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WT/REG381/M/1

14 December 2020

(20-9033) Page: 1/4

Committee on Regional Agreements

Ninety-eighth Session

THE ECONOMIC PARTNERSHIP AGREEMENT BETWEEN THE EUROPEAN UNION AND SADC STATES (BOTSWANA, LESOTHO, MOZAMBIQUE, NAMIBIA, SOUTH AFRICA AND ESWATINI) (GOODS)

NOTE ON THE MEETING OF 18 NOVEMBER 2020

Chairman: Ambassador H.E. Mr. Mārtiņš KREITUS (Latvia)

1.1. The 98th Session of the Committee on Regional Trade Agreements (hereinafter "CRTA" or the "Committee") was convened in Airgram WTO/AIR/RTA/23/Rev.1 dated 6 November 2020.

1.2. Under Agenda Item C.II of the Session, the CRTA considered the Economic Partnership Agreement between the European Union and SADC States (Botswana, Lesotho, Mozambique, Namibia, South Africa and Eswatini), goods (hereinafter "the Agreement"). The Chairman stated that the Factual Presentation had been prepared by the Secretariat on its own responsibility in full consultation with the Parties, in accordance with paragraph 7(b) of the Transparency Mechanism for Regional Trade Agreements (document WT/L/671).

1.3. The Chairman indicated that the Agreement had been first notified to the WTO by the Parties on 24 September 2009, but at that time the date of its entry into force was not yet known. In a follow-up notification - WT/REG274/N/1/Add.1 - dated 16 September 2014, the Parties had indicated that the Agreement had entered provisionally into force on 4 August 2014. The Agreement had been notified under Article XXIV:7(a) of the GATT 1994 as an agreement establishing a area for trade in goods within the meaning of Article XXIV (8) (b) of the GATT 1994. The Parties also indicated that it would be implemented over a transition period. The text of the Agreement was available, together with its Annexes, on the Parties' official websites. The Factual Presentation on the goods aspects (document WT/REG274/1 dated 16 June 2020) and questions and replies on this Agreement (document WT/REG274/2 dated 21 September 2020) had been distributed. 1.4. The delegation of Botswana on behalf of SADC stated that it was an honour and privilege to convey the statement on behalf of the SADC EPA Group. The SADC EPA Group was a subset of the Southern African Development Community (SADC) countries which had negotiated and signed an Economic Partnership Agreement (EPA) with the EU. These were: a. The Republic of Botswana; b. The Kingdom of Eswatini; c. The Kingdom of Lesotho; d. The Republic of Namibia; e. The Republic of South Africa; and f. The Republic of Mozambique.

The first five countries were also Members of the Southern African Union (SACU).

1.5. She also thanked the Secretariat and the Chairman for convening the meeting, which provided an opportunity to discuss the EU-SADC EPA Factual Presentation. The presentation provided a good synopsis of the Agreement and reflected its intended objectives. She also thanked SADC's partner, the European Commission, for their collaboration in preparing for the review.

1.6. Trade relations between the EU and the African, Caribbean and Pacific (ACP) countries dated as far back as the EU's 1957 founding Treaty of Rome. This had been initially embodied in two

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- 2 - generations of the "Yaoundé Convention" which culminated into the Lomé Convention. These conventions had been initiated to provide non-reciprocal preferential market access to products originating from ACP States into the EU market. This arrangement was however, not in conformity with one of the 's critical rules on providing reciprocal trade between trading partners. In the late 1990s the whole structure of the relationship between the EU and the ACP Group of countries had been therefore challenged at the World Trade Organisation and it was clear that the old ACP-EU cooperation model had run its course. However, it should be noted that although South Africa became a member of the ACP Group on 24 April 1997, through its accession to the Fourth Lomé Convention, this non-reciprocal preferential market access was not applicable to South Africa.

1.7. In a positive response to the challenges by the WTO Members, in 2000, the EU and the ACP Member States signed the Cotonou Agreement. This Agreement mapped the way for negotiating the Economic Partnership Agreements (EPAs). In 2004 the EU initiated negotiations with ACP States for a-WTO compliant , which had culminated in signed EPAs with, among other African States, eleven (11) SADC countries under different configurations: for example, Comoros, Madagascar, Mauritius, Seychelles and Zimbabwe signed an EPA with the EU under the Eastern and Southern African (ESA); while the SADC EPA Group signed under the SADC-EPA configuration. Angola had submitted a request for accession to the Agreement under its configuration.

1.8. The negotiations of the Agreement had coincided with the review of the bilateral agreement between the EU and South Africa - the Trade, Development and Cooperation Agreement (TDCA). As provided in Article 31 of the SACU Agreement of 2002, no SACU Member State shall negotiate and enter into new preferential trade agreements or amend existing agreements without the consent of other Member States. South Africa had therefore formally joined the EU-SADC EPA negotiations in 2006 with a view to lessen fragmentation in SACU in terms of trade relations with partner countries. The Agreement had been signed in June 2016; four months later, provisional implementation had started for the EU and SACU States, while Mozambique subsequently acceded to the Agreement in February 2018. For South Africa the Agreement replaces the trade chapter of the TDCA.

1.9. The Agreement had a focus on regional integration fostering regional value chains in the SADC EPA group of countries. It was a reciprocal trade agreement where both the EU and the SADC EPA group offered preferential market access to each other. However, the EU provided greater preferential and -free access, while the SADC EPA group maintained protection of sensitive sectors. Under the Agreement, the EU guaranteed Botswana, Lesotho, Mozambique, Namibia, and Swaziland a 100% free access to its market and had fully or partially removed customs duties on 98.7% of coming from South Africa. On the other hand, the Southern African (SACU) removed customs duties on 86% of imports from the EU and Mozambique removed 74%.

1.10. The Agreement provided measures in favour of the SADC EPA States. The safeguard measures included: multilateral ; general bilateral safeguards; agricultural safeguards; good security safeguards; BELN transitional safeguards (for Botswana, Eswatini, Lesotho and Namibia); and infant industry protection. Under the Agreement, the EU had committed to eliminating agricultural subsidies. The Agreement further provided for developmental objectives. In addition, trade-related areas could benefit from funding by the EU for the benefit of the SADC EPA Group. The Agreement also included a bilateral protocol between the EU and South Africa on Trade in Wine and Spirits as well as protection of Geographical Indications of wine, spirits, beer and some agricultural products from South Africa and the EU. The Agreement also had a built- in agenda for negotiations of trade in services as well as investment for those parties that agree.

1.11. To facilitate trade, the Parties had undertaken to reinforce cooperation in the area of customs. The Parties promoted harmonisation of customs legislation and procedures, and cooperation between the Customs Administrations of the signatories in all matters pertaining to customs. The Parties also agreed to strengthen cooperation and exchange of information on sanitary and phytosanitary measures (SPS) in agriculture including food security, development of regional value chains and integration to promote animal health and plant health. The Parties committed to alignment to international standards with regards to technical barriers to trade and sanitary and phytosanitary measures. The Parties had also exchanged information such as Contact Points for officers accountable for the implementation of the Agreement in areas of customs cooperation; sanitary and phytosanitary measures; technical regulations, standards bodies, and conformity assessment.

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1.12. The inaugural Joint Council on 18th February 2019 had considered the status of implementation and established implementation structures. In terms of trade, the EU was the largest trading partner as a block for the SADC EPA Group, with South Africa accounting for the largest and most diversified part of EU imports into and out of the region. Some of the products exported to the EU from the region included: fruits, platinum, vehicles, other manufactured goods, wine, diamonds, beef, sugar, and aluminium, among others. On the other hand, the EU exported a wide range of goods to the SADC EPA countries, including vehicles, machinery, electrical equipment, pharmaceuticals and processed food. In concluding she thanked Members of the WTO for the interest shown in the Agreement as demonstrated by the questions posed and for the EU's contributions to the responses. She stood ready to provide any additional clarification required to Members at the meeting or if required in writing at a later stage. The representative of Namibia aligned himself with the statement of Botswana. The Agreement provided improved market access, particularly on agricultural products through the enhancement of market access for smaller countries through the elimination of non- barriers. It provided opportunities for economic cooperation and governance. As well as supporting conditions for private sector investment through the enhancement of supply capacity and economic growth it also provided an avenue for trade facilitation through the instruments of customs cooperation through customs authorities. The Factual Presentation of the Secretariat was a true reflection of the EU and SADC relationship as provided for in the Agreement. He thanked the Chairman and the Members who had expressed their interest in the Agreement.

1.13. The representative of the delegation of the European Union thanked the delegation of Botswana and welcomed the Committee's consideration of the Economic Partnership Agreement between the EU and the SADC EPA States, comprising Botswana, Eswatini, Lesotho, Mozambique, Namibia and South Africa. He thanked the Secretariat for the preparation of the Factual Presentation and to the SADC EPA States for their cooperation in the exercise. He also thanked Members for their questions and the interest showed in the consideration of this Agreement. He presented informal slides on the Agreement to the Committee.

1.14. The European Union and the African, Caribbean and Pacific (ACP) countries and regions had enjoyed a Strategic Partnership since the ACP-EU Partnership Agreement was signed in Cotonou on 23 June 2000. The agreement, called the 'Cotonou Agreement', had been the most comprehensive partnership agreement between developing countries and the EU. It had been the framework for the EU's relations with 79 countries from Africa, the Caribbean and the Pacific (ACP). The Agreement had economic, political and development dimensions and was characterised by equality of the partners, broad-based participation (States and non-State actors), dialogue and regional integration.

1.15. The EU was committed to supporting the ACP) countries' integration into the world's trading system to expand their trade and also to enable them to benefit from the global economy. For this reason, under the umbrella of the Cotonou Agreement, the EU had signed several Economic Partnership Agreements (EPAs) with the ACP countries and regions aiming at promoting ACP-EU trade, in line with WTO rules. The EPAs were "tailor-made" agreements to suit specific regional circumstances and intended to support trade diversification while taking into account different socio- economic circumstances.

1.16. The Agreement was signed in June 2016 and had been applied provisionally between all Parties except Mozambique since October 2016. For Mozambique the Agreement had been applied provisionally since February 2018. The EPA Agreement covered trade in goods and also trade-related issues, such as customs and trade facilitation, technical barriers to trade, sanitary and phytosanitary measures, trade and sustainable development and development support.

1.17. The EU was the main trading partner of the SADC EPA States, accounting for 20% of their exports and 22% of their imports in 2019. The EU's exports to the SADC EPA States had a value of 24.6 billion Euros and the EU's imports were worth 23.1 billion Euros. Since the start of the provisional application of the Agreement, total trade between the EU and the SADC EPA States had been increasing. Exports from the SADC EPA States to the EU had increased 19% from 2015 to 2019.

1.18. The composition of bilateral trade flows showed it mainly concerned industrial products: those accounted for 91.3% of EU exports to the SADC EPA States and for 85.9% of EU imports from the SADC EPA States. The number one export product from the EU to the SADC EPA States was "car parts" and accounted for 7.6% of EU exports to the region. The number one export product from the SADC EPA States to the EU was "cars and other vehicles" which accounted for 19.8% of their

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- 4 - total exports to the EU. Car exports from the EU had tripled in a period of 4 years and had grown in value from 1.8 to 5 billion Euros. Sixty-six per cent of cars produced in the SADC region were exported to the EU. However, it was important to note that the industrial nature of EU trade with the SADC EPA States was mainly due to South Africa. The export base of most countries in the region was still little diversified although there had been signs of improvement since the start of the provisional application of the Agreement. The trade in goods chapter provided for reciprocal, but asymmetric market opening by both Parties. The EU granted duty-free quota-free treatment to all SADC EPA States except South Africa, which received such treatment with respect to 96% of its exports to the EU and was granted partial liberalisation for an additional 2.7% of those exports. Under the Agreement, the Southern African Customs Union (SACU) granted duty-free and quota- free treatment to 84.9% of products exported by the EU to the region. An additional 12.9% of EU exports benefitted from partial liberalisation (reduced tariffs or tariff-rate quotas). As a least developed country, Mozambique had liberalised a smaller percentage of exports from the EU.

1.19. He also wished to highlight provisions on development cooperation in the Agreement, which identified trade-related areas that could benefit from EU funding. Several EU development cooperation programmes in the SADC region were directly relevant to the Agreement's implementation. The Parties were currently focussing on ensuring the effective implementation of the Agreement so that consumers and businesses could fully reap the benefits of opportunities. Since the start of the provisional application of the Agreement there had been several meetings of the Joint Committee of the Agreement that had for instance ensured that all tariff cuts had been fully implemented and that the institutional framework, including the dispute settlement rules, were fully operational. Preparatory steps were being taken to review the Agreement's rules on diagonal cumulation that would facilitate the creation of regional value chains within the SADC region. The EU-SADC EPA's Joint Council was also considering a request received this year from Angola to accede to the Agreement.

1.20. P He concluded by stating that the EU was grateful for the interest shown in relation to this Agreement and looked forward to a fruitful discussion and would endeavour to answer all Members' questions.

1.21. The representative of Canada thanked the Parties for their transparency and the Secretariat for preparing the Factual Presentation.

1.22. The Chairman noted that the consideration of the Goods Aspects of the Economic Partnership Agreement between the European Union and SADC States (Botswana, Lesotho, Mozambique, Namibia, South Africa and Eswatini) had allowed the Committee to clarify a number of questions and thus concluded oral discussion of the RTA in accordance with paragraph 11 of the Transparency Mechanism. If any delegations wished to ask follow-up questions they were invited to forward submissions in writing to the Secretariat by 25 November 2020 and Parties were asked to submit replies in writing by no later than 9 December 2020. In accordance with paragraph 13 of the Transparency Mechanism all written submissions, as well as minutes of this meeting would be circulated promptly, in all WTO official languages, and made available on the WTO website.

1.23. The Committee took note of the comments made.

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