Economic Partnership Agreement with EU would add little for SA

THE DECISION by the SA government not to sign an economic partnership agreement (EPA) with the European Union (EU) is not the major blow to the clothing and textile industry that recent press reports suggested, according to Brian Brink, executive director of the Textile Federation. He also argued that the EPA – signed last November by Botswana, Lesotho, Mozambique and Swaziland, but rejected by SA and Namibia – added little that the SA/EU free trade agreement (FTA) signed in January 2001 did not already supply. “With the FTA’s on-going phase-down of tariffs,” he said, “most SA textile and clothing items can already get into the EU on a duty-free basis.” The only area where the EPA really had advantage was less restrictive rules of origin. “Under the FTA rules of origin – where an EUR1 certificate of origin is required,” Brink told FTW, “a two-stage transformation of imported raw materials needs to be made before textile and clothing products can qualify as 'Made in SA'. “Under the EPA only a one-stage transformation is required.” Although used as a major argument by the press commentators, Brink added that this more relaxed rule of origin was unlikely to give the major advantage to the countries which had signed the EPAs. “Also, what must be borne in mind,” he said, “was that SA and Namibia pulled out of the EPA negotiations because they felt that unreasonable demands were being made on the part of the EU.” Brink also rejected the suggestion in a business daily that the EPA dispensation of rules of origin might encourage SA manufacturers to relocate to an EPA-eligible country. “The textile and clothing industries are extremely labour-intensive,” he told FTW. “And the argument that they might get lower labour costs is likely to carry more weight in any relocation decision than this minor relaxation of the rules of origin ever would.”