THE TRADE DEVELOPMENT AND CO-OPERATION AGREEMENT BETWEEN THE EU AND SA

1. THE TRADE DEVELOPMENT AND CO-OPERATION AGREEMENT BETWEEN THE EU AND SA SA exports faced high tariffs in EU requested preferential access - Lomé EU proposed FTA and qualified Lomé membership Lomé member (qualified) - March 1999 Negotiations lasted 3 years (21 official negotiating rounds) Concluded beginning 1999 after discussions between Minister Erwin and Commissioner Pinhiero and compromise on port and sherry Agreement is Trade, Development and Co-operation agreement - covers more than just trade, all aspects not dealt with under qualified Lomé membership

2. Aspects covered by TDCA: Political dialogue Provisions for a FTA Trade related issues Economic co-operation Financial assistance and development co-operation Social and cultural co-operation Also, SA agreed to negotiate separate: Wines and Spirits agreement Fisheries agreement

3. SA NEGOTIATING POSITION NDA responsible for agricultural component of negotiations Steering Committee established (became ATF in 1997) SA position included the following points: favorable market access for SA agric exports (and potential exports) Rules of origin procedures should be identified Agreement should be asymmetric in favor of SA Should address concerns regarding EU export refunds Mutually beneficial certification procedures (SPS requirements) Should take into account possible impact on SACU and SADC

4. COVERAGE OF THE AGREEMENT 90% of trade between EU and SA will be duty free (EU will liberalize 96%, SA - 86%) [WTO requirement - Article 24] 70% of agric. Trade duty free EU will liberalize 61% of agric. imports from SA [74% including tariff quotas] SA will liberalize 83% of agric. imports from the EU EU quotas for cheese, cut flowers, proteas, canned fruit, fruit juices, wine and sparkling wine SA quotas for cheese, wine and sparkling wine

5. PRODUCTS ON THE RESERVE LIST EU excluded (reserve list) beef, dairy products, cut flowers, fresh fruit, sweetcorn, rice, maize, sugar, canned fruit and vegetables, fruit juices, wine SA placed beef, mutton, maize, wheat, dairy and sugar on the reserve list Will be subject to periodic reviews (no later than 5 years after entry into force of the agreement)

6. SAVINGS ON CUSTOMS DUTIES - SA EXPORTS TO THE EU Short term (within 3 years after entry into force) dairy R200 million (cheese quota) wine and spirits R150 million fresh fruit R100 million canned fruit R 100 million Long term (10 years after entry into force) fresh fruit R1 billion dairy R700 million wines and spirits R500 million Overall possible net gain for SA (agric) of R2 billion

7. OTHER ASPECTS OF THE AGREEMENT Wines and Spirits agreement: Compromise reached on port and sherry. W&S agr. Close to conclusion. Export subsidies: No export refunds on cheese quota. Agricultural safeguard clause included in the agreement. Protocol on Rules of Origin: Prohibit trade deflection within FTA. Determine whether imports originating or not. All preferential trade under the agreement subject to certificate of origin. SARS responsible for implementation and administration. DTI workshops. SPS equivalency Agreement: Backlogs in EU. Will accommodate SA as soon as possible

8. IMPLEMENTATION Signed on 11 October 1999 To be ratified by EU and SA parliaments Will be a mixed agreement Transitional agreement for aspects of community competency (including trade) Implementation - 1 January 2000

9. THE EUROPEAN UNION - SA’S MOST IMPORTANT TRADE AND INVESTMENT PARTNER 30% SA exports destined for EU 45% SA imports originate in EU 40% SA agricultural exports destined for EU 20% agricultural imports originate in EU [Ave 1994 to 1996 SACU data] Most important SA agric exports to EU - wine (16%), citrus (12%), grapes (11%), apple&pears (11%), canned fruit and veg (10%) [1996 SACU data]

10. CHALLENGES FACING SA AGRICULTURAL SECTOR Increased competition from EU imports Utilising export opportunities Meeting EU standards - SPS and other Effective implementation of rules of origin Implementation a monitoring system - safeguards

11. IMPLICATIONS FOR SADC AND SACU Possible impact - increased competition for BLNS and SADC products on SA market; trade diversion into SADC and BLNS; diversion of investment into SA Provisions in agreement to compensate BLNS for loss in revenue (financial windows for structural adjustment) SADC - will have to utilize provisions in Lomé SA/EU agreement and SADC agreement need to be implemented simultaneously

12. IMPLICATIONS FOR AGRIC TRADE POLICY TDCA important milestone in development of SA trade policy. Worldwide trend - strategic trade negotiations to secure improved and equitable market access conditions. Agricultural trade policy located within framework of SA’s global relations. Requires new global strategy that a. Prioritises exports and investment thrusts into region or countries identified as offering optimal opportunities; b. Restructures and redevelops overseas economic representation to achieve these objectives; and c. Negotiates favourable terms of engagements with foreign economic interests or entities

13. IMPLICATIONS FOR AGRIC TRADE POLICY (cntd.) re-evaluation of traditional trading pattern, shift from North-South to South-South (without neglecting traditional partners). Butterfly approach - Africa and Europe center; Asia and America wings (future growth) Trend to trade liberalization irreversible: - use tariffs only for unfair competition. - greater use of countervailing and anti-dumping measures. Continuation of relatively high tariffs questionable (SADC and EU more than 50% of agric imports).

14. IMPLICATIONS FOR AGRIC TRADE POLICY (cntd.) Aim to improve global market access conditions through WTO: - Global reduction in tariff levels - Removal of trade distorting support measures - Strengthening of existing multilateral agreements aimed at trade facilitation (e.g. SPS or TBT agreements) Strategic alliances (CAIRNS group and non-aligned movement).

15. EXPORTS TO EU

17. IMPORTS FROM EU

19. MOST IMPORTANT AGRIC EXPORTS