Whatever happened to all those nice promises?

Date: 22/02/1996

WHEN apartheid started to crumble, the EU said it wanted to help democracy flourish in South Africa.

Making much ado about political solidarity with the black majority, it helped prepare elections and then made a magnanimous pledge of financial aid.

Now, the Union has dropped the ball.

At least that's the way it appears to South Africans, who watch in dismay as EU member states and the European Commission arm-wrestle over the details of a negotiating mandate for a proposed free trade accord with a country whose political system they want to foster, but whose economic potential they fear.

Restless at the delay, South Africa has already delivered a diplomatic protest to Rome, asking Italy to use its sway as current holder of the EU presidency to break the stalemate. Pretoria wants EU foreign ministers to commit themselves to speedy negotiations when they meet next week.

“It's been two years since the elections when all sorts of promises were made,” said a South African negotiator. “We are beginning to wonder what they were thinking of when they invited us to talks.”

President Nelson Mandela's government is anxious to know what the Union will offer, as the trade agreement's contents could have an important influence on his economic programme as he tries to build up the country's impoverished areas.

The Government of National Unity, borne to power in 1994 on a wave of expectations of prosperity, is now struggling to stem the tide of joblessness, poverty and crime. Afraid their honeymoon cannot last in the face of such economic despair, Mandela and his Deputy President Thabo Mbeki are calling for trade opportunities.

“Our democracy is a good thing, but it needs economic motivation now,” said a South African official. “In five years, it might be too late.”

But despite all that, South Africans are not even sure they want a free trade agreement with the EU, believing that so far, at least, there is no guarantee that it would make them better off.

They fear the EU will omit from the pact the products that would give South Africa an advantage - namely, farm goods - and include more of the industrial goods that Europeans sell to South Africans.

Although the trade plans, which may be complemented by separate accords on science and technology, fisheries, and even wine-making practices, envision EU markets opening first, allowing South Africa a temporary export boom, Pretoria would also have to open its markets before the end of a ten-year transition period.

South Africans will negotiate to delay opening their markets for as long as possible, fearing the consequences for their own industry when sophisticated German, French and Italian companies come to town.

South African diplomats say that their country's concerns are only natural. But they cannot understand why the Europeans should be afraid.

“France and Germany see us as an employment threat,” said one diplomat. “They seem to have forgotten which country is the developing one and which are developed.”

EU governments have found countless reasons for not moving trade talks forward. French fears of agricultural imports were to be expected, but the Commision was surprised when Bonn - normally a free trade champion - took Paris' side.

But Germany is bound by conflicting interests in its foreign and agriculture ministries. EU governments want to ensure that the farm trade chapters of the accord will not adversely affect the Union's Common Agriculture Policy (CAP) and are anxious to avoid having to renegotiate it before preparations are made for the entry of Central and Eastern European countries (CEECs) into the Union. While some German diplomats might see the benefit of using generous concessions to South Africa as a useful precedent for their CEEC allies, farm officials oppose concessions for anyone, even the CEECs.

Bonn led a group of EU governments last year in rejecting a proposed 50&percent; increase in the quotas for agricultural imports from the CEECs.

Warning that the accord with South Africa is the first to be negotiated under World Trade Organisation (WTO) rules, the Council of Ministers has asked the Commission to carry out a study into the compatability of the proposed accord with those regulations.

The Commission, unable to answer before ministers reveal what they would or would not include in the accord, is frustrated, but acknowledges the risk of setting precedents with this accord.

“It is a test case,” Commission officials say apologetically. “South Africa is the unlucky hostage.”

But neither the Commission nor the Council have really explained why the trade accords concluded with Morocco, Tunisia and Israel since the WTO's entry into force on 1 January last year were not subject to the same restraints.

Another worry for member states is that if they give concessions to South Africa, other trading partners, such as Morocco and Tunisia, will ask for similar privileges.

All this was not exactly what South Africa had in mind. From the very start, it asked for full membership in the Lomé Convention, the development pact which links the Union to 70 African, Caribbean and Pacific (ACP) nations and gives them preferential access to EU markets. All other sub-Saharan African nations enjoy Lomé market access privileges and South Africa maintained it should be part of that club.

But though it is considered a developing nation in most international fora, the Union refused the request, arguing that only half of the country fell into this category. And with the future of Lomé uncertain, South Africa stands little chance of reversing that decision.

Rather than bringing South Africa fully into Lomé, the Union appears to be using it as an escape hatch, a precedent for taking some of the more economicially-advanced members of Lomé out of the convention and into bilateral relationships.

Since last year, South Africa has received preferential access to EU markets under the Generalised System of Preferences (GSP) which the Union has granted to some trading partners. But while it receives full GSP for the small volume of industrial products it exports, it only enjoys some 57&percent; of the benefits that could be granted on its farm exports.

A trade zone with the EU could also pose big economic and political problems for Pretoria. South Africa is linked to Lesotho, Namibia and Swaziland in a customs union. Import duties collected by the four are shared in a common pool.

For the governments of Lesotho and Swaziland, those receipts are a vital source of income. If import duties on European goods were cut, a huge source of capital would be eliminated, raising a questionmark over how Pretoria would compensate its neighbours.

While the other three would be free to set up their own tariffs against EU goods, that would mean installing border controls between themselves and South Africa, and enforcing them.

South African diplomats, exuding pessimism, are wondering whether the EU considered all that when it proposed talks towards a free trade agreement. “It would be like us concluding an accord with France,” said one.

Despite all that, they want to see what the Union will offer them. But it remains to be seen which side would gain more from the trade pact.

The Union is currently the source of 45&percent; of South Africa's imports. If it lowers its high import duties, European goods are likely to take a 60&percent; share of South African imports, Pretoria says.

South African goods, on the other hand, comprise less than 2&percent; of EU imports. Even South African gold, the commodity which Europe buys in the largest quantity, accounts for less than 12&percent; of Union gold imports.

“From the mandate as it appears now, the only benefits go to the EU. We need to get this whole thing back into perspective again,” said a South African diplomat, adding: “Europe was built from inexpensive steel from Africa. It is our turn now.”