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tralac Newsletter • Issue 2 • July 2018
The SADC-EU Economic Partnership Agreement

Welcome to tralac’s July newsletter, which focuses on the Southern African Development Community (SADC) – European Union (EU) Economic Partnership Agreement.

The SADC EPA is an important agreement for the six SADC member states that are party to the agreement – Botswana, Lesotho, Namibia, South Africa, eSwatini and Mozambique. It is notable that all, except Mozambique, are also members of the Southern African Customs Union (SACU). Angola, which participated in the negotiations but did not sign and ratify the agreement, may accede to the agreement in the future. The SADC EPA is also the only fully operational African EPA; this agreement also provides a basis for post-Brexit trade with the UK, until a new agreement is negotiated. In the transitional phase, the provisions of the agreement will be ‘rolled-over’ in the domestic legislation of the UK and SADC EPA member states.

This agreement provides all but South Africa with duty-free access to the EU markets; for South Africa, 98.7% of exports to the EU are fully or partially liberalised. A recent trade data update does however indicate that this grouping’s exports to the EU are still predominantly commodities. A series of briefs and updates covers various aspects of the agreement – these are available here.

As with any trade agreement, the SADC EPA provides new opportunities for trade between the parties. Whether this potential is realised or not will depend on a number of factors, including effective implementation. Although provisional application of the agreement began in October 2016, much remains to be done to inform potential traders about the specific provisions in the agreement. Effective implementation also requires, amongst other things, that domestic quality infrastructure be in place and capable of providing the assurance that the requisite standards to gain access to the export market are met. Currently, for example, export of skimmed milk powder and butter from South Africa to the EU is not possible – the EU requirements for monitoring residues and substances in dairy products are not met. This means that the tariff rate quota (TRQ – providing duty-free access to the EU market for specified quantities of these products) cannot be used. The new trade update (and earlier tralac brief on SADC EPA TRQ utilisation, available here) provides data on other TRQs that were not utilised in 2017, and those that are still available for the current year. Feedback from firms suggests that the process of TRQ management could be improved, starting with acknowledgement of applications (even an e-response) with timelines for feedback; and quick turn-around responses are essential.

Concerns about quality infrastructure and the capacity to provide testing and quality assurance services affects not only exports to the EU, but also to other export destinations. This lack of quality infrastructure is failing the private sector; apparently because of fiscal challenges. The SADC EPA includes provisions on development support, and quality infrastructure support is specifically included. We do hope that this is opportunity is taken up.

We look forward to your feedback.

Trudi Hartzenberg and the tralac team

Introducing tralac’s new short course
Trade Law and Policy for Africa’s Development
If you are a mid-level or senior trade policy official from Africa’s national governments, regional and continental organisations or an experienced trade policy and law practitioner from non-state organisations, including the private sector – then this course is an opportunity to engage with Africa’s trade agenda and learn how and why trade is so important for our social and economic development. On completion of the course, you will be armed with the knowledge and skills to contribute to sustainable development and African integration through trade.

2018 Course Outline
tralacBlog is a forum to share and engage with the views of tralac researchers and Associates, as well as guest contributors, on pressing regional integration and trade policy issues affecting African countries in order to encourage relevant, topic-related discussion and debate.
Read more
Implementing the AfCFTA: When and How?
Engaging with the international e-commerce trade agenda for structural transformation in Africa
AGOA Forum 2018 outcomes: where to for a future bilateral trade relationship between the United States and Africa?
Trump’s Trade War: Are the Brakes failing?
Questions and Answers (FAQs)
Economic Partnership Agreement between the European Union and SADC EPA Group
SADC EPA is an agreement between the European Union (EU) and the Southern African Development Community (SADC) EPA Group member states (Botswana, Eswatini, Lesotho, Namibia and South Africa, all of which are also members of SACU; and Mozambique). The SADC EPA was originally designed as a comprehensive partnership agreement, to cover trade in goods, trade in services, investment, competition, intellectual property and public procurement, as well as specific development provisions pertaining to support that the EU will make available to the SADC EPA member states. However, the Agreement that was concluded and signed on 10 June 2016 in Kasane, Botswana, covers only trade in goods (including disciplines such as tariffs, rules of origin, customs and border management and related disciplines), and development provisions (pertaining for example to support to SADC EPA member states to support their development of quality infrastructure).
Spotlight on the SADC-EU EPA

For the period 2008-2017, exports from the SADC EPA countries to the EU decreased by 2.3%. Over the same period exports from the EU to the SADC EPA countries also declined by 1.1%. However, between 2016 and 2017, SADC EPA country exports to the EU increased by 16.8% and the EU exports to the SADC EPA states by 7.7%.

In 2016, close to 38 million tons of goods from the SADC member states entered the EU by sea, air, rail and road transportation. The main mode of transportation is sea transportation (98% of SADC exports), while road, rail and air transportation accounts for 1%, 0.4% and 0.3% of SADC’s exports respectively. 6% of these goods are exported to the UK which enter by sea (2.4 million tons), air and road.
Intra-Africa trade and tariff profiles
tralac has prepared several Trade Data Updates to provide an overview of the intra-African trading relationships of individual African countries. Each country update is accompanied by a visual representation of key data and trends in an infographic.

Read more
AGOA Forum 2018
Earlier in July, the annual US-Africa AGOA Forum took place in Washington, D.C. Both the forum agendas, as well as the forum outcomes and recommendations, can be downloaded from at the following link.
While the AGOA legislation still has seven years to its expected expiry date, discussions around a future bilateral US-Africa trade and investment relationship were a central topic at this year’s event. There has also been what appears to be an increasing divergence between the US Administration on the one hand, and African countries, regarding a future path forward: bilateral FTAs between the United States and individual countries (extendable to additional countries) as favoured by the United States, or a continental (or at least regional) approach favoured by many African countries and evident in the ministerial recommendations read out at the Forum. A few months previously the African Continental FTA (AfCFTA) was signed in Kigali, Rwanda, now with 49 signatories. But is a continental approach with respect to a trade negotiation with the United States, potentially covering various topics beyond trade in goods, each requiring unified negotiating positions, even realistic at this stage? Can and should such an ambitious negotiation wait? Read a related blog post here.

On 30 July 2018, US President Trump issued a proclamation suspending AGOA benefits for Rwanda’s apparel export sector. This follows adverse findings under a previous out-of-cycle review pertaining to restrictions that Rwanda places on imports of worn clothing. Other EAC member states previously reversed their planned implementation of similar bans.
Read more
Key trade stats for AGOA beneficiaries to May 2018

Aggregate exports to US: Year to Date to May 2018: $ 10.85 billion
Share of AGOA exports: Year to Date to May 2018: $ 5.26 billion
Data to mid-year 2018 are expected to be published shortly.

Visit the Data Center
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