Institute for World Economics and International Management - IWIM The Challenges of EPAs for Regional Integration and Trade Capacity Building in Southern Africa WTRADE “Trade Monday’s” 07 March 2005, Copenhagen Mareike Meyn Diplom-Volkswirtin Institute for World Economics and International Management (IWIM), University of Bremen

Institute for World Economics and International Management - IWIM Structure of the Presentation 1.Regional Integration Frameworks and EPA formation in Southern Africa 2.Challenges for the SADC EPA -on regional integration -Supply- and demand-side constraints 3.Including development aspects into EPAs 4.Policy Recommendations

Institute for World Economics and International Management - IWIM Why Promoting South-South Integration for EPA Negotiations? To avoid a “hub-and-spoke” relationship with the EU To increase the bargaining power vis-à-vis the EU and push through issues that are of fundamental interest for southern African countries To benefit from regional integration gains (e.g. trade creation, economies of scale) Condition: Custom Unions or effectively implemented Free Trade Areas Question: Does the European approach that pushes southern African countries to opt for one integration framework promotes regional integration in southern Africa or hamper regional integration efforts?

Institute for World Economics and International Management - IWIM Regional Integration Frameworks in Southern Africa COMESA SADC SACU South Africa Botswana Lesotho Namibia Swaziland Mozambique Angola DRC Malawi Mauritius Zambia Zimbabawe Tanzania EAC

Institute for World Economics and International Management - IWIM Mozambique Tanzania Lesotho South Africa SACU SADC Cotonou Agreement Mauritius „Everything But Arms“ Initiative Botswana Namibia Swaziland Zimbabwe TDCA Mozambique Tanzania Angola DRC Malawi Zambia COMESA Lesotho SADC Countries Trade Agreements with the EU

Institute for World Economics and International Management - IWIM TDCA South Africa SACU SADC EPA Mauritius SEA EPA LDCs BLNS Zimbabwe DR Congo Malawi Zambia Mozambique Tanzania Angola COMESA SADC countries’ chosen configuration for EPA Negotiations

Institute for World Economics and International Management - IWIM Export and import volumes and main trading products with SADC (minus South Africa) and COMESA, 2001 (in Mio. US$) Export volume in million US$ and % of total exports Main export products Import volume in million € and % of total imports Main import products BotswanaSADC 18 (0.3%) SADC Salt, Blood, Copper Mattes SADC 6.5 (0.2%) SADC Sugar, cement, Cotton Fabrics MauritiusSADC 1.4 (0.1%) COMESA 81.0 (6.2%) SADC Cotton Fabrics COMESA Cotton Fabrics, Flour, Fertilizer, Feed preparat. SADC 2.2 (0.1%) COMESA 54.1 (3.3%) SADC Coal and Fuels COMESA Energy and Fuels, Textiles, Garment, Food MozambiqueSADC 0.2 (0.1%) SADC Petroleum Oils, Fish, Palm oil SADC 0.8 (0.1%) SADC Beer, Wine

Institute for World Economics and International Management - IWIM South Africa SACU SADC TDCA SADC EPA Mauritius SEA EPA LDCs Angola Mozambique Tanzania BLNS DR Congo Malawi Zambia Zimbabwe SADC Countries’ chosen Configuration for EPA Negotiations

Institute for World Economics and International Management - IWIM Fragmentation of SADC member countries in EPA negotiations South Africa and the BLNS countries that are locked into the liberalisation schedule of the EU-South Africa and have de facto liberalised their markets towards the EU by 2012; The rest SADC EPA countries, namely Angola, Mozambique and Tanzania, that are all Least Developed Countries and thus potentially able to retain their non-reciprocal trade relations with the EU under the “Everything But Arms” initiative; and The remaining SADC countries (DR Congo, Malawi, Mauritius, Zambia and Zimbabwe) that are entering into the Southern Eastern Africa EPA. To avoid smuggling, trade diversion and economic polarisation and to promote intra-regional trade and regional integration in southern Africa, a common external trade policy towards the EU would be in the best interest of all SADC countries.

Institute for World Economics and International Management - IWIM Conclusions and Policy Recommendations SADC should put pressure on its members to opt for a consistent regional policy and to decide for regional integration in a SADC, COMESA or EAC framework. SADC countries’ decisions to negotiate an EPA in two different regional frameworks give reason to question whether the current configuration of 13 SADC member countries is going to survive. –DRC, Malawi, Mauritius, Zambia, and Zimbabwe are currently negotiating a Southern Eastern Africa EPA and all but DRC might join the COMESA Customs Union later this year. –Tanzania will be bound in a Customs Union with Uganda and Kenya from October 2004 on –SADC EPA = BLNS + Angola and Mozambique or enlarged SACU ?

Institute for World Economics and International Management - IWIM Conclusions and Policy Recommendations To cope with the challenges created by EPAs, the SADC EPA has to move on towards deeper regional integration. SADC can no longer rely on its slowest members but has to adopt an integration framework of different speeds where core members work constructively towards a CU. These core members could be the SACU countries that are enlarged by Mozambique. The enlarged SACU has to harmonise its trade-related policies and formulate common policies in this field respectively. Efforts to create a common trade negotiation body must be strengthened. Angola should maintain its non-reciprocal trade relations with the EU in the short- to medium term and join the SADC EPA only after having integrated in its intra-regional trade and investment framework. However, the EPA concept violates those from the EU formulated requirements that ACP countries will be treated according to their different development status.

Institute for World Economics and International Management - IWIM Thank you for your attention! Questions and comments are very welcome.