Controversy still dogs EPA

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Trade and Industry Minister Joshua Setipa signs the agreement in June this year. The EPA guarantees duty-free, quota-free access to the European market.
Trade and Industry Minister Joshua Setipa signs the agreement in June this year. The EPA guarantees duty-free, quota-free access to the European market.

Cécile Barbière

AN Economic Partnership Agreement between the EU, Namibia, Botswana, Swaziland, South Africa and Lesotho entered into force on Monday, but its impact on the region’s development remains controversial.

The long road to an Economic Partnership Agreement (EPA) between the EU and the countries of Africa’s south finally reached its destination on Monday, when the trade agreement that has been in discussions since 2007 finally came into force.

The deal liberalises trade between the five African nations and the EU, superseding the non-reciprocal 16-years-old Cotonou Agreement, which is set to expire in 2020.

Namibia, Botswana, Swaziland and Lesotho will benefit from duty-free access to the lucrative European market, but South Africa, with its more advanced economy, will still have to pay tariffs on some products it chooses to sell.

In return, the countries in question will have to open up their markets to European exports by scrapping tariffs on 86 percent of products originating in the EU.

An impact study on the effectiveness of trade liberalisation, released in June, forecasted African exports to the EU to increase by 0.91 percent. Europe’s producers are also set to benefit, with a 0.73 percent rise predicted for their exports.

Even though the European Commission continues to insist that it has “never accepted such a degree of asymmetry in a trade deal before”, civil society, some European politicians and African representatives continue to denounce the alleged inequity of the deal.

Least Developed Countries (LDCs) already benefit from duty-free access to the single market, under the “Everything but Arms” initiative of the Commission, so EPAs are not necessarily good news, given that those countries, for example Lesotho, have to then open up their own less developed markets to European imports.

Mozambique, another LDC, is expected to join the other five nations by ratifying the deal by the end of the year, a Commission representative said.

For the executive, EPAs ensure that LDCs will maintain their access to the European market, regardless of their status. “Today, EPAs grant LDCs free access to the European market because of their status, but the agreement allows them to keep access even if they no longer meet LDC criteria,” a Commission official told EurActiv.

Another benefit is, of course, that “European goods can be imported at a lower cost, due to the elimination of tariffs”. However, the agreement’s critics insist that this loss of customs revenue is a real problem.

The EPA allows the governments of southern Africa to draw up a list of sensitive products, on which custom duties can still be levied, in order to preserve their economies and protect local production.

Safeguard clauses, intended to protect local products from an onslaught of European goods, can also be occasionally activated by the African countries, but they are strictly regulated and can only be used during the first 12 years of the agreement.

The deal is set to have only a limited impact in reducing poverty, despite it being one of the stated objectives of the Commission. The executive’s trade chief, Commissioner Cecilia Malmström, said that the agreement will “promote sustainable economic growth and regional integration in southern Africa and is designed to help lift people out of poverty in the years to come.”

But the impact study concluded that the share of the population in the region living on less than $1 a day will only drop by 0.02 percent by 2035 thanks to the EPA. In Namibia, it would decrease by 0.03 percent.

In terms of the number of people living on $1.25 a day, the benchmark used to define extreme poverty, the improvement is predicted to be even more marginal. In South Africa, the numbers would only decrease by 0.01 percent, while in Namibia its impact would be non-existent.

The study concluded that the EPA would only have a “modest” effect on reducing poverty in the two countries it analysed. — EurActiv France.

 

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