It is imperative for Namibia to ratify the Southern African Customs Union (SACU), Mozambique and United Kingdom (UK) Economic Partnership Agreement (EPA) as soon as possible to ensure the country continues to benefit from duty free and quota free trade with the UK after December 2020. As part of SACU Namibia currently trades with the UK under a signed memorandum of understanding on an interim basis until December this year.
Minister of Industrialisation and Trade Lucia Iipumbu cautioned in Parliament last week that the ratification process must be completed to ensure that Namibia continues to trade with the UK under favourable conditions after December 2020 when the current agreement between the European Union (EU) and the UK lapses.
Iipumbu stated that in an event that Namibia fails to ratify the SACU, Mozambique, and UK EPA before December 2020, then the country would not be compliant with the statutory requirements and provisions as stipulate in the EPA.
This means the Namibian business community will be subjected to paying Most Favoured Nations (MFN) duties as per the World Trade Organisation rules and principles with the regard to the products exported to the UK market.
According to the minister, analysis indicate that if the UK imposes MFN duties then Namibia’s losses could amount to millions of dollars on an annual basis for products such as grapes and beef.
“Also, and perhaps the greatest threat to our exports is market preference erosion where Namibia will be competing with countries like Brazil, Argentina and others in the UK market,” Iipumbu explained.
Further, she outlined that Namibia exported about US$43 million and US$49 million to the UK during 2017 and 2019 respectively and maintained a trade deficit with the UK which shrunk in the first year of the agreement by approximately US$13 million. Namibia imports from the UK stood at US$58 million in 2019.
“The ratification of the SACU, Mozambique UK economic partnership agreement therefore will provide the window of opportunities for Namibia to continue reducing and eradicating poverty through the establishment of the trade partnership consistent with an objecting of sustainable and inclusive development. It will also improve our competitiveness and economic growth within the SACU region plus Mozambique,” she explained.
The agreement was negotiated among the SACU member states plus Mozambique on one hand and the other hand with the United Kingdom.
SACU member states and Mozambique as a SADC member concluded an EPA with the European Union in 2016 and negotiated another EPA with the UK since 2017 as the result of that country’s national referendum when it voted in favour of leaving the EU economic block.
“The parties have been in discussions to explore ways to ensure that existing trade agreements between the parties, which are governed by the EU, SADC economic partnership agreement, will not be disrupted by UK’s exit from the EU,” she said.
Iipumbu elaborated that the negotiations between the parties were aimed to roll over the SADC EU EPA for the free trade regime with the EU to continue. The negotiations were concluded in Gaborone in September 2019. Upon conclusion of negotiations the parties signed an MoU to ensure transitional arrangements regarding the continuation of trade preferences of the EU’s and SADC’s EPA to avoid trade disruptions until December 2020.
In support of the motion, Minister of Agriculture, Water, and Land Reform, Calle Schlettwein, said most exports come from the agricultural sector like grapes and beef so it is very important that the free trade partnership is maintained.
“We have managed these products to be competitive in the best-paying markets of the UK and EU. So, there are benefits for our domestic economy and for farmers that are dealing with these products,” Schlettwein stated.