| Following is a summary,
extracted from a recent policy brief by the European Centre for Development Policy
Management, of main conclusions of an European Commission study report on the Impact of
Introducing reciprocal trade between the EU and SADC. While, in the long run, SADC
would be a natural Regional Economic Partnership Agreement (REPA) partner for the EU,
institutional, political and economic constraints make it difficult, if not impossible,
for SADC to conclude a REPA in the timescale envisaged by the EU.
The 14 SADC members have made uneven progress towards trade liberalisation, and a lot
remains to be achieved before a Free Trade Area (FTA), let alone a customs union, could be
in place.
The report suggests the following: |
First, extend the EU-South
Africa free trade agreement to other SACU members (Botswana, Lesotho, Namibia, and
Swaziland). Then, conclude some form of REPA with the three remaining non-LDCs
(Mauritius, Seychelles, Zimbabwe), temporarily leaving out six LDCs that are better off
outside a REPA. A SADC-wide REPA with the EU might be envisaged beyond 2010. Expected
trade creation gains are very small, while trade diversion losses are substantially
greater, especially for the Seychelles (2 percent of GDP) and Mauritius (1.7 percent of
GDP).
Trade creation gains would arise if inefficient local production in the ACP was
displaced by more competitive imports from Europe.
Trade diversion costs would occur if imports from non-EU suppliers |
were displaced by European
products, although the former are more efficient, because of the preferential treatment
given by the ACP to the latter. The agricultural sector would be mostly affected,
especially by subsidised European exports. Estimated losses in government revenues
vary, ranging from negligible amounts for the BLNS (Botswana, Lesotho, Namibia and
Swaziland) to losses of 9 percent and 8 percent for Mauritius and Tanzania, and 30 percent
for the Seychelles.
In the longer term, the report sees positive benefits in a SADC-wide REPA since it
would “lock” the SADC countries in their own FTA and underpin regional
integration.
In the short term, however, the gradual approach proposed above could be rather
detrimental to the process of regional integration.
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