South African trade talks back on line

Date: 23/04/1998

By Mark Turner

AS SOUTH Africa struggles to lay its political past to rest, Pretoria can take some solace in a new ray of hope for its commercial future.

After asserting for two years that it wants a free trade agreement with South Africa but refusing to let in the country's most competitive agricultural produce, the EU finally appears willing to show some flexibility when talks resume next week.

But South Africans expecting any ground-breaking announcements could have to wait a good deal longer. The next few months will see a classic demonstration of compromise à l'européenne.

Instead of seeking agreement on a new negotiating mandate to replace its absurdly restrictive 1996 proposal, which could take six months and scupper any hope of success under the UK presidency, the Union has instead opted to hold 'virtual' negotiations.

In effect, the European Commission will be allowed to act as though it did have a more liberal mandate, initial a deal and then ask member states afterwards for an official seal of approval.

In return for this free hand, Commission negotiators have promised to keep national governments informed of their progress in great detail, and not to present them with any sudden and nasty surprises when a deal is done.

The institution insists that this is all perfectly above board and in fact represents a step forward from previous practice. "This is not a new system," insisted one Commission official. "In the past, we would interpret our mandate flexibly and then present the Council of Ministers with a 'take-it-or-leave-it' deal. This way we are being far more transparent."

It is ironic, however, that it was precisely this old way of doing business which prompted France to claim in 1996 that Commission trade officials were getting out of control and to call a halt to the profusion of EU free trade deals, wrecking the South African mandate.

For the time being, however, no Union country has objected to the new approach to South Africa. To do so could be highly embarrassing, with Europe coming under growing criticism for breaking its promises to the young democracy.

As things stand, the Union has offered Pretoria complete free industrial access within three years and tariff-free entry for two-thirds of its agriculture within around a decade, eventually covering something over 90% of all trade. But it has so far refused to offer free access to competitive South African products such as citrus fruits and wine.

Pretoria responded earlier this year by offering the Union unrestricted industrial and agricultural trade for about 80-85% of goods within 12 years. Its proposals would limit imports of sensitive products such as car parts and beef under a number of special protocols. But South Africa has, by the Commission's own admission, proved surprisingly flexible about those exclusions with little - so far - given in return.

"It is now up to the Community to show some goodwill," said a Commission official. Specifically, that would mean re-examining the list of no-go agricultural goods attached to the original offer (perhaps by offering season-sensitive tariffs), and pledging a periodic review of excluded products.

Quite how quickly that might be achieved, and how far the Union can go, is still open to debate. The Commission is at present holding highly delicate internal talks between negotiators, industry and agricultural experts, and is not predicting any swift solutions.

Parallel and contentious talks on EU access to South African fisheries, which Spain has stipulated as a precondition for a deal, and on denominations for wines and spirits, are also holding up progress.

Talks on intellectual property, public procurement and competition similarly have some way to go.

The Commission does not expect a deal to be concluded before the June Cardiff summit which will mark the end of the UK presidency, although some suggest it could be in place by the end of July, before the whole of Europe goes on holiday.