International Trade and Economic Development

Update on WTO, TPR and EPAPresented to the

Portfolio Committee on Trade and Industry

By: Dr Rob DaviesMinister of Trade and Industry

16 February 2010

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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

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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

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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”

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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

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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

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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

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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 TradeWTO Secretariat Report is distributed to WTO MembersOver 200 questions raised by WTO Members sent to SACU SACU Member States prepare written and oral responses for theReview

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• 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)

Key Findings

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•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

Key Findings

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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

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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

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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