SADC’s modest EPA gains

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Provisionally in effect since October 2016, the recently signed Economic Partnership Agreement (EPA) between the EU and the so-called ‘SADC EPA Group’ is a symbolic intensifying of trade ties.

The more substantial impacts of the EPA, however, are likely to be felt outside the EU-SADC relationship. Part 2 of a mini-series on African trade agreements. Following negotiations lasting more than a decade, the ‘EPA Group’ of the Southern African Development Community (SADC), which comprises Botswana, Lesotho, Mozambique, Namibia and South Africa, signed an EPA with the EU on 10th June 2016. While there is scope for Angola to join the ranks later on, the nine remaining members of SADC are either exempt or in discussions over other regional EPAs.

The bedrock of the free trade agreement is the asymmetric liberalisation of barriers to trade between the two blocs: EU reports indicate it is the most asymmetric agreement of all those to which the EU has signed up. SADC members, aside from South Africa, have gained quota and tariff-free access to the EU market in return for more moderate and gradual access to the SADC market over 15 – 20 years.

SADC’s gains from the EPA will be both modest and various. While some member states (for example Mozambique or Botswana) already had privileged access to the EU market in general or for specific goods, others (such as South Africa) have faced stricter trade conditions. Botswana, Namibia and Swaziland can look forward to uninhibited access to the EU market, offering 74.1 percent full access and 12.1 percent partial access to their own markets in exchange.

Although a step up in terms of legally-binding and increased market access, the three states already had unilateral access as of 2008. As middle-income states, and stakeholders in a potential EPA, the EU had provided them with Market Access Regulations – essentially temporary free trade agreements. As low-income countries, Mozambique and Lesotho were privileged in the same way under the Anything But Arms initiative, allowing them to trade freely in all goods except for munitions and military equipment. Mozambique and South Africa have received a different deal to other players in the mix. Mozambique, as a large, low-income state, is granted free EU access while only being required to lift 74 percent of its own trade barriers.

Mozambique, however, has yet to fully ratify the agreement despite its signature. South Africa, the local giant among SADC economies, has been offered a distinct package given its relative competitiveness and advanced economy. The EU has granted South Africa 96.2 percent full access to its market, alongside 2.5 percent partial access, while South Africa offers the same as Botswana et al. That said, South Africa too maintains an existing agreement with the EU: the Trade, Development and Cooperation Agreement Between the EU and South Africa which was established in 2000 with an aim to liberalise 90 percent of all EU-South Africa trade.

All in all, the deal is not expected to yield enormous trade benefits for either bloc. All SADC states already have some sort of agreement in place, which is in some cases unilateral, offering states free access free of charge. That said, the legally binding EPA offers security on otherwise arbitrary trade deals. — Globalriskinsights

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