Dispute over tactics could delay South Africa talks

Date: 14/12/1995

By Elizabeth Wise

HOPES that EU negotiators will be given the go-ahead before Christmas to begin talks with South Africa on a free-trade accord have been dented by signs of division between member states over tactics.

The European Commission's special task force is anxious to get agreement on a negotiating mandate before the Christmas break, so that bilateral talks can begin in the New Year on plans for a free-trade zone by the year 2007.

But despite much hard work behind the scenes in the Council of Ministers, the prospect of opening EU markets to South African fruit and other goods is holding up progress.

Governments are still divided over details of the negotiating mandate, particularly over how much of its bargaining strategy the Commission should reveal to the South Africans at the outset.

At issue is the question of whether EU negotiators should establish a list of sensitive commodities which the Union wants to protect from competing South African products before the talks begin, or draw one up as the negotiations proceed. The EU's customary procedure in trade negotiations is to set out at the start a list of sensitive European products which it wants to exclude from free trade.

This time, however, some member states want to compile the list during the course of the negotiations, so that they can be used as bargaining chips. They argue that as the Union and South Africa are virtually starting virtually from zero on this trade accord, the standard rules need not apply.

Those who favour retaining the old method fear that changing the system could set a precedent for future trade talks. “It's not just South Africa, it is the principle of how you organise your free trade agreements,” said one EU official.

Under World Trade Organisation (WTO) rules, only free trade zones which do not exclude any sectors are accepted, but the rules do allow some products to be exempted.

Both South Africa and the EU would like to protect some goods. Southern European states are seeking to shelter their farmers from South African oranges and wine, while northern Europeans are worried about their apple and pear crops facing new competition. European manufacturers of base chemicals, various steel products and textiles are also likely to seek some protection.

Commission officials say the European market is open to 80&percent; of South Africa's exports, with only fruit, wine and chemicals still barred. By contrast, they say only 45&percent; of EU goods may enter South Africa duty free.

“There is much more to win from our point of view,” said one, although he pointed out that current restructuring in South Africa's industrial and farm sectors had also made them particularly sensitive, as well as costing jobs.

The Commission wants to get the talks under way as soon as possible. “We have to bring South Africa out of isolation. They need help fast,” argued a member of the negotiating team led by Commission Development Director-General Steffen Smidt. South African negotiators are also calling for a speedy start to the talks.

Progress so far has been remarkable. One month after the April 1994 elections brought Nelson Mandela to the president's office, the EU lifted its last remaining apartheid-era sanction, which barred military cooperation. Last December, EU governments approved a simple cooperation agreement.

If member states can agree on the details of a far-reaching trade pact before their development ministers meet in Brussels next Wednesday (20 December), Commission officials will be able to begin talks with the South African government in January and, they hope, conclude an agreement by the middle of next year. After approval of the negotiation results by EU governments and the European Parliament, the accord could take effect in 1997, if all goes well.

The accord would give South Africa a 10-year transition period (perhaps as many as 12 years for some goods) within which to prepare its manufacturers and farmers for fully-fledged competition with their European counterparts. By 2007, the Commission says, both markets should be almost completely open.

But while South Africa's goods, services and capital would be able to enter the EU freely under a free trade accord, its citizens would not.

The issues of visas and travelling rights have been left out of the Commission's proposed negotiating mandate.

In the meantime, the EU is moving closer to establishing a regular political dialogue with Pretoria, in addition to greater cooperation in a range of areas including culture, science and technology.

Commission officials are also trying to work out how to include South Africa in the Lomé Convention, which links the Union and 70 African, Caribbean and Pacific (ACP) nations.

Promised 500 million ecu from the EU budget over the next four years, South Africa will nevertheless be excluded from the development aid that flows through Lomé, as well as from its price support systems for staple goods, if it remains outside the convention. It will also be excluded from Lomé rules giving ACP exports duty-free access to EU markets. South Africa also wants to be included in Lomé to allow it to develop closer political and economic integration with its neighbours.

“It is politically important that we show something here,” commented one Commission negotiator.