The EU is happy to sell its highly subsidised products to Africa but is less happy if Africa asks for a similar free- trade deal. Lynda Loxton outlines Alec Erwin’s battle
TRADE and Industry Minister Alec Erwin left for Europe this week determined to persuade the European Union (EU) that any trade deal with South Africa would have to benefit the rest of Africa as well.
“This is a chance for Europe to make an important contribution for the rebuilding of Africa,” he said.
Erwin admitted that he had been disappointed with the EU’s apparent unwillingness to see a bilateral deal with South Africa as different from other trade agreements, but still hoped to persuade it to look at the issue from a developmental, rather than merely a trade, perspective.
This difference in perspective has been particularly highlighted in the debate between the two on agricultural products. The EU has indicated that it wants to exclude about 40% of South Africa’s agricultural products from any free-trade deal, but has not offered to do the same about its highly subsidised agricultural products.
In terms of World Trade Organisation rules, the EU is supposed to phase out its agricultural subsidies by the end of the century, but in the meantime heavily subsidised European beef exports to the Southern African Development Community have become a major threat to regional beef production, which South Africa cannot accept.
South Africa claims that European beef exports have risen from 7000 tons in 1993 to 42000 tons in 1996. The beef was sold at half the price that South African producers charged and this has led to massive revenue losses by producers, not only in South Africa but also in Namibia, Botswana and Swaziland.
The South African dairy industry has also warned about the effect of equally heavily subsidised European dairy products.
But it is not only the EU trade negotiations that South Africa is grappling with at the moment. It is finding it hard work trying to reconcile the conflicting demands of a whole array of trade talks with its deep-rooted conviction that South Africa has a post- apartheid duty to ensure that any deal must benefit the region as a whole.
“These processes have to be co-ordinated to avoid riding too many horses, with a direct consequence of riding none successfully,” says government trade adviser Maruping John Kodisang.
South Africa wanted to see a wider development package put in place in the region that covered trade as well as industrialisation, cross-border investment and product-specific protocols. Kodisang says this would liberalise intra-regional trade to the benefit of all member states, improve productivity, encourage investment, spur economic development and lead to the establishment of a free-trade area.
The trade protocol has to be ratified by two-thirds of the community states and South Africa has been criticised for not ratifying it immediately.
“The process has to be guided by various and often tedious legislative processes and constitutional procedures,” Kodisang explained.
“Countries like South Africa have to consult broadly by bringing various stakeholders on board through the National Economic Development and Labour Council to come up with a phased-down schedule. It has to be borne in mind that the protocol only sets a framework, and the details still have to be negotiated.
“On the other hand, South Africa’s tariff offer has to be responsive to the sensitivities of the community and a number of other bilateral trade talks now under way.”
These included South Africa’s negotiations with the EU and Zimbabwe and the trade community’s negotiations with Zambia, all of which had their own sensitivities and problem areas.
The situation is further complicated by the fact that there have been “talks about talks” of establishing a Trans-Atlantic Free Trade Area between the European Union and the North Atlantic Free Trade Area, which could have serious implications for low- growth African economies.
This made it even more imperative that the community should push ahead with plans to substitute import substitution with export- led manufacturing growth to address the structural weaknesses of regional economies.
“The high level of protectionism within national economies must make way for international competitiveness,” Kodisang said.
But this would require a high degree of co- operation and integration within the region, which South Africa wanted to be as inclusive as possible, covering broader civil society and academics as well as government officials.
“The re-emergence of South Africa on the international and regional landscape is rather taxing as it presents both challenges and opportunities,” Kodisang said.
South Africa also currently holds the presidency of the United Nations Commission on Trade and Development and is chair of the community.
“These are demanding responsibilities that must be driven by a leadership that has vision to constantly engage the unjust global order in rigorous policy dialogue,” he said.
“South Africa is then expected to negotiate a better deal for the South in general and for Africa in particular. The main challenge is the rapid restructuring of African economies as driven and sponsored by the Bretton Woods institutions. Hence the process of trade and financial liberalisation is premised and informed by the neo-liberal orthodoxy that seeks to create trading opportunities for the North.
“This is not to suggest that African economies must not restructure. They must do so as dictated by their own circumstances, a process that has to be driven by indigenous constituencies and not by external forces.”