International Trade and Economic Development

1. International Trade and Economic Development Update on WTO, TPR and EPA Presented to the Portfolio Committee on Trade and Industry By: Dr Rob Davies Minister of Trade and Industry 16 February 2010

2. South Africa’s Approach to Multilateralism and the WTO • SA is a proponent of multilateralism, to address globalisation, marginalisation and deepening interdependence of economies and societies • WTO trade rules are important, but imbalances and inequities in rules from previous Rounds prejudice developing country interests • Our objectives: ensure the trading system is strengthened, transparent, inclusive and focused on promoting the developmental interests of developing countries

3. Developments in Doha Round • Erosion of development mandate and threat of growing imbalance • Steady reduction in ambition to remove distortions in international agricultural trade by developed countries • Growing pressure to open markets of emerging developing countries in industrial goods and services • Harsh impact on South Africa: little or no new market access but deepest and widest industrial tariff cuts than any WTO Member

4. Prospects for Doha • Strong resistance offered by South Africa, some recognition of our special circumstances - outcome not secured in July and December 2008 Ministerial Meetings • Repeated calls to conclude Doha - G20 Summit outcomes November 2008, April 2009; G8 plus G6 Summit in July 2009, Cairns Group, and OECD Ministerial Meetings in May 2009 and at MC7 in 2009 • WTO DG argues Doha should be concluded by mid-2010 (before US mid-term and elections in Brazil), and modalities need to be concluded earlier • General assessment is “little prospect for progress”

5. Prospects for Doha • Key is US: No clear WTO mandate (other priorities), no personnel in key positions, insistence on bilateral engagements; refusal to use previously negotiated texts • While US seeks access to 60% of new trade that will come from emerging markets their demands are not matched with any new offers and reflects lack of clear position on Doha • We need to be vigilant and monitor developments closely, the substance of outcome more important than early conclusion • We must continue to raise our concerns and build alliances on the overall imbalance in Doha, the need to preserve the development mandate of Doha

6. WTO MC7 • The MC7 was held to comply with requirement to hold Ministerial conference every 2 years • MC7 not intended as a negotiating meeting but many Members insisted on concluding the round in 2010. • Agreement to intensify technical engagements between Jan-March 2010 • Possible Ministerial stock-taking by end of March 2010 • Depending on the stock-taking meeting, Lamy indicated that he would may political guidance at the G20 Summit in June 2010

7. WTO TRADE POLICY REVIEW (TPR) of SACU • Regular monitoring of Member State’s trade policies • Promote intergovernmental debate on member states trade issues • Assess the effects of national trade policies on world trade • Encourage voluntary compliance and conformity to WTO rules • Transparency on the country’s policies

8. WTO TPR for SACU • Periodic Review by TPR Body • Every Six Years for SACU – Last Review November 2009 • Reports produced: The WTO Secretariat Report for SACU and Individual SACU Members; Individual Government Report • Factual Reports Cover: The Economic Environment, Trade and Investment Regimes,Trade Policies and Practices by Measure and Sectors and Aid for Trade • WTO Secretariat Report is distributed to WTO Members • Over 200 questions raised by WTO Members sent to SACU • SACU Member States prepare written and oral responses for the • Review

9. Key Findings • SACU members are at different levels of economic development • Common challenges of unemployment, income inequalities, poverty and HIV/AIDS • Call for deeper economic integration i.e. harmonization of policies, and common development objectives • SACU economies expanded at an average annual rate of about 4% in real terms over review period (2002-2008)

10. Key Findings • SACU has difficulties in meeting WTO notification obligations i.e. agriculture • SACU has a narrow export base, with the exception of South Africa whose economy is relatively diversified • Services play a crucial role for future diversification in SACU economies

11. Update on Economic Partnership Agreement (EPA) • SA involvement in EPA not legally required, but we sought to align TDCA to EPA, consolidate the region and strengthen trade relations between the region and EU • Difficult negotiating process that creates divisions in SACU & SADC • Limits development policy space, constrains trade diversification efforts and undermines regional integration • BLMNS initialed in 2007, BLMS signed in 2009

12. Update on EPA • Over 2008-2009, SA raised specific problems with EPA: • Lack of alignment in EPA and TDCA Tariffs and RoO, and unless addressed, would require new customs controls in SACU • Unresolved negotiation issues (MFN, national treatment, definition of parties, customs procedures, safeguards, standards) • Some issues “resolved” in Swakopmund in March 2009 (export taxes, quantitative restrictions, infant industry protection, free circulation, food security) but not legally secured • Other issues not addressed

13. Update on EPA • Some pressure from EC for notification and entry into force for those members who signed IEPA • Entry into force will legally establish divisions in SACU • The key issue now is whether we are able to resolve all unresolved negotiating issues and align tariff and RoO before ratification • If issues resolved prior to ratification, damage to SACU more limited • If not, SACU will be seriously undermined • Some degree of common understanding emerging within SACU and SADC EPA Group (consultations last week) • This will be tested with EC in March