Namibia spearheads EPA resistance

08 August 2013 Author  

front henning 09 augNAMIBIA’S courage to stand up against the European Union (EU) and refuse to sign the Economic Partnership Agreement (EPA) is admirable but unsustainable, given its comparatively vulnerable situation. These are the views expressed by Henning Melber in his recently released report “Namibia and the Economic Partnership Agreement (South African Foreign Policy Initiative, SAFPI, Brief No.39).

In spite of the economic risks involved, Namibia has been at the forefront of resistance to signing the EPAs. Government has argued that the terms of the EPAs are not in the country’s best interests. 

“This does not diminish the impact the position has had for other countries negotiating the EPAs. It can be assumed that Namibia’s principled refusal to get bullied into an agreement against what it considered its own best interests served as an example for other countries originally more willing to adhere to the pressure exerted.

 

“That the EPAs remain a contested notion and require from the EU more wheeling and dealing than was probably anticipated at the beginning shows that even relatively small economies with comparatively little weight can make a meaningful impact during negotiations,” Melber says.

Namibia currently enjoys free access to the EU market. Namibian products whether industrial or agricultural, do not pay duties at the EU’s borders and are not subject to quotas.

However, this regime is based on a temporary instrument that will end on 1 October 2014. If by this date Namibia does not ratify an Economic Partnership Agreement, the country will not be eligible for preferential treatment for its exports to the EU.

In June 2010, European Commission (EC) Trade Directorate concluded that the Interim EPAs (IEPAs) with the SADC countries could not be implemented before all partners have signed them.

Namibia’s firm refusal to sign an IEPA has turned out to be the biggest stumbling block towards such a common basis.

“Angola and South Africa took a similar route and joined Namibia in its principled stance. However, Namibia, whilst bordering both countries, was the smallest and most vulnerable of the three economies and took the only big risk: Its average annual per capita income classifies it as a Higher Middle Income country and hence disqualifies it from a Least Developed Countries (LDC) status.

“This entirely fictional aggregate contrasts with one of the world’s highest Gini-coefficients, which means that the country has among the biggest discrepancies in the distribution of wealth and as a result faces a massive poverty problem among the majority of its population,” the paper says.

Angola on the other hand qualifies as a LDC despite its excessive revenue income from crude oil reserves. Under the Everything-But-Arms (EBA) initiative, this allows the country preferential access to the EU market.

“It also has a precious good to offer, for which the EU is willing to show quite some degree of flexibility when it comes to accommodating deviating behaviour. After all, oil reserves are an internationally attractive asset, which provides bargaining power,” Melber says.

In the 90s, South Africa negotiated a Trade, Development and Cooperation Agreement (TDCA) with the EU.

This fully World Trade Organisation (WTO) compatible Free Trade Agreement (FTA) was negotiated in blatant violation of the Southern Africa Customs Union (SACU) provisions, which would have required prior consent and involvement of the other members of the customs union.

Because of this, the last stage of the current TDCA implementation allows the EU to export subsidised goods duty free into the markets of the other SACU member states including Namibia, preventing any protection to local producers with regard to such competition.

“De facto, the EU already benefits from the open markets of the SACU members through its TDCA with South Africa and does not need any IEPA provisions for this penetration as long as SACU is intact.

“Because of the TDCA and not being African Caribbean and Pacific (ACP country), South Africa was originally not part of the EPA negotiations.

“Only the obvious lack of logic to this exclusion, given the country’s central role in the sub-region and its integrated economy by means of SACU and SADC membership, led to a late correction.

“However, South Africa had reasons to find some of the clauses coming into effect under the TDCA dubious and detrimental enough to take a sceptical position vis-à-vis the current deal in the making. Thanks to the TDCA, it can afford this reluctance,” Melber says.

After it had originally initialled the draft agreement at the end of 2007, Namibia dared to refuse signing the IEPA.

At a meeting in Swakopmund in mid-March 2009, certain clearly specified objections were raised, which dealt with substantial queries Namibia expressed.

Instead of being incorporated into the IEPA document to be signed, however, they were considered by the EC as matters to be dealt with ‘in good faith’.

“Namibia’s Minister of Trade and Industry [at the time] Hage Geingob begged to differ: he subsequently charged that the EU had failed to put the given assurances to paper.

“His refusal to sign a document which had not incorporated the agreed changes provoked hardly concealed threats that Namibia might as a result lose its preferential (duty and quota free) access for beef, fish and table grapes to the EU market, estimated to be worth N$3 billion.

“[This] is a substantial if not decisive share of the annual income for the local meat, fish and grape producers,” the paper says.

Melber adds that “an assessment of the likely implications for Namibia estimates that more than half (51percent) of total exports to the EU would be subject to additional duties.

“While the additional tariffs would be on average moderate, it would considerably affect duties levied on beef exports and “would probably result in the de facto commercial closure of the EU market to Namibian beef exports”.

“Fisheries were likely to be less severely affected. Negative effects could also limit the exports of seedless table grapes to the EU market, which emerged in recent years as a viable export commodity.

“Research results by the Overseas Development Institute predicted that taxes imposed on beef imports from Namibia would exceed the annual EU aid fund contributions by more than four times,” the report states.

The Most Favoured Nations (MFN) clause remains another problematic issue. The clause stipulates that all trade agreements entered with parties holding above 1.5 percent of the global trade would automatically entitle the EU the same preferences.

In the light of a trade agreement negotiated in parallel between SADC and India, southern African countries considered this an obstruction to the desired strengthening of South-South trade relations, writes Melber.

Outstanding issues for Namibia still include tariff negotiations, export taxes, management of the fishing industry, balance in agricultural products and rules of origin.

During an official visit to Namibia three weeks ago, EU Trade Commissioner Karel de Gucht said the EU is listening to Namibia’s concerns about how to deal with European goods entering Namibia’s markets at lower tariffs.

He said the EU has already expressed its readiness to offer measures for infant industry protection and food security safeguards.

In April, Minister of Trade Calle Schlettwein said that the EPA is “about partnership towards the shared goals of poverty alleviation and economic development. Let’s not use bully tactics or old colonial arrogance. Let’s be partners who have equal sovereignty.”

Last month Permanent Secretary in the Ministry of Trade and Industry Malan Lindeque said that while the parties had made some progress on the EPA negotiations, the negotiations were not easy or simple.

De Gucht said he was convinced that the meeting with Geingob and Schlettwein helped to bring the talks closer to a conclusion.

Both parties agreed that a new round of negotiations would take place in September in the hope that the two sides would find solutions to the outstanding issues.

WINDHOEK OBSERVER

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