SOUTHERN AFRICAN COUNTRIES EXPECTED TO SIGN

C O N F I D E N T I A L SECTION 01 OF 02 PRETORIA 000022

SIPDIS

PLEASE PASS TO USTR FOR BILL JACKSON

E.O. 12958: DECL: 01/10/2019
TAGS: ECON ETRD SF
SUBJECT: SOUTHERN AFRICAN COUNTRIES EXPECTED TO SIGN
ECONOMIC PARTNERSHIP AGREEMENT WITH THE EU

REF: 08 PRETORIA 00328

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Classified By: Economic Counselor Perry Ball for reasons 1.4 (b) and (d
)


1. (SBU) Summary: Several members of the Southern African
Development Community (SADC) (Botswana, Lesotho, Namibia,
Swaziland, Mozambique and Angola) are expected to sign the
interim EU-SADC Economic Partnership Agreement when the EU
Trade Commissioner visits Southern Africa in February.
Tariffs in the interim EPA are similar to those under an
existing EU-South Africa agreement. The EPA replaces the
expired Cotonou Agreement and allows for these countries to
retain preferential access to the EU market, attract
investment, and diversify their services markets. South
Africa has objected to the EPA since the negotiations began,
and is unlikely to sign it in February. End Summary.

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EPA to be signed in February...
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2. (C) Botswana, Lesotho, Namibia, Swaziland (collectively
known as the BLNS countries),Mozambique and Angola are
expected to sign the interim EU- Southern African Development
Community's Economic Partnership Agreement (EPA) when the EU
Trade Commissioner visits Southern Africa in February,
according to EU Economic and Trade Counselor Jorge
Peydro-Aznar, who met with Deputy Economic Counselor and
Trade and Investment Officer on January 7 to discuss the
interim EPA. Peydro-Aznar does not know whether South Africa
will sign the agreement in February.


3. (C) Peydro-Aznar said the tariffs in the interim EPA
will closely track those in the EU-South Africa Trade and
Development Cooperation Agreement (TDCA),though there will
be some differences on sensitive items. The interim EPA will
also have minimalist sections on investment and services,
committing the parties to pursue liberalization in talks for
a final EPA. (Namibia will not be a party to the investment
and services chapter.) There will also be a development
chapter covering cooperation in business-enhancing
infrastructure and institutional capacity building.

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...With or Without South Africa
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4. (C) The EPA will fill a void formerly occupied by the
Cotonou Agreement, which expired on December 31, 2007,
leaving the African Cotonou partners with the choice of
either trading with the EU under GSP, or negotiating a free
trade agreement with Brussels. Peydro-Aznar said that the
BLNS countries, Mozambique and Angola have always been eager
to pursue an EPA lest they revert to GSP tariffs. These
countries also want attract investment and diversify their
services providers, which are now often South African.


5. (C) South Africa refused to initial the interim EPA,
objecting to the inclusion of "new generation" issues (such
as services) and MFN rules that could complicate Pretoria's
trade diplomacy with "Southern" countries such as Brazil.
According to Peydro-Aznar, the EU has made several
concessions to win Pretoria's support for the EPA. Brussels
proposed that South Africa opt-out of the investment and
services chapters, and it worked with the Africans to ensure
Qservices chapters, and it worked with the Africans to ensure
that the EPA tariffs closely track the existing TDCA tariffs.
Nevertheless, Peydro-Aznar was skeptical that Pretoria would
sign.


6. (C) He said that Pretoria has little to gain from an EU
EPA, since it already has very favorable access to the EU
market under the TDCA. He also speculated that Pretoria was
miffed that the EPA negotiations were a joint initiative of
the EU and its Cotonou partners, with South Africa joining
the talks at a later date. "Pretoria has never felt like it
owned these negotiations," he said, adding that he "knows for
a fact" that South Africa has been pressuring the BLNS
countries (members with South Africa in the Southern African

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Customs Union or SACU) not to deal with the EU. At this
point, South Africa may have "painted itself into a corner"
and feels that it cannot retreat on the EPA, Peydro-Aznar
said.

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Comment
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7. (C) Local media have carried loose talk to the effect
that Pretoria's failure to sign the EPA would spell the end
of SACU, as South Africa and the BLNS countries would not
have a common tariff with the EU. Peydro-Aznar claimed that
there is no legal reason why an EPA without South Africa
would force SACU to dissolve; he attributed these reports to
a pressure campaign by South African negotiators. Post will
explore this issue further in the run up to next month's
signing.
BOST