EUROPEAN Union (EU) Ambassador Michael Doyle has urged Lesotho to take full advantage of the trade opportunities available under the Southern African Development Community Economic-European Union Partnership Agreement (SADC-EU EPA).
Dr Doyle made the remarks during an information seminar held yesterday at Avani Maseru Hotel which explored the trade opportunities available to Lesotho under the facility. The seminar was attended by government officials, the business community and members of civil society organisations among others.
The SADC-EU EPA is a bilateral trade and development agreement between Botswana, Lesotho, Mozambique, Namibia, South Africa, and Swaziland with the EU. The trade negotiations were concluded on 15 July 2014 culminating in a long-term agreement for duty and quota-free access to the EU market for SADC-EU EPA members.
“When we speak of trade, we are not only referring to trade in goods, but also trade in services as well as investment and development cooperation,” said Dr Doyle, adding that total SADC EPA group exports to the EU were €31 billion (about M431 billion) while EU exports amounted to €33 billion.
“EPAs are ambitious trade and development partnerships which go beyond trade in goods to create favourable conditions for economic development. There is potential in Lesotho to develop the services sector and the EPA provides for cooperation in this area too.”
He said the EU took into account the differences in the levels of development with its SADC-EU EPA partners, adding that under the agreement, the latter could shield sensitive products and services from liberalisation.
The ambassador also noted that for Basotho to fully benefit from the 500 million strong EU market, they need to fully understand rules of trade and rules of origin.
“The applicable rules of origin under the EPA will be more flexible than the current rules and will notably make it easier for exporters to use materials from other countries, a process called ‘cumulation of origin’,” Dr Doyle said.
“An example of this could be canned fruit, where some of the actual fruit crop is sourced outside Lesotho, for example in Swaziland. As long as there is some processing in Lesotho — the canned fruit produced can be exported as originating in Lesotho.”
He said the EPA was not just about market access but also “developing a true sustainable partnership; diversifying and developing industry in Lesotho, and adding value within the country to stimulate employment and economic growth”.
“I urge the government of Lesotho to create a conducive environment to allow private businesses the capacity and ability to trade and enjoy the full benefits of the EPA,” he added.
“The government of Lesotho and private businesses need to work harmoniously to increase the value of goods that they export to our markets.
“Lesotho already exports rough diamonds to the EU market which constitutes a large share of your exports to the EU. Added value of diamonds exported to European markets could be boosted.”
In his remarks, Trade and Industry Minister Joshua Setipa said Lesotho needed to resuscitate trade relations it used to enjoy with the EU through the export of asparagus and textile products.
“Given our historical trade relationship, it is a mystery that volumes have been declining. If you go back to 10 or 15 years ago, Lesotho was exporting almost its entire asparagus produce to the EU,” Mr Setipa said.
“We were exporting clothes to the EU but all that has disappeared so we have an opportunity to resuscitate those relationships. I don’t know what it would take for us to become a food processing hub, but having listened to the ambassador, I believe it is another sector with a huge potential.”
He also highlighted the need for government to exploit EPA opportunities to participate in global value chains.
“We have a factory in Maputsoe that produces leather seats for BMW and they go straight to the Poland in the United Kingdom,” the minister said.
“We also need to understand how we could use the relationship with the EU to provide support for companies that work with us. But I think the test of how far we can fully exploit the benefits of the EPA lies in how far we can use this programme, which is one part developmental and one part a trading relationship, to drive economic growth among our own entrepreneurs.”