of Commerce and Industry chief executive officer Tarah Shaanika on the issue.

South Africa, which like Namibia did not sign the interim EPA, has argued that the TDCA be blanketed out to the entire union.

Union member states are however concerned by the concessions that South Africa has made under the TDCA and possible conflict of interest.

South Africa, for instance, wants to protect its wine and cheese industries while agreeing to other European agricultural imports.

These would end up competing with indigenous agricultural produce in Botswana and Namibia, killing the local industries in the two countries.

"How do we know EU would compete fairly with our products that have no subsidy?" Shaanika asks rhetorically.

Even though some analysts have argued that South Africa went into the EPA to keep simple coherence in SACU, and hence the agreement on the broadening of TDCA, Willie Roux, renowned researcher and international trade policy analyst, disagrees saying the TDCA is contrary to the spirit advocated by the EU under EPA that of extending favourable treatment to a specific country at the expense of others.

"That is hardly fair, is it? The EU would never allow us to treat one member state more special than the rest under the agreement they are forcing us to sign with them," says Roux.

Namibia's refusal to sign the EPA was a feat in itself, in that it forced the EU to discuss pertinent issues of competition, services and other protection measures that are of concern to many countries within SADC.

Namibia's most concerns are the effect of liberalisation on crucial domestic industries, such as telecommunications, public procurement, as well as industries with infant industry protections such as dairies and pasta production.

The new decision overturned that confidence. "How do you decide on a deadline when negotiations are not even concluded? We are very worried about the behaviour of the EU and would appeal to our negotiators to ensure that whatever permanent EPA we come up with, it will not create limitations for our economies to fast-track industrialisation," Shaanika says.

The overall objective, says the NCCI, would be to have an EPA that does not limit the country to protect local industries when necessary and is in the best interest of Africa.

"We shall not support a trade pact which does not recognise the fact that between the two partners, there is one which is hugely developed and one hugely underdeveloped," argues Shaanika.

But there is still time for Namibia to salvage the situation, according to Roux.

"There is still time for us to conclude the negotiations, but now we have an additional pressure on us to conclude them. The ultimatum is unfair and leaves a bad taste in the mouth," said Roux. One of the suggestions is for Europe to agree to an EPA agreement that includes the lists of concerns raised by Namibia for future negotiations.

Meanwhile, the EU says, "Four years of application has provided enough breathing space for ratification or further negotiation. It is therefore time to bring the process to a close, by amending the Regulation and concluding Economic Partnership Agreement negotiations."

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