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Brussels, 28.11.2006

SEC(2006) 1635

COMMISSION STAFF WORKING DOCUMENT

Accompanying document to the COMMUNICATION FROM THE COMMISSION TO THE COUNCIL Communication to modify the directives for the negotiations of economic partnership agreements with ACP countries and regions {COM(2006) 673 final} {SEC(2006) 1427} PRELIMINARY INDICATIONS OF IMPACT

EXECUTIVE SUMMARY

The Commission proposes to welcome the SADC EPA framework tabled on 7th of March 2006, which notably envisages the inclusion of South Africa into the EC-SADC EPA. This inclusion would require a modification of the EPA negotiating directives. The logical consequence would be to take the trade provisions out from the TDCA and replace them with the EPA trade provisions, at the entry into force of this new agreement. However this inclusion would be linked to certain 'conditions' concerning the definition of tariff offers, the scope of the future agreement and the situation concerning Mozambique, Angola and Tanzania (MAT), which differ from the SADC Framework.

EPA negotiations with the SADC Group have been very slow mainly due to insufficient cohesion within SADC Group of countries (several countries belonging to different, and sometimes conflicting, trade arrangements) and cautious role of South Africa into the EPA process, to avoid divergences between the regional integration process and its own agenda. SADC proposal is welcome in so far as it clarifies the role of South Africa in the negotiations.

Regarding market access it should be noted that the negotiations would be conducted taking as a basis the existing TDCA and Cotonou provisions. Due to South African competitiveness, it is inevitable to grant a different trade regime for the access to the EU market and the other EPA members. Therefore extension of duty free and quota free treatment to South Africa is not envisaged in the foreseeable future. Any additional tariff concessions for Botswana, Lesotho, Namibia and Swaziland (BLNS) and the MAT would be the outcome of the EPA negotiations and depend on the efforts of these countries to integrate on rules.

The SADC proposal also raises the question of how MAT countries intend to position themselves in the next phases of the negotiations. Their request for 'EBA contractual' would pose legal problems with WTO rules, insofar as it would fulfil neither GATT Art. XXIV requirements (lack of reciprocity) nor the enabling clause, as it would create a discrimination with other EBA beneficiaries. Should MAT countries wish not to join the EPA, they would continue to be entitled to the tariff treatment based on the GSP (EBA). In any case and that whatever the final EPA format, the future agreement would remain open to the ACPs of the region who wish to join later. Finally in the EC response to SADC it should also be made clear that to leave aside all references to regulatory supply-side commitments (e.g. Services, Investment; Government procurement; trade facilitation; IPR, environment, labour and Competition), is not an acceptable option. These issues are the essence of the EPA sustainable development package. If, in the end, the region would choose not to make an effort in addressing those issues, then the EC would find it difficult to improve SADC access to its market. As a conclusion it should be underlined that including South Africa into the SADC EPA process is also coherent with the recent communication for an EU-SA Strategic Partnership.