EPA divides SACU- Experts
Gaborone – A study conducted by the Botswana Institute for Development Policy Analysis (BIDPA) says the Interim Economic Partnership Agreement with the EU has had a divisive effect on SACU after Botswana, Lesotho and Swaziland initialled the treaty last June while Namibia and South Africa delayed the signing.
The study, prepared by Professor Roman Grynberg and Khutsafalo Sekolokwane, says that in the coming months or years the SADC members will negotiate a final EPA which will replace the Interim Agreement.
According to the briefing if South Africa does not sign, SACU will be in “serious peril”.
“If the Customs Union were abandoned, what would replace it? Since all SACU members are also members of SADC, the SADC Free Trade Area would govern trade among the parties if SACU were to collapse. The SADC FTA came into force on January 2008 with an estimated 85 percent of all trade in goods having been liberalised, and the remaining tariff lines are expected to be phased out by 2012.”
“One problem with SADC is that it does not have strong enforcement mechanisms. Though the SADC Trade Protocol specifies a dispute settlement system modeled on the WTO, the chances of a country failing to implement the findings of a SADC dispute settlement body are high; hence the prospect of a ‘trade war’ cannot be discounted. However, if the SACU collapse provoked a country to raise tariffs in violation of its SADC FTA commitments, it would no longer be dealing with its SACU counterparts only, but with other Members of SADC.”
This change will be very difficult for SACU Members since they have liberalised so much under the SADC FTA. But if any SACU Member decided to disregard SADC and raise tariffs, its WTO commitments would then provide the upper limit or ceiling. Since most countries’ applied tariffs are often substantially lower than their bound rates, a current SACU country could legally raise import tariffs within the limits of the law if SACU dissolved.
According to the study, the demise of SACU and its replacement by SADC would certainly result in a considerable dilution of South Africa’s political and economic power in the region. Access for Botswana been has been accepted widely as the main economic benefit of the Interim EPA. What the EU offered Botswana (and Namibia, which is similarly dependent upon beef) is duty free quota free access.
Since Botswana’s beef exports were already largely duty free the benefit of the improved market access in the IEPA, which provides for quota free access, is financially limited.
“Based on the 2006 data, the Overseas Development Institute (ODI) together with BIDPA had calculated that the increased benefit to Botswana was about P8 million from then improved market access. However, increased market access is of little value to the three countries in the region. Neither Botswana nor Namibia nor Swaziland have ever been able to fully utilize the generous quota that existed under the Cotonou Agreement and the Lome Convention before that,” reads the study.