The Interim Economic Partnership Agreement: Why Namibia Should Not Sign – Part 1

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Recent reports in the media with regards to Namibia’s so-called “reluctance” to sign the interim Economic Partnership Agreement (EPA) with the European Union (EU) have elevated the issue to a level that once again necessitates public debate on the merits of such a step.

These reports were sparked by the current spate of remarks by the Minister of Trade and Industry, Dr Hage Geingob, on why Namibia has not yet signed the interim EPA. This has opened a Pandora’s box with local Civil Society Organisations (CSOs), the European Commission (EC), the local meat industry and the Namibia Chamber of Commerce and Industry (NCCI) joining the bandwagon in reaction to Geingob’s comments.

Part 2 of this article

 Part 2 – The Interim Economic Partnership Agreement: Why Namibia Should Not Sign

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Several local CSOs came out in support of the Government’s stance not to sign the interim EPA at this stage and voiced their concerns about the latest developments that brought about a discord between the Southern African EPA participants. This has specific reference to the necessity of preserving the integrity of the Southern African Customs Union (SACU).

The EC, through the spokesperson for the European Trade Commissioner, Lütz Güellner, came out strongly to counter the recent remarks of Geingob with regards to the signing of the interim EPA. The latest from his side concerns the ambiguity of Namibia towards the interim EPA and a possible legal challenge to end the country’s current duty free quota free (DFQF) market access to EU markets.

The Chief Executive Officer (CEO) of Meatco, Kobus du Plessis, reacted to Geingob’s comments by attaching an income and loss statement for the local meat exporting industry should Namibia decide not to sign the interim EPA. However, he acknowledged that the meat sector is not the only sector in the Namibian economy and that regional integration and SACU receipts are important to the country.

Lately the NCCI, through its CEO Tarah Shaanika, also voiced its support for the Government not to sign the interim EPA at this stage. The NCCI recognises the threat of the interim EPA to regional integration in Southern Africa and warned that the Government should “continue seeking strong and unequivocal written assurances that what has been agreed in negotiations will be honoured”.

All of the above responses warrant an in-depth look into what is actually at play at the moment. For this, it is necessary to highlight some of the tactics and discrepancies towards the Southern African Development Community (SADC) EPA members, the current pressure to sign an unconcluded agreement, as well as potential consequences with regards to the so-called “agreed” texts during the Swakopmund EPA negotiations in March of this year.

Since the first rounds of negotiations, these were marred with controversy and eventual distrust given the EC’s negotiating tactics and the autocratic attitude of the former European Trade Commissioner, Peter Mandelson.

A flight into history should recall that despite an agreed Joint Roadmap at the launch of the negotiations on July 8, 2004, the initial composition of the SADC EPA configuration was unsustainable in terms of existing regional integration initiatives and the unspecified role of South Africa as only an observer.

A chronology of events unfolded with the negotiations in Southern Africa soon falling behind the progress achieved by other configurations. On February 12, 2006, SADC-EPA trade ministers adopted a range of strategic framework proposals as a salvage attempt for the local regional integration agenda. These proposals were submitted to the EC on March 7, 2006.

The two main proposals were the inclusion of South Africa as a member of the SADC configuration (to preserve the integrity of SACU) and the exclusion of the so-called new generation issues (services, investment, intellectual property rights, competition, etc.) from the negotiations – these issues are not a requirement to comply with World Trade Organisation (WTO) rules.

It took the EC 11 months to respond to these proposals, consequently delaying any progress in the negotiations even further. On February 14, 2007, the EC approved South Africa’s inclusion as a member of the SADC EPA configuration (albeit with a differentiated approach in market access). However, they insisted to keep the new generation issues on the negotiation agenda. By then the negotiations were already in trouble given the EPA deadline of December 31, 2007.

On April 4, 2007 the EU strategically announced DFQF market access (IP/07/476) to all African, Caribbean and Pacific (ACP) countries as part of the EPA negotiations. This offer covers all products “including agricultural goods like beef, dairy, cereals and all fruit and vegetables”, “with a phase-in period for rice and sugar”. The offer would apply immediately given the prerequisite of “the signing of an agreement”.

However, the offer also introduced an additional impediment for the SADC EPA configuration in “The only exception will be South Africa where a number of globally competitive products will continue to pay import duties.” What if the SADC EPA configuration would counter this argument with a request to treat an EU country differently on the grounds of “a number of globally competitive products that will have to continue paying import duties”?

EC’s attempts to penalising ACP developing countries

Despite the DFQF offer, resistance to the EPAs among the ACP countries was mounting given the EC’s non-accommodating attitude and its strong-arm tactics during the negotiations to ensure signatures to these agreements. Peter Mandelson’s last attempt to force ACP signatures came when he threatened ACP developing countries with punitive tariffs from the EU’s Generalised System of Preferences (GSP) should they decide not to sign EPAs before the 2007 deadline – this despite the acquis principle that no country would be worse off post-Cotonou.

As a confirmation, during an address to the European Parliament’s International Trade Committee on September 11, 2007, Mandelson said it was “irresponsible” for anti-poverty campaigners to claim that if the ACP does not sign EPAs by end-2007, punitive tariffs should not be imposed on those countries. This, Mandelson claimed, was because he had “no [other] legal option” than that imposed under the WTO rules – thus deliberately neglecting the Cotonou provisions.

Despite Mandelson’s threat, the EC realised that their overzealous ambition of having full EPAs signed by the year-end deadline was totally unrealistic, given the slow progress in the negotiations and the ever-mounting resistance to certain provisions in the EPAs (especially from African countries). On October 23, 2007 the EC proposed a goods-only negotiating agenda to ensure any progress in the negotiations.

However, the EC capitalised on this setback by introducing a two-tiered approach not to fall short in the negotiations. The first step required the configurations or countries to initial an interim EPA before the deadline, while the second step included an undertaking to continue negotiations towards a full EPA in 2008.

The second step also provided for the continuation of the negotiations on the new generation issues.

Despite these threats from the EC, only 35 out of 79 ACP countries initialled an interim EPA before the end of December deadline – these include the 15 countries from the Caribbean, only two countries from the Pacific and 18 countries from Africa.

Namibia only initialled the interim EPA after assurances from the EC President, Manuel Barroso, during the EU-Africa Summit in Lisbon on December 8-9, 2007, that the unresolved issues would be re-opened for negotiation during 2008. A statement containing a list of issues to be resolved before signature accompanied the initialling.

In total contrast, Mandelson, during an address to the members of the European Parliament on January 29, 2008, contradicted the Barroso promise to re-open the contentious issues of the interim EPAs, stating that he was not in favour of further dialogue on deals (interim EPAs) that were already secured (initialled).

On February 26, 2008, the Director of ACP relations in the EC, Klaus Rudischhauser, conceded that the EC’s handling of the trade negotiations that lead to the proposed interim EPAs was a public relations “disaster” and a “huge communications failure”. This prompted the EC to embark on an “EPA success stories” campaign in a number of ACP countries.

Peter Thompson, EU Commission Director responsible for EPAs and development (GSP), on March 6, 2008 sent a communication [D(2008) VV D/2489] to the Heads of Delegations in these ACP countries to reflect on their website “some of the more positive stories that emerged on interim EPAs”, because “The fact that these views are expressed by third parties and do not come from the mouth of EU negotiators, … contributes to re-balancing the debate.”

The ANSA list

In order to add further impetus to the plight of the Southern African countries, Angola and South Africa, on May 19, 2008, added their concerns to the Namibian list of unresolved issues (now referred to as the ‘ANSA’ list). The ANSA list was submitted to the EC who then agreed that these concerns could be re-opened for negotiation, albeit in a parallel process to the EPA negotiations.

During the third week of July 2008, the European Development Commissioner, Louis Michel, in an address to European Parliament members, said that the EU’s policies would not always be coherent with development objectives. According to him, as a consequence, Africa will have to learn to live with the adverse effects these policies will sometimes have on their countries’ development situation.

He went on to say that although he agrees that organisations criticizing the EU for these inconsistencies are “ethically and intellectually” correct, they are “perhaps politically not right”. When it comes to weighing the interests of European farmers against those of developing countries, in many cases those of the former still prevail over the latter. In his own words: “There are limits to what is feasible in political terms”.

In an unexpected turn of events, on October 3, 2008 Mandelson resigned as European Trade Commissioner to take up the position of Secretary of State for Business in the United Kingdom cabinet. On October 6, 2008 Baroness Catherine Ashton was appointed as the new European Trade Commissioner.

On December 15, 2008, Baroness Ashton wrote a letter to Action for Southern Africa (ACTSA) on the SADC EPA. In the letter she said, “With SADC our objective remains to consolidate the regional integration and if possible include South Africa in the EPA. To that effect we have started to negotiate the concerns that have been expressed by South Africa, Namibia and Angola. Our objective is to reach agreement on all [note!] these issues that would be acceptable to the region as a whole, including those who have not raised these concerns.” On services and investment in the interim EPA she said, “Only those countries wishing to negotiate in these areas will do so.” On competition and Government Procurement, “Negotiations will only be envisaged once adequate regional capacity has been built.”

On January 6, 2009 the ANSA countries submitted a Joint Demarche to the European Union Member States stating that they had “repeatedly raised concerns about specific aspects of the Interim Economic Partnership Agreement (IEPA) that profoundly impede prospects for deepening the processes of sustainable integration and development within and between the countries of Southern Africa.”

In the Demarche five issues were raised, addressing the compromising of the SADC-wide regional integration process, long-term trade policy divisions in the region, the lack of flexibility towards the ANSA concerns, the inadequate proposal to avoid the undermining of the SACU common external tariff (CET) and the non-clarity on accommodating Angola’s post-conflict situation in the negotiations.

Wallie Roux is a Namibian Independent Trade Policy Analyst

Also Read:

 Europe’s abusive EPA condemned as it tears Africa apart

 EPA is a pirate deal from Europe to disable African growth

 European deal stands to slow African development

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