EC/ACP EPAs Debates: Prospects and Challenges for the SADC Group Dr. Yenkong Ngangjoh H., Programme Co-ordinator on Global Trade and RI-Nordic Africa Institute-Uppsala, Sweden (yenkong.ngangjoh-hodu@nai.uu.se) 01/01/2019 Prepared by Dr. Yenkong Ngangjoh H., NAI-Uppsala

Framework for Trade Relations between Southern Africa and Europe Four Applicable Frameworks: The Cotonou Partnership (CPA) Agreement(2000) The Everything But Arms initiative (2001) The EU’s GSP available to all Southern African countries (less favourable than CPA) EU-South Africa Trade and Development Co-operation Agreement (TDCA) 01/01/2019 Prepared by Dr. Yenkong Ngangjoh H., NAI-Uppsala

EU-South Africa Trade, Development and Co-operation Agreement (TDCA) Commitment of SA Duties reduction on 86% of current import from EU over 12-year period South Africa will eliminates tariffs on 83% of EU agricultural import Commitments of EU Duty-free import of 95% of current South African EU export - (implementation within 10-year period with many reduction within 1st few years (front loading) EU will eliminate tariffs on 61% SA agric import TDCA de facto applies also to SACU (Botswana, Lesotho, Namibia and Swaziland-BLNS) BLNS & SA share common external tariffs By implication, BLNS obliged to reduce their tariffs on EU products Rules of Origin requirement in TDCA an impediment to BLNS products into the EU 01/01/2019 Prepared by Dr. Yenkong Ngangjoh H., NAI-Uppsala

Prepared by Dr. Yenkong Ngangjoh H., NAI-Uppsala Arguments for EPAs EPAs will foster development mainly through trade liberalisation and the creation of right policy framework to attract investment EPAs & intra-ACP FTAs will lead to economic development and growth By building on ACP RI processes, EPAs will contribute to effective regional markets 01/01/2019 Prepared by Dr. Yenkong Ngangjoh H., NAI-Uppsala

Arguments against EPAs Two unequal Partners EPAs detrimental to local production EPAs will create unemployment Fear of reintroduction of Singapore issues (investment, competition, gov’t procurement etc.) into EPAs by EC Fear of services liberalisation Fear of Inclusion of WTO plus (e.g. TRIPs) Fear that current EC approach does not take into account national dev’t strategies in ACP countries Fear of pressure by the EC on ACP to conclude EPAs before Jan. 2007 01/01/2019 Prepared by Dr. Yenkong Ngangjoh H., NAI-Uppsala

Key Issues and Challenges for SADC-EU EPA Negotiations (1) Geographical Configuration (GC): Challenge of coordinating EPA negotiating approach due to overlapping membership Therefore, there is existence of different integration programmes and conflicting obligations by different regional arrangements TDCA-SACU case BLNS being de facto TDCA member, SACU may choose to negotiate EPA with EU in combination with TDCA Challenge lies on how SACU-EU (TDCA) EPA will take form Should the TDCA review process accommodates BLNS? But, CPA preference for BLNS better than TDCA preferences If BLNS are incorporated into TDCA, how to bring in Angola, Tanzania & Mozambique? (other three SADC EPA members) 01/01/2019 Prepared by Dr. Yenkong Ngangjoh H., NAI-Uppsala

Key Issues and Challenges for SADC-EU EPA Negotiations (2) EAC (Tanzania, Uganda, Kenya) a CU Tanzania part of EAC, but negotiating EPA under SADC banner while Uganda and Kenya under ESA Way forward: Coordination and harmonization of SADC-EU EPA with other EPAs necessary for concluding other EPAs, i.e. need of alliances among regional partners Trade policy convergence necessary for SADC members Harmonization of common external tariffs of SADC/SACU, COMESA/EAC and IOC required 01/01/2019 Prepared by Dr. Yenkong Ngangjoh H., NAI-Uppsala

Key Issues and Challenges for SADC-EU EPA Negotiations (3) Lack of Capacity for Trade Negotiations and limited Resource Mobilization: With the exception of SA, SADC members lack knowledge of both regional and multilateral trade negotiations Cost of reciprocity: Small & medium sized firms in the SADC zone may effectively be pushed out of the market by highly competitive EU products as a fallback of reciprocity Tariff liberalisation in an EPA will leads to substantial import revenue losses With reciprocity, SADC gov’t budget will be under pressure by infrastructural investments required to prepare its mkt for competition from EU 01/01/2019 Prepared by Dr. Yenkong Ngangjoh H., NAI-Uppsala

Some Elements of SADC approach to EPA Basing mkt access for EU to SACU mkt on the current EU-SA TDCA, with some modifications for sensitive products No obligation on LDCs of Tanzania, Mozambique and Angola to extend tariff reduction commitments to EU Provide EBA equivalent access to EU mkt to all non-SADC LDC Simplified rules of origin for SADC exports to EU Binding Commitment from EU for SPS standard capacity building Trade facilitation development support commitment from EU Compensation plans for BLNS revenue losers on adjustment No agreement on services and trade related areas Option of joining EPA by some SADC members later upon completion of Custom Union 01/01/2019 Prepared by Dr. Yenkong Ngangjoh H., NAI-Uppsala

Some Alternatives to EPAs Pursuant to Art. 37.6 CPA, a WTO-compatible alternative trading arrangements maybe entered into by ACP Members not wanting EPA Why consider alternatives to EPA? SADC Members may be doubtful of merits of EPA or as a fallback in case of no agreed EPA As a benchmark scenario for measuring the outcome of EPA negotiations 01/01/2019 Prepared by Dr. Yenkong Ngangjoh H., NAI-Uppsala

Some Alternatives to EPAs Countries not willing to open up to EU products may rely on the EU GSP, leading to slight loss of preference An extension of GSP+ to incorporate Cotonou equivalent preferences An enhanced GSP comprising three trade regimes: GSP+, EBA for SADC LDCs and a new ‘Non-LDCs (BLNS) preferential regime’. Extending EBA to all ACP, the G90 or even all developing countries Prolongation of the CPA beyond 2007 Incomplete FTA (total liberalization of EU mkt to products from ACP and partial liberalization by ACP i.e. 10%MFN). This option needs reforming GATT Art. XXIV 01/01/2019 Prepared by Dr. Yenkong Ngangjoh H., NAI-Uppsala

What if there is no EPA by January 2008? To resolve this, the following questions need to be answered; viz, Can the SADC (minus group) continue to get the Lomé preferences? If the answer is no, will it amount to a violation of an international treaty by the EU? Can the SADC (minus group) sue? If so, where will be the proper jurisdiction? 01/01/2019 Prepared by Dr. Yenkong Ngangjoh H., NAI-Uppsala

What if there is no EPA by January 2008? Can the SADC (minus group) continue to get the Lomé preferences after 2007? No, except there is an extension of the Cotonou waiver by the WTO. But, is the EU ready to pay for such extension? If the answer is no, what next for Namibia, Botswana and Swaziland which do not benefit from EBA? 01/01/2019 Prepared by Dr. Yenkong Ngangjoh H., NAI-Uppsala

What if there is no EPA by January 2008? Is the CPA a treaty within the meaning of the VCLT? Pursuant to the VCLT, “treaty” means an international agreement concluded between States in written form and governed by international law, whether embodied in a single instrument or in two or more related instruments and whatever its particular designation; (Art. 2.1(a)) If the CPA fulfils the above definition, the principle of Pacta Sunt Servanda applies However, a party may not invoke a provision of its internal law as a justification for violating a treaty. (VCLT Art. 27) 01/01/2019 Prepared by Dr. Yenkong Ngangjoh H., NAI-Uppsala

Jurisdictional Question Pursuant to Art. 98 CPA, disputes shall be submitted to Council of Ministers and thereafter to Committee of Ambassadors However, in case of failure the dispute may be taken to the Permanent Court of Arbitration Measure challenge; Duration of the proceedings and available remedies 01/01/2019 Prepared by Dr. Yenkong Ngangjoh H., NAI-Uppsala

Jurisdictional Question Can CPA issues be heard by the WTO panel/AB? Pursuant to DSU Art. 1, “The rules and procedures of this Understanding shall apply to disputes brought pursuant to consultations and dispute settlement provisions of the agreements listed in Appendix 1 of this Understanding” and those special or additional rules and procedures on dispute settlement covered in Appendix 2 to this Understanding. DSU Art. 11 further calls for panels to observe objectivity in discharging their duties & in conformity with relevant covered agreements Recently in Mexico – Taxes on Soft Drinks, the AB observed that “adjudicating non-WTO issues by the panel and the AB will be against the function of the panels and the AB as intended by the DSU” Therefore, is CPA WTO issue? 01/01/2019 Prepared by Dr. Yenkong Ngangjoh H., NAI-Uppsala

Jurisdictional Question However, we must note that the WTO treaty system is not a closed regime ”lex specialis” See AB reports in US – Gasoline, US – Wool Shirts and Blouses etc. Thank you!!! 01/01/2019 Prepared by Dr. Yenkong Ngangjoh H., NAI-Uppsala