Southern Africa reaps EU trade benefits

By Timo Shihepo

WINDHOEK–FIVE southern African countries – Botswana, Lesotho, Namibia, South Africa and Swaziland – have opened a new chapter in their bilateral relations with the European Union (EU) following the coming into effect of the Economic Partnership Agreement (EPA) on October 10.

The EPA takes into account the different levels of development of the partners. It gives Botswana, Lesotho, Mozambique, Namibia, and Swaziland duty-free, quota-free access to the European market.

Meanwhile, an analysis by The Southern Times indicates that the region has been enjoying robust trade with the EU. The SADC EPA Group recorded a positive trade balance in 2015, according to the EU Embassy in Windhoek.

Botswana, aided by petroleum, mining products and ores, recorded the highest positive trade balance totalling R18.5 billion after it exported goods worth R22.6 billion while importing products worth only R4.1 billion.

Namibia, in second place, posted a positive trade balance totalling R9.5 billion, after exporting to the EU goods worth R15.5 billion and importing products worth R6 billion.

Mozambique exported goods worth R21.5 billion to the EU compared to imports worth R14.7 billion, resulting in a positive trade balance of R6.8 billion. Lesotho exported goods worth R3.8 billion and imported R180 million worth of goods. Its trade balance with the EU stood at R3.6 billion.

Swaziland, whose exports were mostly made up of food products, sold to the EU markets products goods worth R2 billion while importing goods worth only R526.5 million.

These figures are expected to increase now that the development-oriented agreement has taken effect.

Mozambique is in the process of ratifying the agreement and will join the EPA as soon as the ratification procedure is completed.

South Africa will also benefit from enhanced market access, going beyond its existing bilateral arrangement with the EU. South Africa recorded a trade deficit of R84.8 billion last year.

The EU is the largest trading partner of the SADC EPA Group. In 2015, the EU imported goods worth almost R480 billion from the region, mostly minerals and metals. The EU exported goods of nearly the same value, consisting mostly of engineering, automotive and chemical products. Total trade between the EU and the SADC EPA Group (including Angola) amounts to R945 billion.

EU Head of Cooperation in Namibia, Markus Theobald, said at the moment these statistics do not represent the true picture of SADC-EU trade because of South Africa. This is due to the fact that before the EPA, most of the products coming from Europe and destined for Namibia and most countries in the region go via South Africa.

Although these products are in transit from the EU to Namibia, for instance, Theobald said they are now considered as imports from South Africa. Many countries in the region opted for this arrangement because since 2005, South Africa has been enjoying a free trade agreement with the EU.

Under that agreement, all products that landed in South Africa attracted reduced tariffs compared to those coming straight from the EU to Namibia, Botswana, Lesotho, Mozambique or Swaziland.

“This will definitely change. Under the EPA that is now changing. Whether the products land in South Africa or in Walvis Bay, it’s on the same terms,” said Theobald.

At the moment, the EU parliament has provisionally accepted the Economic Partnership Agreement, although all the 28 member countries are yet to ratify the trade agreement. The SADC EPA countries, on the other hand, are yet to gazette their tariff books as per the EPA.

Anna Hybaskova, the EU Ambassador to Namibia said: “It’s important that this is gazetted because people at the customs unions don’t know what tariffs to use.”

Hybaskova said she expected the five countries to gazette the EU-SADC EPA documents after ratification, and pave the way for its smooth implementation.

Namibia ratified the EPA in August 2016, way before the October 1 deadline that was set by the European Union. But the EU says it has not been presented with evidence that this has been gazetted.

“What I should say is that the EU delegation in Namibia has not received any official information if this document has been gazetted in Namibia,” she said.

Namibia was using the Market Access Regulation (MAR) regime, which is no longer valid, and is now using the new SADC-EPA regime that appears on importing papers that go with cargo to the EU market.

Meanwhile, Hybaskova said the United Kingdom leaving the EU had not yet affected the operations of the EU-SADC EPA. “God knows. Of course, legally nothing has yet to happen. Not even a single round of negotiations has been carried out in the wake of the news. So we wait,” she said.