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Regionalism and EPAs TDCA Review and EPAs1

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					tralac Annual Conference
5 October 2006

                                                              Regionalism and EPAs:
                                                             TDCA Review and EPAs1
                                                                                           by
                                                                           Wilhelm Smalberger2


Questions begging to be addressed

1. What is the link between regionalism and EPAs?

    This has been addressed by various speakers. Suffice to say that the EPA process
    has brought huge external pressure to bear upon the ACP to sort out its regional
    affiliations. In all fairness to the players and their intentions, my humble impression is
    that we, i.e. the ACP states, need some encouragement. As Shakespear reminds us
    in Twelfth Night: some people inherit greatness, others deserve it, but upon some it
    is imposed. Likewise, regional integration can be inherited from previous
    generations3, or it can be developed in a bottom-up manner, on the basis of sound
    economic principles, and thus deserved, or it could be imposed. It is fair to say that
    the third possibility reflects the situation SADC finds itself in vis-à-vis the EU. If one
    were to be asked whether or not this external pressure is serving the cause of
    regional integration in SADC, one would find it very difficult to answer in the
    affirmative. However, that is now water under the bridge and we would have to find
    the best way forward – which I believe is the subject of the final session tomorrow.

2. What is the link between the review of the TDCA and EPAs?

        Since I was involved in the entire process in the nineties of our negotiations with
        the EU, I think it will be useful to bring institutional memory to the current
        situation. The natural trajectory of our trade policy after 1994 would have been to
        first sort out our relations in Southern Africa, namely vis-à-vis SACU and SADC,
        before we oriented ourselves with regard to the rest of the world. Students of EC
        history will tell us that this is exactly what the EC did. It took them 10 years to sort
        out their club rules and their identity - from 1958 to 1968 - before they started to
        look towards the outside world. If we had followed the same sequence, it would
        have allowed us to first consolidate our position in Southern Africa. However, our
        judgement at the time was that that kind of luxury was not accorded to us. The
        EU offered SA the possibility of negotiating an FTA with them. Since the EC

1
  See annexure for an explanation of the acronyms used in this presentation.
2
  Wilhelm Smalberger is from the Department of Trade and Industry of South Africa. The views
expressed in this contribution are personal and should not be attributed to any group or national
body.
3
  As the current generation in SACU did.


                                                                                                    1
      represents 40% of our international economy and since we desired to reintegrate
      into the world economy as quickly as possible, we decided on a parallel process.
      This was to sort out our relations with the EU at the same time that we
      restructured our relations with SACU and SADC.

      SA’s first ambition vis-à-vis the EU was to be regarded/treated as part of the ACP
      under the Lomé Convention. What was the EUs response? SA was not a typical
      ACP country and as a result would make it impossible for them to get an
      extension for the waiver for Lomé. SA consequently joined the Convention but
      only as a partial member, excluded from the trade chapter.

      SA’s second ambition was to take BLNS along and do an agreement between
      SACU and the EU. We understood the implications of being in a customs union
      and the disciplines associated with a common external tariff. We thought the EU
      also understood it. But what was the EU’s response? A bureaucratic one: it did
      not have a mandate to negotiate with SACU.

      The point I am trying to make is this: there has always been unfinished business
      in the back of our minds: between us and the region, vis-à-vis the EU. The
      preamble of the TDCA serves as a reminder to both parties.

          With regard to SACU, and I quote: (the parties are) “…. to ensure that their
          mutual arrangements do not impede the process of restructuring the
          Southern African Customs Union (SACU), which links South Africa to four
          ACP States”. As far as the internal process is concerned, we achieved that
          via the new SACU agreement that entered into force in 2004. The obvious
          next step for SACU is to harmonise its relations with the EU.

          With regard to SADC, the preamble may not be as clear but it does confirm
          the commitment of the parties, i.e. SA and the EU, to promote regional
          cooperation and economic integration between the countries of Southern
          Africa, and to encourage the liberalisation of trade between these countries.

      My conclusion on this second question is this: the review of the TDCA is firmly
      caught up in the regional configuration. SADC in March this year made a clear
      proposal for a way forward vis-à-vis the EU, a framework in which a to-be-revised
      TDCA is to play a key role. Xavier Carim is to elaborate on this tomorrow.

3. Is the TDCA a hindrance to regional integration or is it an instrument that could
   unite the region vis-à-vis the EU? In other words, is it an obstacle or a saving
   grace?

      I am sure many of you hold views on this question, and the countries in the
      region have their views. I have not been asked to provide a detailed critique, or
      for that matter, a defence of the TDCA. So let me leave you with just a few
      thoughts.




                                                                                      2
The TDCA reflects a reality that existed at the time of its negotiation. That is
one of the reasons why it contains a rendezvous clause. The critical question
is whether the conditions that prevailed in the 90’s are still the same, and thus
providing the ground for the EU to respond to SA (and the region) as it did
before the start of the TDCA negotiations. Or have conditions changed
sufficiently for the parties to take deliberate steps to harmonise relations
between the EU and the region? We, in South Africa, have reason to believe
that the world has moved on and that the situation requires fresh
perspectives.

The second critical aspect is the impact EU trade policy has on the region.
Our argument is that it cannot pretend to promote regional development in
the region and at the same time divide us via differential trade policies it
applies vis-à-vis the region.

The third aspect is a matter of sovereignty. The parties to a negotiation have
to exercise their sovereign rights with regard to how they want to configure
themselves. We can never tell the EU that we have signed an agreement
with the EU 15 and that in terms of the TDCA we would not allow them to
enlarge any further. Neither can we employ one set of rules vis-à-vis Holland
and a more liberal set vis-à-vis Belgium. These are clever people. Instead of
the Dutch exporting via Rotterdam they will simply move their goods via
Antwerp. Likewise, these same realities have to be recognised with regard to
Southern Africa.

What is my final conclusion? We now have an historical opportunity to
address our unfinished business. We must think long term and in a creative
manner, and we mustn’t allow particular interests to railroad our ability to
build relations between the EU and us on solid and generally accepted
principles. The question is therefore not so much whether the TDCA is a
hindrance or whether it is an instrument that could unite us, but rather how it
could become the vehicle to achieve our regional objectives.




                                                                               3
Annexure


EPAs:         Economic Partnership Agreements that are to replace the trade chapter of
              the ACP-EU Partnership Agreement signed in Cotonou on 23 June 2000.

EC:           European Community is the legal framework consisting of, inter alia, a
              customs customs union with a common customs duty tariff vis-à-vis goods
              from outside the EC and no customs duty barriers between the member
              states. Goods cleared for customs purposes in one member state are
              therefore free to move to other member states.

EU:           European Union, which came about as a result of the Treaty of Maastricht in
              1992, is the political framework consisting today of 25 member states, namely
              Austria (19954), Belgium (1957), Cyprus (2004), Czech Republic (2004),
              Denmark (1973), Estonia (2004), Finland (1995), France (1957), Germany
              (1957), Greece (1981), Hungary (2004), Ireland (1973), Italy (1957), Latvia
              (2004), Lithuania (2004), Luxembourg (1957), Malta (2004), Netherlands
              (1957), Poland (2004), Portugal (1986), Slovenia (2004), Slovakia (2004),
              Spain (1986), Sweden (1995) and the United Kingdom (1973).

SACU:         Southern African Customs Union, consisting of Botswana, Lesotho, Namibia,
              South Africa and Swaziland. It operates on the basis of the same principles
              explained above under “EC”.

SADC:         Southern African Development Community is a free trade area consisting of
              Angola, Botswana, DR Congo, Lesotho, Madagascar, Malawi, Mauritius,
              Mozambique, Namibia, South Africa, Swaziland, Tanzania, Zambia and
              Zimbabwe. It does not have a common customs duty tariff vis-à-vis goods
              from outside SADC.

TDCA:         Agreement on Trade, Development and Cooperation between the European
              Community and its member states, of the one part, and the Republic of South
              Africa, of the other part, signed on 11 October 1999.




4
    Date of accession.


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