EU sees South Africa deal as model for future

Date: 22/07/1999

By Shada Islam

IT MAY have taken four years of tough and often acrimonious negotiations to conclude the EU's free trade and cooperation agreement with South Africa, but it looks set to serve as a model for the Union's future relationship with the African, Caribbean and Pacific region.

The pact with Pretoria is the EU's most ambitious free trade deal yet, including provisions for the gradual elimination of restrictions on trade in agriculture - long the most protected of Union sectors. It also goes further than any other free trade accord in its references to issues such as state subsidies to industries, intellectual property rights and competition policy. In addition, it contains a promise that European aid will be used to help prop up those of South Africa's economic sectors which are most vulnerable to increased foreign competition.

EU officials have long maintained that the deal with Pretoria will set the tone for the Union's relationship with the ACP states after 2000, when the 25-year-old Lomé Convention runs out.

South African diplomats are more cautious. They insist their agreement with the EU is atypical because their country's relatively high level of development and varied economic structures are totally different from other African countries. But they do concede that the accord is seen, in the words of one, as a "source of inspiration" for ACP states.

The scope and content of the Regional Economic Partnership Agree-ments (REPAs) proposed by the EU will be based loosely on the free trade pact negotiated with South Africa. But many in the ACP group are unhappy with the idea of using the accord with Pretoria as a blueprint for their future relationship with the Union, arguing that most countries in Africa are not yet ready for free trade with Europe.

However, despite their misgivings, ACP officials and diplomats admit that a South-African style free trade deal with the EU could have symbolic value. It would be seen as a signal that an ACP nation - or region - is serious about economic reform and trade liberalisation and could give added guarantees to foreign investors. Also on the plus side, better market access in agriculture will now be up for negotiation. Having agreed to open its markets to South African farm goods, the EU is expected to fashion REPAs with the ACP states in a similar way.

South Africa's success in negotiating a relatively long 12-year period for full implementation of the free trade provisions of the agreement means ACP countries can ask for equally generous - or even more generous - treatment, especially in sectors which are considered particularly sensitive to foreign competition. Also, like South Africa, ACP countries should be able to "ring-fence" their vulnerable sectors from European exports.

But following in Pretoria's footsteps for the continent's poorer and less internationally savvy nations will not be easy. South Africa's long and difficult negotiating experience with the EU is a source of concern to many.

One diplomat said that if Africa's most-advanced nation found it so difficult to thrash out a satisfactory deal with Europe, other ACP nations would find the task of negotiating REPAs even "more onerous".

Another recalls how bargaining on trade concessions in the EU-South African negotiations sometimes turned into "hand to hand combat on each product".

Many academics and non-governmental agencies both in Europe and Africa are advising the ACP group against REPAs, arguing the carving up of the group into smaller regional units would reduce their negotiating clout and impair their ability to secure a fair deal.

Some development experts also warn that the impact of the REPAs on African regional groups which are trying to speed up their own efforts at economic integration could be quite disruptive. For instance, an agreement between the EU and the Southern African Development Community could come into effect in 2005, distorting SADC's own efforts to implement a regional free trade deal between 2000 and 2008.

Instead, they argue, SADC and other regional groupings in Africa should be given time to consolidate economic integration before negotiating a free trade or economic partnership treaty with Europe.

"Members of our regional groups are at very different levels of development," said one diplomat. "Does that mean that countries in one group will have different types of free trade deals with the EU?"

Given these concerns, a meeting of European and African non-governmental aid experts in Germany recently warned ACP countries not to give in to "premature pressure" from the EU for trade liberalisation.

The development specialists also insisted that regional integration should be pursued and consolidated by ACP states before any effort was made to negotiate free trade agreements with Europe.

ACP countries could ask for more time to cope with the strains of the global economy. But in the end, as South Africa decided, it makes more sense to enter the globalisation fray than to try and stay outside.

Major feature.