The Southern African Development Community (SADC) comprising of Botswana, Lesotho, Mozambique, Namibia, South Africa and Swaziland signed the Economic Partnership Agreement (EPA) with the European Union (EU), on 10 June 2016 in Kasane, Botswana.
The Agreement now needs to be ratified before 1 October 2016, otherwise Namibia and the SADC EPA countries (apart from South Africa due to her current agreement with the EU) risk losing preferential market access to the EU. The period between now and the beginning of the October 2016 deadline is rather short for all the parliamentary processes to be undertaken in the SADC EPA Member States. This arbitrary deadline by the EU is of concern to the private sector as there is potential to disrupt current trade should the deadline be missed, particularly for beef and grape exports.
Ratifying the EPA is not the end of this process, but actually the beginning. The real test is how the EPA provisions are interpreted and applied, not only to ensure agricultural development in Namibia, but also to promote commercial activities of the private sector, which is in the actual fact the implementer of the Agreement.
The question now is to what extent and how far a small and open economy like Namibia is affected by these global and technology trends beyond its control and how it can ensure an entrance into the global trade with the assistance of the EPA.
Namibian export and potential export enterprises need to become globally orientated in their activities and ambitions, otherwise the provisions of the signed EPA legal framework that guarantees Duty-Free-Quota-Free (DFQF) market access into the EU for Namibia's products, will be in vain.
Current agriculture exports to the EU are mainly beef and grapes, which is rather discouraging. Leveraging on this requires intensified and accelerated implementation of Namibia's industrial policy that revolves around manufacturing and specifically agro processing. The linkage between trade and industrial policy is so inherently critical that competitiveness almost relies on it, albeit not solely on it.
It is important to remember that the EPA also facilitates access to cheaper, better quality and/or more technologically advanced inputs into the manufacturing processes, as tariffs for EU products are eliminated or phased out upon implementation of the Agreement.
International production and trade are increasingly organised within the so-called global value chains (GVCs) where different stages of production processes are located across different countries through outsourcing and offshoring of activities. The EPA broadens such opportunities through preferential tariffs and cumulative provisions. The reverse is also true in that final value added products can be produced in Namibia. For example, Meatco is currently doing final packaging and labelling of beef in family packs for European retailers. The issue is thus how local companies position their business models considering the dynamics of international trade.
Seizing the opportunities created by this Agreement means providing avenues for addressing issues of concern to Namibia, including sanitary and phyto-sanitary (SPS) and technical barriers such as standards. As an example, the 90/40 day rule is excluding communal farmers' cattle to qualify for the EU market access, which is depriving Namibia potential export volumes and foreign exchange earnings. The cost of compliance with standards is another area of concern as it increases the cost of doing business, thus eroding potential income and benefits for producers in Namibia.
There is now need for greater private sector participation through various SADC/EU EPA structures and committees to address issues that could inhibit Namibia's capacity to derive maximum benefits. These include improving the understanding of the design and application of EU food safety, as well as animal and plant health standards, to reduce the costs of compliance for Namibian exporters to support accessing high value export supply chains; ensuring Namibia's preferential benefits are not eroded as the EU concludes new trade agreements with third parties, as preference erosion presents risks of crowding out Namibia's products in the EU market; and supporting the ongoing and planned strategies to enhance domestic production and value addition through the utilisation of a range of policy instruments, including infant industry protection and the limited use of export taxes for value addition.
Consideration should also be made for the establishment of a national and sectoral SADC/EU EPA Implementation Forum to mobilise all stakeholders and expertise for continuous monitoring of issues arising from the implementation of the EPA. There are already existing forums which could be tailored to serve this purpose, including the sectoral committees of the Namibian Trade Forum (NTF), as well as the Agricultural Trade Forum (ATF).
Rejoice Karita is a Senior Trade Advisor at the Agricultural Trade Forum.