The Costs and Benefits to South Africa of joining the SADC EPA

Abstract

This study has been a limited desk based investigation into the costs and benefits of South Africa (SA) joining the SADC EPA which the EU is finalizing with five South African countries (SADC5). This would necessitate South Africa scrapping the TDCA agreement which currently governs its trade with the European Union countries (EU).

This study has four parts. In part A, we present a brief literature review on what various commentators indicate are the possible pitfalls of SA joining the SADC EPA. Then, in part B, we will focus on trade patterns between SA and the SADC from the point of view of traditional theoretical issues of trade creation, trade diversion and terms of trade impacts of FTA formation on SA. The essential question asked is what are possible positive or negative impacts on SA trade? Some of the issues raised in the literature review of Part A will be taken up here. One important issue in the context of FTAs is the specification of rules of origin (RoO) that are an integral part of all FTAs. In Section C we will look particularly at the RoOs of the GSP plus, the SADC EPA and the TDCA from the point of view of the issues of bilateral, diagonal and full cumulation. This issue is important as various commentators have argued that most FTAs remain stillborn due to onerous conditions in RoOs. In Section D, a simple econometric exercise is then attempted for major SA items exported to the EU to see to what extent the TDCA has been beneficial to SA. In the following Section E, we will make some general observations on SA particularly in relation to its supply side constraints and domestic conditions of growth rates, structure of production, employment etc. which impinge on the political economy of SA regional integration efforts. Finally, in Section F we will suggest possible options for SA from the point of view of its concerns in joining the SADC EPA.

Citation

Pant, M. The Costs and Benefits to South Africa of joining the SADC EPA. (2009) 119 pp.

The Costs and Benefits to South Africa of joining the SADC EPA

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