by Munetsi Madakufamba
This is the third in a four-part series on future SADC-EU trade relations under the Lome Convention.
Beef farmers in southern Africa are keeping their fingers crossed that proposals for reciprocal trade with the European Union (EU) do not pass next year when the 25-year-old Lome Convention is set to be overhauled.
As the millennium dawns, anxiety is mounting among the southern African countries which, since 1975 have been enjoying preferential access to the European markets under the Lome Convention which expires in February 2000.
The Lome Convention, which has governed aid and trade relations between the EU and the African- Caribbean-Pacific (ACP) countries since 1975, has fallen victim to the sweeping economic reforms championed by the World Trade Organisation, which prohibit “discriminatory” trade preferences. All Southern African Development Community (SADC) countries except South Africa have benefited from these preferences since the pact was signed.
Through the convention, Botswana, Namibia and Zimbabwe — three of the top beef producing countries in SADC – have been able to export their meat under reduced tariffs. As a result, the southern African countries have been able to compete favourably with European farmers.
But if EU proposals for “do-as-I-do trade” pass, then beef farmers in the region might as well consider venturing into other forms of business. EU beef is heavily subsidised and cannot compete with that from southern Africa where governments have been forced by international financial institutions to lift agricultural subsidies as part of economic reforms.
It is not just beef that is going to be affected if Lome preferences are phased out. The whole export base of the region is going to suffer since the EU has remained SADC’s major trading partner during the entire existence of the Lome Convention.
The volume of SADC exports to the EU (South Africa included) has averaged more than USS 15 billion over the last few years. Agricultural products have averaged one quarter, industrials half and the rest has mainly been precious stones.
South Africa contributes the bulk of exports, almost 70 percent despite the fact that it does not enjoy duty free access, followed by Mauritius and Zimbabwe which contribute about a fifth between them. Exports from the rest of the region account for the remaining 10 percent.
On the other hand, the EU has remained a key source of SADC imports with the overall balance of trade marginally in favour of the latter.
Although the Lome convention has generally been criticised for not adequately improving the export performance of ACP countries, including SADC, the situation would have been worse without it, according to a recent report commissioned by the European Commission, and written by a team of local consultants.
“The overall weak performance of the ACP states in the EU markets does not imply that the trade provisions (under Lome) had been of no use since the ACP countries may have recorded an even lower level of performance in the absence of the Convention,” says the report.
While most of the SADC countries witnessed declining market share in the EU, some member states were able to diversify into new export products, and in certain instances, increasing export volumes.
Examples include horticultural products from Zimbabwe, Zambia, Mauritius; clothing from Zimbabwe and Mauritius; and canned tuna from Mauritius and Seychelles.
But while debate is currently raging on in the two regions on what would be the best successor to the current Lome agreement, another aspect of it has almost been forgotten. EU governments, nongovernmental organisations and other parts of its community contribute more than 70 percent of all official aid to Africa and other ACP regions.
Official aid from the Paris-based Organisation for Economic Cooperation and Development (OECD),for which the EU is part, has shrunk to just 0.22 percent of their gross national product, well short of 0.7 percent, a target for which they set for themselves three decades ago.
Against the backdrop of declining aid, southern African countries, like all other developing nations, find themselves in a dilemma. If they ask for more aid, it comes with conditions which include less government involvement in the market. If they agree to open up, their small industries are subjected to the chill winds of international competition.
On the other hand, no trade liberalisation, no aid. But being developing countries as they are, aid is certainly vital, not just for balance of payments support, but also for undertaking expensive projects such as dam and road construction.
But in the short term, beef fanners would be interested to know if their market share, both in SADCand Europe, is guaranteed before they can ask why their governments are not building enough dams.
