EU on verge of historic deal with South Africa

Date: 28/01/1999

By Gareth Harding

SOUTH Africa and the EU are on the brink of clinching a long-awaited €17-billion trade pact, handing President Nelson Mandela a glittering political and economic prize just three months before he leaves office.

The deal will also end months of political embarrassment for European leaders over their repeated failure to deliver the promised accord to the new post-apartheid republic throughout last year.

After more than three years of tortuous negotiations, only one obstacle is standing in the way of the most far-reaching trade agreement between the Union and a country not bidding for EU membership.

Commission officials are confident that a deal can be struck this weekend when Development Commissioner João de Deus Pinheiro holds talks with South African Trade Minister Alec Erwin in the margins of the World Economic Forum meeting in Davos, Switzerland, which begins today (28 January). "This should be the final meeting," said one.

Diplomats say that if the two are unable to reach agreement, a last-minute meeting will be arranged between Mandela and European Commission President Jacques Santer, who will both be in Davos, to try to break the deadlock.

The veteran African National Congress leader is currently in Germany, where he is lobbying Chancellor Gerhard Schröder to abandon plans to write a clause on illegal immigration into the trade agreement.

The unexpected dispute with Germany has threatened to derail negotiations which have been progressing smoothly since the last high-level round of talks in early December.

Commission officials say "substantial progress" has been made on many of the outstanding issues in behind-the-scenes talks over the past six weeks.

A key stumbling block was removed when the two sides agreed to begin discussion on opening up access to South Africa's resource-rich fishing waters "as soon as possible" and wrap them up by the end of next year. Agreement has also been reached on the pace of liberalisation of the blocs' textile and car markets.

The overall deal means that 95% of the EU market will be opened up to goods from South Africa within the next decade, whilst 86% of the South African market will be fully liberalised within the same time-frame.

This leaves only the thorny problem of how to relabel locally produced port and sherry. The Union argues that these are terms which can only be applied to products from specific regions of Spain and Portugal, and is insisting that South African producers stop using them.

But Pretoria says they are generic terms which have been used for hundreds of years and claims that changing them could cost up to 10,000 jobs. South African negotiators agreed to abandon the two terms on goods destined for export shortly before Christmas, but are still insisting on using them for the home market.

In order to break the deadlock, the EU has dangled a number of carrots in front of Pretoria's nose.

One possible compromise on the table could involve South Africa agreeing to give up the terms within 12 years. In return, the Union is offering greater access to European wine markets and EU aid to help South African port and sherry producers market their products under new names.

Officials on both sides are optimistic that this could be enough to settle the dispute. "Both sides realise it would be silly for an agreement to be held up by such a small issue," said one South African diplomat.

Pretoria is keen to sign an accord ahead of presidential elections in April, whilst EU leaders have set a 25 March deadline for finalising a deal.