Explanatory Memorandum to COM(2010)57 - 2010/0038 (NLE) Proposal for a Council Decision on a EU position within the EC-South Africa Cooperation Council on the amendment of the relevant provisions and Annexes to the Trade, Development and Cooperation Agreement (TDCA) between the EC and its Member States, on the one part, and South Africa, on the other part, to align certain tariffs with those applied to the EU products by Botswana, Lesotho and Swaziland in the Annex 3 of the EU-SADC interim Economic Partnership Agreement - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2010)57 - 2010/0038 (NLE) Proposal for a Council Decision on a EU position within the EC-South Africa Cooperation Council on the ... |
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| source | COM(2010)57  |
| date | 23-02-2010 |
Article 106 i of the Agreement on Trade, Development and Cooperation between the European Community and its Member States, of the one part, and the Republic of South Africa, of the other part ('TDCA') empowers the Cooperation Council established by the same Agreement to decide on amendments put forward by any Party to the Agreement. According to Article 97 i of the TDCA, the Cooperation Council has the power to take decisions in respect of all matters covered by the TDCA.
South Africa is a member of the Southern Africa Customs Union (SACU) together with Botswana, Lesotho, Namibia and Swaziland (the so-called BLNS group). The EU and South Africa concluded a bilateral agreement, the TDCA (Trade, Development and Cooperation Agreement) which entered into force in 2000. During negotiations with the SADC EPA (Economic Partnership Agreement) group, including South Africa, the BLNS stated clearly their desire to align themselves to the existing TDCA provisions with South Africa provided that certain sensitivities could be accommodated by the EU. These sensitivities were identified with 53 tariff lines for which, in most cases, the BLNS side requested a dismantling at a slower pace than that foreseen in the TDCA. This is commonly referred to as retrofitting.
It should be noted that the previous SACU Agreement, which was in force during the conclusion of the TDCA did not oblige South Africa to formally consult and associate with all the other SACU members. This was then corrected in 2002 when a new binding consultation clause (Art. 31) was included into the new SACU Agreement.
The Commission accepted this request and it was introduced in the tariff dismantling scheme (Annex 3) of the interim EPA negotiated with the SADC EPA group. It was agreed that for these 53 tariff lines the existing TDCA dismantling scheme would mainly be frozen until 2011 and fully liberalised by 2015, as compared to the dismantling scheme included in the TDCA. For four of these 53 tariff lines duties will be frozen at 2007 TDCA tariff rates and for the time being there will be no further liberalisation.
The interim EPA was initialled in December 2007 by the BLNS. Unfortunately South Africa, although it had participated in the negotiations, did not initial the interim EPA in the end. Therefore tariff discrepancies still remain between the interim EPA and the TDCA regarding these 53 tariff lines.
Following the signature of the interim SADC EPA by Botswana, Lesotho and Swaziland in June 2009, South Africa complained that the implementation of this agreement would disrupt the SACU common external tariff (CET) because the tariff treatment for these 53 tariff lines on EU imports would be different from the commitments negotiated in the interim EPA and those in the TDCA. According to South Africa, the implementation of the interim EPA would therefore create an obstacle to the free circulation within SACU of EU products subject to different tariff schedules in different members of the customs union.
In order to address these problems and to support regional integration, in December 2008, representatives of the European Commission proposed tariff alignment whereby the EU would agree to extend to South Africa (via the TDCA) the tariff treatment for the 53 tariff lines negotiated with the BLNS in the interim EPA for these tariff lines, so that the same timetable for dismantlement would apply across all SACU members. This alignment would help to ensure that the TDCA and the interim EPA are fully compatible with the concept of a common external tariff for all members of SACU and support their regional integration.
The tariff alignment proposal was endorsed by the representatives of the Parties during a Senior Officials meeting that took place in Swakopmund (Namibia) in March 2009. It was considered that this alignment would be necessary to consolidate SACU tariff coherence, and help the interim EPA signatories to implement their commitments included in Annex 3 of the interim EPA.
It is important to underline that this tariff alignment is not proposing a new strategy, and is fully in line with previous actions undertaken in the context of SADC EPA negotiations. Following the non-signature of the interim SADC EPA by South Africa, this alignment is a technical way of implementing an arrangement that was foreseen with all SACU members (including South Africa and Angola, which in the event did not initial the agreement) in 2007, in two different agreements: the interim EPA and the TDCA. In fact, in order to preserve the SACU Common External Tariff (CET), the idea of aligning the TDCA market access granted to the EU with the one in the interim SADC Economic Partnership Agreement has been discussed in the SADC EPA group.
This helps the integration of SACU members and thus demonstrates clearly the EU commitment to SACU integration. It does not pre-empt possible future negotiations with South Africa in the framework of ongoing negotiations for a comprehensive SADC EPA.
The list of tariff lines (53), on which these adjustments should apply as well as the description of the new tariff treatment is provided in the attached Excel sheet, which reflects the tariff lines to be included in Annex 1 and Annex 2 of the Decision of the EU-South Africa Cooperation Council.
Existing provisions in the area of the proposalAgreement on Trade, Development and Cooperation between the European Community and its Member States, of the one part, and the Republic of South Africa, of the other part ('TDCA') i.
Consistency with the other policies and objectives of the UnionIf adopted, this proposal will help to finalise the EC-SADC EPA Negotiations, with the entire SADC EPA Group, which is in the interests of the European Union.
Contents
In 2008, several rounds of EPA talks between the EU and SADC EPA Group (including South Africa) took place at Senior Officials level in order to find a mutually satisfactory solution that would allow South Africa to eventually join a comprehensive SADC EPA.Since South Africa is not part of the Interim SADC EPA, the alignment of customs duties of the 53 tariff lines that were not identical under the interim SADC EPA and the EU-South Africa Trade and Development Cooperation Agreement was considered necessary in order to preserve SACU external tariffs.This matter was discussed with SADC EPA side on several occasions, in 2008 as well as at Ministerial level in February 2009 and subsequently at Senior Officials' level in March 2009, in order to allow the signature of the Interim SADC EPA Agreement to move forward. This proposal would pave the way for the continuation of market access discussions in the full SADC EPA context, to include South Africa.
There was no need for external expertise.
Impact assessmentNot applicable.
Summary of the proposed actionThe proposed Council Decision is structured as follows:1. The aim of this Council Decision is to align the relevant tariff schedules of 53 tariff lines applied by South Africa for imports from the EU as set out in the TDCA to EC products to those applied to the same EU products by Botswana, Lesotho, and Swaziland in accordance with Annex 3 of the interim Economic Partnership Agreement with a view to preserving the uniformity of the Southern African Customs Union external tariff, to which those three countries belong, in respect of their imports from the EU.2. This proposal is based on the conclusions endorsed by the representatives, in March 2009 in Swakopmund, Namibia.
Legal basisArticles 207 i first subparagraph and 218(9) of the Treaty on the Functioning of the European Union and the Agreement on Trade, Development and Cooperation between the European Community and its Member States, of the one part, and the Republic of South Africa, of the other part i (hereinafter referred to as the TDCA), signed in Pretoria on 11 October 1999 and entered into force on 1 May
Subsidiarity principleThe proposal falls under the exclusive competence of the Community. The subsidiarity principle therefore does not apply.
Proportionality principleThe proposal complies with the proportionality principle for the following reason(s).
The proposed form of action (Council Decision) is as simple as possible in the context of the TDCA. Any alternative means would require the renegotiations of the entire Agreement.
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Proposed instruments: Council Decision.
Other means would not be adequate for the following reason(s).Amending the TDCA is the best way to preserve SACU tariff coherence and the fastest way to resume EU-SADC full EPA talks with the entire SADC EPA region.
The proposal will have no financial implications. The reason is that this tariff alignment is a modification of the South African tariff schedule included in the TDCA and not the modification of the EU tariff schedule. Thus, the tariff alignment as proposed in this Decision, will have no consequences on the EU budget.