Regional and developmental issues top South Africa’s agenda in the next round of EU negotiations, writes Madeleine Wackernagel
After frequent setbacks, the next round of talks between South Africa and the European Union over a trade deal will kick off on January 22. This time, the departments of Foreign Affairs and Trade and Industry, jointly leading the negotiations, will put regional development issues top of the agenda.
Pretoria’s position paper, informally presented to Brussels last month, made plain South Africa’s priorities. While short on detail, it made regional and developmental concerns a priority. Indeed, Pretoria is hoping that the new discussions will open the way for a trade and development agreement (TDA) rather than merely a free trade agreement (FTA).
The EU’s first mandate failed to consider the importance of the region to South Africa, economically as well as politically, says an insider. “The fact that we have embarked on a rapid tariff- lowering programme, far exceeding the demands of the World Trade Organisation, is proof enough of our commitment to the region. It is time the EU understood that,” he says.
At the same time, the EU is trying to work out a framework for a new Lom? agreement due in 1998, and South Africa’s role within it. A trade deal that incorporates developmental concerns, with South Africa accepting an asymmetric arrangement in return for EU compensation to our regional partners, could provide the model for a post-Lom? IV pact, says Dr Garth le Pere, executive director of the Foundation for Global Dialogue.
Thus far in the negotiations, the emphasis has been on trade, with agriculture the biggest hiccup to their progress, but the developmental considerations are just as important, he says. At a recent workshop hosted by the FGD, the Department of Trade and Industry (DTI) made clear its desire for a developmental component to any deal.
In light of South Africa’s comparative advantage in terms of manufacturing production, it would make sense if our regional neighbours concentrated on agriculture, with free access to the EU market in terms of Lom?. Such an arrangement might include EU infrastructural and technical assistance to the region, while South Africa benefits from increased manufacturing penetration to the EU states.
But all this assumes a satisfactory solution to the South African Customs Union (Sacu) negotiations, expected to be finalised soon.
Faizel Ismail, chief director of foreign trade relations at the DTI, stressed the importance of a cohesive policy, taking into account the economic differences. “We need greater co-ordination,” he says, “otherwise we could end up competing for investment, which would be playing a zero- sum game. In addition, whatever policy is devised, we have to ensure it is implemented more efficiently than in the past.”
The stumbling block is revenue sharing, with some members, such as Lesotho, reliant on the Sacu pool for 70% of its total receipts, while others, such as Swaziland and Namibia are less dependent, at 54%.
“The objective is to devise an equitable and sustainable formula without placing undue pressure on South Africa’s fiscus. We had to work out the internal flows of trade to calculate the revenue pool but a formula has been agreed and guidelines have been set, so we are optimistic a deal can be struck soon,” says Ismail.
Tariff levels are another important aspect of the negotiations, and again, Sacu had to be incorporated into any deal with the EU. “We are confident the EU better appreciates our position vis-^-vis Sacu now. Growth must be seen as a regional issue, not just a South African priority.”