Much is at stake in talks on EU-SA economic partnership THE South Africa-European Union (EU) summit that was held in Pretoria last week after the second SA-EU Business Forum had more than the usual relevance. It came at an important time in talks to establish a new framework for SA-EU economic relations in the context of broader negotiations for a new framework for the EU and Southern Africa — and, indeed, sub-Saharan Africa. The importance for South Africa of the EU’s economic relationship with Africa is often seemingly taken for granted, given its long existence and the fact that the EU has recently been more of a focus of negative attention due to the crisis affecting the euro. The crisis has, however, underlined the relevance of both the euro and the EU, the world’s largest market, for South Africa and the global economy. The EU remains the largest single economic partner for South Africa and most of Africa. About 77% of foreign direct investment in South Africa comes from the EU, which remains South Africa’s single largest trading partner. Total two-way trade has grown by about 128% since 2004, thanks largely to the bilateral Trade, Development and Co-operation Agreement (TDCA) finalised in 2000. The EU is also the largest source of donor assistance for South Africa and Africa. Unfortunately, as the euro and global crises coincide with the economic negotiations between the EU and sub-Saharan Africa, there has been much frustration and turbulence since the negotiations began in 2007. When it comes to South Africa in the negotiation of economic partnership agreements (EPAs), the trade aspects of the TDCA are to be integrated into a Southern African regional economic agreement with the EU — the so-called Southern African Development Community (Sadc) EPA. This includes only some Sadc members but focuses on those especially vital for securing a viable and strong geoeconomic bloc in this region — including Angola and Mozambique, as well as the best-performing regional economic bloc in Africa: the Southern African Customs Union (Sacu), which comprises Botswana, Lesotho, Namibia, South Africa and Swaziland. A problem for South Africa, with its growing trade deficit with the EU since 2008, is that the EU will not allow South Africa the same preferential access to the EU that it allows others. Another challenge is that all agree that EU trade into Sacu must not be allowed to harm its operations — in other words, all EU goods must enter on similar conditions. Further complications include an October 2014 deadline for EPA conclusion, with the EU wanting negotiations completed by October this year to allow for ratification, by which time many African countries will lose their preferential access into EU markets if they are not least-developed countries (LDCs), which are given open access to the EU, with no quotas or tariffs for everything but armaments. The implications for the Sadc EPA, particularly for Botswana, Namibia and Swaziland — none of which are LDCs nor have independent agreements with the EU — are considerable. LDCs, such as Lesotho, are less concerned about the continuing absence of an EPA. The stakes are high for South Africa being in an EPA — it is seen by many as the turning point for the finalisation of the other African EPAs. The EPAs should also facilitate, and not hamper, efforts for integrating African regional economies. And while the original intention was to help regional integration, the opposite is now feared by many African negotiators and, along with other aspects of the EPAs, it seems to become more unsolvable the longer negotiations continue. The EPA process could have long-lasting consequences for South Africa in its ties with the EU, as well as with its immediate region in Southern Africa, Africa and the broader global context. The EU this month expanded to 28 member countries, with the inclusion of Croatia, and continues to expand its economic relations in the midst of global economic turbulence by signing free-trade agreements with Japan, Canada, Australia, India and the US to complement those concluded with South Korea, Chile and others. Its economic ties with Russia, central Asia and China continue to expand and diversify, with, among others, new transportation links between Beijing and Brussels via Moscow and Berlin as well as the Black Sea. Such emerging economic ties give EU-SA business flows added dimensions from the EU side, as a South African business linkage offers expanding opportunities to the EU in South Africa’s regional context. In this context, the SA-EU relationship remains relevant and can offer both sides enhanced benefits. The importance of South Africa’s position is also illustrated by its pivotal role in current moves to create larger integrated regional and more diversified economies in Africa, which can strengthen industrialisation and rural development, as well as the sustainable use of natural resources. South Africa strengthening its ties with emerging markets similarly places South Africa in a central role in intra-African business flows, as well as between Africa and other countries. The new potential for expanded SA-Japanese ties after last May’s visit to Japan by President Jacob Zuma and the inclusion of South Africa in Brics (Brazil, Russia, India China and South Africa) offers new opportunities for all stakeholders. The changing scenario in North Africa opens new doors of opportunity for trans-Mediterranean relations, as has happened for intra-African relations, but comes with new fears about security and instability. This should give both the EU and sub-Saharan Africa yet more reasons for appreciating and building on existing traditional ties, where the role of business to drive sustainable development in Africa is an even more pressing necessity than before. Innovative ways for African business to manage its EU-related activities are needed urgently at this time of new opportunities. Such moves can help enrich not only the EU-African relationship, but have positive spin-off results for African business in the broader global marketplace, where the EU dimension continues to be strong and where trilateral approaches to business activities offer enhanced rewards. It is imperative that stakeholders promote positive results and that African business in particular should become more informed and involved, as its direct interests are especially affected. South Africa’s business community should perhaps give more leadership in interacting with other stakeholders, for the common good. The intended creation of an South Africa-EU Business Council, along with the new bilateral business forums, are overdue and should be welcomed. While the summit focused on a variety of issues — including security in Africa, co-operation for the peaceful use of nuclear technology, and rising unemployment in both the EU and SA — important economic issues remained the key focus. Here the need to finalise the EPA, which is a continuing subject of tension between South Africa and the EU, is a priority for mutual credibility. It is encouraging that the joint communique last week noted that, when it comes to the EPA, leaders from both sides were "convinced that solutions to pending issues can be found" and that, "to this end, we urged our negotiators to expedite their work". It is hoped that this proves true for the sake of all of the stakeholders. • Maré is an adviser on international public affairs and diplomacy. He was previously a South African diplomat involved with the conclusion of the TDCA.
Posted on: Mon, 22 Jul 2013 11:46:40 +0000
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