Further delay in EPA, disastrous – IMF
Delays in finalizing negotiations with the European Union under the Economic Partnership Agreement (EPA) could prove disastrous to the local economy, the IMF has warned.
In a report released earlier this week detailing findings of an IMF team that visited the country late last year as part of the Article IV consultations, the IMF said delays in signing an EPA could see Namibia lose its big export market.
The European Union has historically been the biggest buyer of Namibia’s exports. According to the IMF report, fish, meat, and grapes generally account for 20 to 30% of the EU’s imports from Namibia.
For years now, Namibia together with SADC partners, Botswana, Lesotho, Mozambique and Swaziland, has been negotiating new free trade terms with the EU. However, Namibia has refused to sign an agreement accusing the EU of negotiating in bad faith while the other SADC countries signed an interim agreement in 2009.
In 2012, the Head of the EU Delegation to Namibia, Ambassador Raul Fuentes Milani said a lack of consensus and agreement on a final EPA was now causing the delegation “EPA fatigue”, but Namibia has been steadfast in its refusal to sign the EPA agreement before its concerns are addressed. The Minister of Trade and Industry, Calle Schlettwein is on record saying: “We should not allow ourselves to be pushed into a corner where the commitments that we then sign harm our ability to develop.” At the center of Namibia’s refusal to sign the Economic Partnership Agreement with the EU, according to the IMF, is: “(i) Policy space, namely the use of export taxes, infant industry protection, and other trade restrictions that are central elements of Namibia’s industrial policy; and (ii) Rules of origin for fish: EU trade agreements use territorial waters (within 12 miles of land) as a criterion for determining the country of origin for fish imports. Namibia is seeking derogation for fish (especially tuna) caught within the 200-mile exclusive economic zone.
Outstanding differences on safeguard measures applied to agricultural trade also remain, along with rules of origin for goods made with raw materials imported from outside the SADC EPA group, as well as geographical indications, and trade-related issues such as competition policy, government procurement and investment. Quoting the Overseas Development Institute (ODI) using trade data for 2006 and comparing tariff rates faced in the EU market by Namibia and its competitors, the IMF said Namibian export revenue from fish, meat, and grapes is estimated to drop by 45.15 million a year if no agreement was signed with the European Union. “Namibia’s meat industry would likely be hurt the worst. Namibia would not be competitive with South America, Australia, and New Zealand at most-favored nation (MFN) rates. The EU imposes MFN tariffs of 7.5 to 22% on fish, with rates varying according to species and type of processing. Namibia presently has a slight preference margin over most competitors, including South Africa. Grape exports will also suffer, but perhaps not to the same extent,” the IMF said. The deadline for signing the trade agreement was last year extended from January 2014 to 2016 to give time to countries such as Namibia to look at some of the proposals from the EU.