Rhetoric or Reality?
EU policy towards South Africa, 1977 - 2000
Beth Perry
Bradford University
DSA European Development Policy Study Group Discussion Paper No. 19, October 2000
In 1994 South Africa became the last of the former European colonies on the African
continent to be handed over to the African majority population. Europe has played a
key role in the country's turbulent history, from the 'discovery' of South Africa in the
15th century by Portuguese navigators, through its progressive colonisation by
Afrikaners of largely European origin, to the repressive brutality and inhumanity of
the white-ruled apartheid regime. Until the early 1970s, Europe's role was at best
apathetic, at worst collaborative. However, as the European Community began to
desire a more active role in international affairs, so an EC policy towards South
Africa took shape. Three key areas of research beg examination regarding the nature
and development of this policy: firstly, the effectiveness and credibility of EC policy
during apartheid; secondly, the changing focus of EC policy from aid to trade and
thirdly, the extent to which policy has reflected the development needs and concerns
of South Africa. With this in mind, the first section of this analysis deals briefly with
Community policy towards South Africa during apartheid, focussing on the EC's
Code of Conduct for Companies operating in South Africa, the 1985 package of
restrictive and positive measures and the imposition of international sanctions on
trade with South Africa. The second section examines post-apartheid policy, in
particular the development of the Trade, Cooperation and Development Agreement
(TDCA) signed between South Africa and the EU in October 1999. A common theme
running throughout both periods of EU policy is that of the primacy of the domestic
economic interests of the member states, which have often undermined or halted more
progressive proposals within the Union.
Until the mid to late 1970s, there was no official Community policy towards South
Africa. Concern focussed around former French and Portuguese colonies and the
apartheid South African state was seen as a predominantly British foreign policy issue
(Holland, 1987: 296). However, British accession to the EC in 1973, criticism of
British economic involvement in South Africa and increasing hostility towards the
apartheid regime eventually led to a Community position being taken within the
framework of European Political Cooperation (EPC).[1] The aim of the EC's policy
towards South Africa was the removal of apartheid, however, the only instrument
employed to achieve this aim was the 1977 Code of Conduct for Community firms
operating in South Africa. This Code was designed to counteract the racist
employment legislation of the apartheid state, through providing guidelines on how to
do business in an apartheid environment and stressing the need for equal pay, access
to education and health, non-discrimination in the workplace and the recognition of
trade unions. However, whilst the Code did have some successes and certainly
reflected a desire on the part of the Community to express official disgust at the
workings of the apartheid state, the effectiveness of the Code as foreign policy tool is
highly questionable. Martin Holland, a prolific writer on the EC's relations with South
Africa, has been highly critical of the Code of Conduct, particularly with regards the
lack of uniformity in its application. Holland finds that there were significant
shortfalls in the application of the code, such as the fact that one third of UK
companies operating in South Africa still failed to negotiate with black trade unions
and some firms continued to reject the principle of equal pay for equal work (Holland,
1987: 299). Box 1 highlights some of the main problems associated with the Code of
Conduct. Perhaps most significantly, the Code was applicable only on a voluntary
basis to all EC firms with subsidiaries in South Africa. The Community had no means
or mandate to enforce compliance and the Code was not uniformly or vigorously
applied.
Box 1. Criticisms of the EC code of Conduct







There was no EC institution with responsibility for supervising or coordinating the code
There was no common reporting format and the quality of information
reported was inconsistent
Responsibility for reporting and monitoring of compliance was national and
not European
The criteria used to determine which firms reported under the Code varied
according to national labour legislation
There were discrepancies between firms in a single country
There were no direct sanctions for non-compliance as the code was voluntary
Only EC firms owning at least 50% equity of the subsidiary and employing
more than 20 black Africans were obliged to report, ensuring that in Britain
and West Germany, the countries to which the Code was most applicable, just
one in seven firms were affected by the Code
(reproduced with information from Holland, 1987: 297-298)
The Code of Conduct remained the only collective action taken until the outbreaks of
popular support in South Africa in 1984 - 1985 were met with intensified violent
official repression. However, despite vehement Commission declarations condemning
apartheid, there were considerable difficulties in formulating a common position,
particularly stemming from the UK, and to a certain degree West Germany.[2]
Eventually, criticism from the UN, the Commonwealth and other EC member states
forced the UK to abandon its opposition to the joint package of positive and restrictive
measures proposed by the Community in September 1985, thus paving the way for
minor revisions to the Code of Conduct and the development of the European Special
Programme (ESP).[3] This aid package was designed to help the victims of apartheid
and to assist the process of peaceful change by supporting non-racial activities,
through non-racial NGOs.[4] For the first time, the EC took a positive developmental
stance in South Africa, moving away from rhetorical condemnation. However, the
ESP was designed to counter the devastating consequences of apartheid, not to bring
about its demise. The main tool employed for this purpose from 1985 onwards was
the imposition of economic and diplomatic sanctions.
The EC was never in agreement about the necessity or extent of international
sanctions or how effective they might be in bringing about an end to apartheid. IntraEC policy disputes, particularly originating from an intransigent Margaret Thatcher,
ensured that it was increasingly difficult for the EC to agree to full economic
sanctions. As Holland writes:
“By the mid-1980s, innovative leadership had given way to conservative opposition
to the imposition of sanctions and the EC became one of the most recalcitrant
members of the international community”( Holland, 1995: 559).
Nevertheless, after much inertia and vacillation, a package of international sanctions
was finally agreed at the Hague in September 1986.[5] However, in their examination
of the application of international sanctions by countries across the world, Hanlon et
al reveal that with regard to imports and exports, financial measures and diplomatic
ties, member states applied sanctions in a half-hearted and self-interested manner
(Hanlon et al, 1990). Whilst countries such as Denmark, Sweden and India applied
near total bans in all key sectors, the approach of the EC countries is clearly
fragmented with some states, including Britain and West Germany, imposing
minimum sanctions, whilst others imposed a total ban on all recommended
products.[6] Furthermore, the vast bulk of trade was not subject to sanctions: in 1985
only 5% of the value of imports was covered by the trade embargo and overall
imports amounted to 9.1bn ECU (Graumans, 1997). In some products, trade even
increased with South Africa between 1986 and 1987. One particular example of this is
the EC's trade in apples, which continued to increase with South Africa, even after the
EC had imposed limited sanctions and condemned apartheid.[7] Whilst it is undeniable
that sanctions did make an important contribution to the end of apartheid, they can
only be of limited effectiveness if they are not applied forcefully and vigorously.[8]
Clearly the strong condemnation of apartheid by the EC was not reflected in an
equally strong stand on trade negotiations with South Africa. The EC could have done
much more to limit trade in goods and sanctions had the potential to be a far more
powerful tool.
Given the evident inadequacy and lack of coherence of EC policy towards South
Africa in this early period, it has been argued that collective actions were only taken
to defend the EC from international criticism. Holland suggests that EC policy from
1977-1984 could be seen as designed to protect the status quo, a conclusion which
could be justified by the voluntary nature of the Code, the continuation of major trade
and investment links and the selective and ineffective application of sanctions.[9]
Indeed:
“the inability of the Community to develop a collective response has left the Code
and partial sanctions as metaphors for the Community's real concern: the
maintenance of Western influence and the protection of capital, not the
introduction of racial equality” (Holland, 1987: 309).
Whilst such a harsh and cynical view would be fiercely opposed by the EC, it is
undeniable that positive statements emanating from the Commission masked
divergence in national attitudes and the dominance of economic national interests.
West German opposition to imposing coal sanctions can be explained by the fact that
1/3 of South African coal exports to the EC were destined for West Germany. For the
UK, South Africa was the 2nd most important destination for Foreign Direct
Investment (FDI) and both West Germany and the UK were also highly dependent on
South Africa for strategic minerals.[10] For France on the other hand, South Africa was
a minor supplier and trading partner which explains why France could so readily
condemn apartheid and push for international measures (Holland, 1987: 306). It is
clear that member states' attitudes to and application of the Code of Conduct and
international sanctions were governed to a large degree by relative levels of economic
interest in South Africa, which consequently undermined not only the credibility of
the EC's opposition to apartheid, but also the developmental effects of programmes
such as the ESP.
Just as agreeing on sanctions had caused tension between member states, the lifting of
sanctions between 1991 and 1994 was a long and slow process which highlighted the
difficulty in co-ordinating diverse national interests.[11] However, the introduction of
the Common Foreign and Security Pillar (CFSP) of the Treaty on European Union in
1993 seemed to herald a new era for the newly named European Union (EU).[12] Free
of the constraints of EPC on collective action, decisions could now be taken by
qualified majority voting with joint actions having the status of a binding
commitment.[13] In November 1993, South Africa became one of the first five
countries subject to a joint action under the CFSP: cooperation and development
initiatives replaced sanctions and codes. The EU's support for democracy and human
rights in South Africa appeared, for the first time, to be more than mere rhetoric. In
the lead-up to the first universal suffrage elections in April 1994, the Commission
took responsibility for the co-ordination of an EU electoral assistance programme.
The EU Electoral Unit was established on 24 January 1994 and 307 observers were
deployed, including European police officers to assist in security and personnel for
voter education. Writers generally agree that the joint action was a success, indeed,
Olsen acknowledges that European support for democratisation was successful and
that the EU did make a difference during the transition period.[14]
Following the election of Nelson Mandela as the first democratically elected leader of
South Africa in April 1994, the South African government was now faced with the
task of emerging from decades of isolation and concluding international agreements
in both the trade and cooperation fields. The EU stated its commitment to contribute
to South Africa's sustainable economic and social development and to consolidate the
foundations for a democratic society. However, despite the initial euphoria which
accompanied the end of apartheid, the South African government remained realistic
about changes in the global economy and kept its expectations in check, stating that:
“It would be hazardous to read more into the world's reaction than was intended:
support and admiration for South Africa's peaceful democratisation. The world's
reaction does not represent an indefinite continuation of the unique relationship or
so-called honeymoon which South Africa has experienced since 1994”
(http://www.gov.za).
Given the gap between rhetoric and reality previously witnessed in EC policy, the
South African government remained sceptical as to how genuine international support
would be. Unfortunately, this scepticism proved well warranted.
It was only natural that some form of agreement would be necessary between the EU
and South Africa. The EU was South Africa's most important trading partner,
receiving more than 40% of South African exports while providing 33% of South
African imports and accounting for over 70% of FDI. In recognition of the changing
context of international relations and changing attitudes towards development, the
new Republic was keen to use trade and not aid to reduce income disparities and
compete in the world economy. Years of relative isolation had led to an inward
looking, inefficient economy, from which the majority of the population was
excluded. South Africa was crippled by serious economic and social problems: high
unemployment, large income disparities, poverty, a lack of international competivity
and industrial diversification and structural inefficiencies in the industrial sector. The
immediate task was therefore to rebuild and restructure the economy. The preferred
route was to obtain trade preferences from the EU.
Over the years, the EU had developed a “complex and opaque hierarchy of trade
preferences” offering greater or lesser preferential access to the Single European
Market. [15] Of all the different options for the South African government to pursue, it
has widely been shown that accession to the Lomé Convention would have been the
best all-round option for the fragile South African democracy. [16] Firstly, even though
South Africa had developed trade in goods which were relatively lightly restricted in
international trade, a significant proportion of goods would have benefited from the
pursuit of preferences, especially in agriculture where South Africa stood at a
disadvantage to its competitors which already benefited from EC preferences.[17]
Secondly, the Lomé Convention was seen as a speedy, extensive yet flexible option,
allowing for future changes in the composition of South African trade.[18] Thirdly, the
Lomé Convention was seen as compatible with regional trade, with generous
provisions on regional cumulation providing the possibility of collaboration within
Southern Africa to produce goods for export. Whilst there would have been more
competition for the African, Caribbean and Pacific countries (ACP) if South Africa
had received Lomé preferences, the regional economy would have benefited from
South African help in extracting mineral wealth and through the Republic's expertise
in production and marketing (Lister, 1990: 30). Indeed, Lister argues that intraregional trade would have been stimulated through membership of Lomé and that
ways could have been engineered to allow South Africa to fit into the Lomé trade
regime (Lister, 1990: 31).
However, in recognition of its higher levels of economic development and the
possible negative effects on existing beneficiaries within Lomé, the South African
government pursued membership to Lomé's trade provisions as only a transitional
measure. Partly so as not to raise fears among its regional partners, South Africa did
not seek the benefits of the trade protocols or stabilisation mechanisms of Lomé and
expressed a preference not to receive funds from the European Development Fund.
However, seeing itself as a developing country in need of economic restructuring and
assistance, South Africa sought preferential market access to the EC and the
encouragement of foreign investment, which would allow economic diversification
and development across the whole Southern African region. Trade preferences were
seen as far more long term than aid, often producing higher revenues for the recipient
government.[19]
South Africa had undeniable economic and social problems and needed the time
offered by trade preferences to recover from the legacy of apartheid. However, EU
policy towards South Africa in the post-apartheid era was rarely driven by
developmental concerns. Instead, as in the earlier period, domestic donor interests
dominated, the EU drove a hard bargain and policy was often inconsistent and
counterproductive. Ignoring the clear rationale for South African accession to the
General Trade Provisions of Lomé on a transitional basis, the EU turned the Republic
down. The official reason stated for exclusion of South Africa from the General Trade
Provisions was the dual nature of the South African economy, characterised by
features common to developed and developing countries. The EU argued that as
South Africa is classed as a developed country by the WTO, South African
membership of Lomé could have jeopardised the whole status and future of the Lomé
Convention. Furthermore, Article 363 of Lomé IV states that any country wishing to
join the Convention must have an economic structure and production comparable with
those of the ACP states.[20] Concern was also expressed that giving a regionally
competitive and dominant South Africa access to trade preferences would reduce their
value for existing beneficiaries, especially in the Southern African region.[21]
However, on close inspection, the EU position is untenable. For a start, South Africa's
classification as a developed country is difficult to understand. Whilst average
earnings were high, this masked huge income gaps within the population. The life
expectancy of a Black South African was comparable with that in Botswana at under
60 years of age, and per capita GNP in South Africa was lower than a number of ACP
countries such as Mauritius, Botswana, Gabon and Cameroon which had not been
excluded from joining Lomé.[22] Furthermore, most developing countries exporting to
the EU are more developed than South Africa in terms of the human development
index and the EU has been quite willing to give very favourable access to the more
developed countries of Central and Eastern Europe.[23] Clearly, the EU's hierarchy of
trade preferences is not based on need and the Union deserves much criticism in this
respect. The fact that South Africa was a developed country was a mere technicality
which could easily have been ignored. However, this argument served to mask EU
concerns over the commercial potential of the South African economy (Commissioner
Pinheiro, 17.04.97).
In some respects, the EU's refusal to choose the most beneficial strategy for South
Africa could have been foreseen. From the outset, individual member states had
different attitudes towards the new Republic. While Britain and Germany pushed for
an immediate fully-fledged agreement on trade and cooperation and were in favour of
more liberal provisions, especially for agricultural products, the southern member
states welcomed the emergence of a new competitor with lukewarm enthusiasm.
Driven by the desire to protect the European market from competitive South African
products and by concern that South African penetration of European markets could be
at the expense of francophone Africa, France played a key role in ensuring that South
Africa was not offered the best deal possible. Whilst aspects of the package of
immediate measures agreed in April 1994 can be commended, such as the agreement
that the European Investment Bank should extend development financing to the
Republic to help investor confidence, South Africa was initially only given GSP
treatment for industrial and not agricultural products, unlike other developing
countries under the GSP. This was partly due to the protectionist fears of
Mediterranean fruit growers and European wine producers. Whilst the Commission
favoured increasing the tariff preference scope of GSP to include plants, vegetables
and fresh and canned fruit, member states were adamantly against this (Financial
Times, 06.07.95). South African agricultural products, especially fruit and wine, were
already in direct competition with EU producers and the EU saw no reason to grant
preferential access, despite the fact that this would clearly have helped South Africa to
cope with many of the country's desperate problems. From the beginning it was
evident that domestic issues tempered and diluted good intentions within the EU and
that South Africa would have to fight for favourable terms for products in which it
had a comparative advantage.
By June 1995 the EU had formulated its proposal for long-term cooperation with
South Africa. A twin track approach was put forward consisting of a bilateral deal
leading to a Free-Trade Area (FTA) and South Africa becoming a 'qualified' member
of the Lomé Convention. The proposed FTA would cover 90% of all trade with full
reciprocity within ten to twelve years. The decision to pursue a FTA with South
Africa must be seen in the context of global changes and faith in the new export-led
regionalism. This was accompanied by the belief that increased competition from the
EU would benefit the South Africa economy, by bringing new investments and new
jobs, more choice for producers and for consumers. However, the FTA was clearly in
the EU's own interest. Whilst low on the list of priorities, the EU recognised that
opening up the South African market would lead to an increase in exports and a more
beneficial situation vis-à-vis Europe's competitors in Japan and the USA. [24] The FTA
would secure investments already in South Africa, particularly from Germany and the
UK. Furthermore, South Africa was seen as the engine of growth for the region and a
vehicle to spread democracy, the rule of law, human rights and good governance to
the region. That the EU acted partly out of self-interest is evident in the
Complementary Negotiating Directives agreed in March 1996 which stipulate that
liberalisation between South Africa and the EU should comply with the principles of
the Common Agricultural Policy, should not affect the implementation of other
community policies and should take account of the interests of the EU's preferential
partners and their economic interests (Graumans, 1998). Such a stipulation has had
extremely negative effects on the developmental impact of the final agreement.
With regard to South Africa's 'qualified' membership of Lomé, South Africa's
agreement was to be “not a brother but a close cousin” of the Convention.[25] This
entailed membership of the preferential tendering agreements and regional cumulation
provisions which would provide substantial assistance to South African exporters.[26]
Furthermore, the fact that South Africa was included in the institutions of Lomé was
of great political importance increasing the weight of the ACP group in all
international negotiations. South African exclusion from the stabilisation mechanisms
and the EDF was uncontroversial, however, South Africa was excluded from Lomé's
duty and quota free access to EU markets and from the bulk of preferential trading
agreements (see Box 2).
Box 2
Main terms of South Africa's accession to the Lomé Convention
Articles applicable to South Africa






Technical, cultural and social
cooperation
Regional cooperation
Eligibility for tenders for the
8th European Development
Fund, but excluding ACP
preferential treatment
Industrial development
Investment promotion and
protection
Participation in the institutions
of the Convention
Articles not applicable to South
Africa





General trade
arrangements
STABEX
SYSMIN
Structural Adjustment
Support
EDF resources (assistance
instead from the EPRD,
funded through the
Community budget)
(Commission of the European Communities, October 1999, 'Partners in Progress'.)
This can be seen as a major set back to a country desperate for rapid export led
growth. As one commentator notes:
“South Africans could be forgiven for thinking that the EU prefers to support
Nelson Mandela's administration with high profile aid pledges rather than close
trade ties”(Financial Times 21.11.95).
The South African government objected in practice and not in principle to the idea of
an FTA with the EU. While an FTA could be a valid long term goal, such an
agreement would jeopardise South Africa's efforts in the shorter term to restructure its
uncompetitive industries and develop an integrated regional trade regime. There was
justified concern that Europe's industrial power would hinder South African industrial
reconstruction and development. In its negotiation briefing of January 1997, the South
African government raised four other points of concern: the fact that the proposed
FTA would exacerbate the existing imbalance in trade between the EU and South
Africa[27]; the fact that almost 40% of South Africa's agricultural products were to be
excluded from the FTA; the fact that the EU imposed the condition of completion of
the FTA negotiations before South Africa could have access to the Lomé provisions
and the fact that bilateral negotiations relating to trade-related issues, such as
government procurement, intellectual property rights and competition policies had
been included in the agreement (See Keet, 1997: 289). It was widely felt that the EU
was not taking into consideration the developmental needs of the country.
South Africa's other major concern was that the proposed FTA with the EU failed to
take into account trade arrangements with neighbouring countries. South Africa is
bound to a customs union arrangement with Botswana, Lesotho, Namibia and
Swaziland (BLNS) that dates back to the end of the 19th century. The Southern
African Customs Union (SACU) provides for free trade among members, a Common
External Tariff (CET) and a common revenue pool for excise duties and revenue
sharing. The major benefit of SACU for the BLNS was the income derived from the
common revenue pool and the existence of a captive market in South Africa for
internationally uncompetitive exports. Since September 1994, South Africa has also
been a member of the Southern African Development Community (SADC). It was
quickly recognised that the proposed FTA with the EU would have a severe spillover
effect on South Africa's neighbours. In particular, four areas of potential effect were
identified: the impact of cheaper EU imports on domestic production within the
SACU market, the possible impact of duty free access on investment decisions, the
impact of the agreement on customs revenues and the implications of the agreement
for future access for the BLNS to the EU market. Table 1 shows the dependence of
the BLNS states on the common revenue pool and gives an idea of the catastrophic
impact removal of this revenue source would have. Cheaper EU imports were
expected to have a negative effect on employment in the South African region and
fears about growth polarisation were aired. South Africa recognised that the FTA
would bolster the politically sensitive one-way trade relationship South Africa had
with its African neighbours and thus damage attempts at regional integration. For
these reasons, the EU proposal was condemned as divisive (Keet, 1997: 287).
Table 1. SACU revenue as a percentage of central government revenue
Botswana
Lesotho
Namibia
Swaziland
1993/4
15.9
53.3
25.4
46.3
1994/5
16.2
53.2
26.4
47.2
16.3
50.6
(Source: Graumans, 1997)
30.1
50.1
1995/6
South Africa was given very little choice regarding the nature of the agreement to be
negotiated, but could fight for more favourable terms. As an alternative to the EU's
plans, South Africa presented its own proposal for a Trade and Development
Agreement (TDA) in 1997, with the declared aim of a trade and development
relationship between the whole of the Southern African region and the EU. Firstly, the
TDA recommended that there should be greater asymmetry than proposed by the EU
to take account of the immense difference in development levels and that any trade
agreement should be aimed at helping South Africa to restructure the economy.
Secondly, South Africa's TDA promoted a greater focus on regional development
than on dismantling extra-regional tariff barriers. The needs and interests of SACU
and SADC had to be given priority. This is reflected in the dual strategy adopted by
South Africa of negotiating an FTA with the EU and with the members of SADC. In
1996 the SADC Free Trade protocol was agreed in Maseru binding South Africa to
extend all benefits granted to a third country to all signatories of the protocol. South
Africa was determined to put SADC first and stressed that better terms would be
offered to the SADC states than the EU was offering South Africa. In line with these
two proposals, South Africa sought 'developmental protocols' from the EU for
sensitive products and sub-sectors in South and Southern Africa such as for the motor
and textile industries.
The extent to which South African concerns were considered during the negotiation
process and reflected in the final agreement is of key importance in assessing EU
policy towards South Africa. The EU had already demonstrated a degree of selfinterest in its refusal to grant South Africa access to the General Trade Provisions of
Lomé. However, within the framework of the new agreement, the EU stated its
intentions to take into account the developmental needs and concerns of South Africa.
As Commissioner Pinheiro stated:
“What we propose is not just an old-fashioned Free Trade Zone. It is nothing less
than a Developmental Free Trade Area, designed to support the South African
government in the successful implementation of its economic policies”( Pinheiro,
17.04.97).
The conviction and credibility of the EU's claim to have created a Developmental
Free Trade Area can be assessed through examining the negotiation of issues of
asymmetry and agriculture and the consideration accorded to regional concerns.
According to the EU, incorporation of the principles of asymmetry and differentiation
into the FTA would allow South Africa the time and space to protect vulnerable
industries and agricultural sectors.[28] Liberalisation would occur over twelve years in
four periods of three years each. South Africa would grant duty-free status to 86% of
its imports from the EU, whilst the EU was to accept freely 95% of South African
exports. The EU liberalisation effort should be completed by 2002, whereas South
Africa's tariff cuts would be concentrated on the second half of a 12 year transition
period (between 2006-2012). However, in February 1998, the EU attempted to turn
asymmetry on its head, frontloading certain South African products and backloading
EU products. This 'volte-face' on the part of the EU was only partially successful.[29]
South African tariff elimination for industrial products is heavily backloaded, in line
with South African demands for special protocols for products sensitive to South
Africa and the Southern African region. However, in agriculture, the asymmetry was
practically reversed, with South Africa eliminating tariffs sooner and to a greater
extent than the EU (see Table 2). As Goodison rightly states,
“[it appears that] the proposed asymmetry therefore had less to do with
accommodating the different levels of development of the EU and South Africa and
more to do with accommodating the different 'sensitivities' with regard to the
impact of the introduction of free trade on domestic economic interests”( Goodison,
1999).
Table 2. Percentage of zero duty imports from other party, by end of transitional
period, based on 1994/96 trade volumes
Agriculture
Industry
Total
South Africa
81.0%
86.5%
86.3%
European Union
61.4%
99.98%
94.9%
(Commission of the European Communities, October 1999, 'Partners in Progress).
In fact, despite a considerably lower level of economic and social development, the
Agreement leaves South Africa with higher adjustment costs than the EU. Asante
estimates that while the EU will have to reduce tariffs on a further 3% of its imports
from South Africa, South Africa will have to remove tariffs on around 6% of its
present imports from the EU (Asante, 1997). Furthermore, as South African tariffs are
far higher than EU tariffs, it has been estimated that South Africa will have to
liberalise up to 5 to 6 times more trade than the EU. This clearly casts aspersions on
the 'developmental' nature of the FTA.
For the EU, the major 'sensitivity' since the birth of the Union has been agriculture. It
must be noted in the EU's 'favour' that this is the first time that an EU proposal for an
FTA includes free trade in agricultural products. However, it is in this sector that one
can see the most blatant disregard for South Africa's developmental needs in favour of
protection of EU interests. Agriculture is the third largest employer in South Africa
and is a particularly labour intensive sector with much potential for growth. As such,
South Africa would have benefited greatly from improved access for agricultural
products to the EU market. However, this has only been partially granted. Although
considerably more products were included in the final agreement than the EU initially
desired, 27% of South African agricultural products were completely excluded as no
agreement could be reached (Goodison, 1999). Furthermore, as mentioned above, the
EU's liberalisation of tariffs on agricultural products is heavily backloaded. However,
the major issue of concern for the South African negotiators has not been the speed or
extent of liberalisation in agriculture, but the continued trade distorting effects of EU
subsidies within the Common Agricultural Policy, ensuring that competitive South
African agricultural goods are continuously undercut by cheaper subsidised EU
produce.[30] The most ridiculous example of the extent of EU protectionism can be
seen in the negotiations concerning the conclusion of a parallel agreement on wines
and spirits.[31] Led by France, the southern EU states demanded the phase out of the
use of traditional names like port and sherry by South Africa. However, even though
South Africa agreed to abide by WTO requirements and to phase out selling port and
sherry under those names, the obstructionist member states continued to push for a
ban on the use of more generic terms such as 'ruby', vin de pays', 'grand cru', 'ouzo'
and 'grappa'. Through a preoccupation with four or five names, the European
agricultural lobby attempted to hold the EU hostage. Indeed, Thabo Mbeki has
accused the developed world of protecting vested interests:
“What seems to predominate is the question in its narrowest and most naked
meaning ..'what's in it for me?' [...] And all this with no apology or sense of
shame.” [32]
The conflict between the rhetoric of free trade and the reality of continued agricultural
protectionism is clearly demonstrated.
Turning now to the regional aspects of the agreement, South Africa was successful in
getting the EU to recognise the primacy of trade relations within Southern Africa and
the principle of SADC-first. The final agreement allows for bilateral, diagonal and full
cumulation to help the BLNS to increase exports through South Africa. South Africa
can ask for derogations from the rules of origin where it has difficulty complying.
Furthermore, the final agreement includes safeguard measures which guard against
dumping and which can be invoked if there is a serious economic deterioration in
either country or if liberalisation is threatening the SACU states. Transitional
safeguard measures can be also be taken for infant industries or sectors in difficulty
(European Commission, 1999: 19). However, whilst the EU has stated a commitment
to help the BLNS in fiscal reform and to contribute financial assistance for adjustment
costs, this does not include losses incurred from decreased customs revenue, despite
the alarming fact that revenue losses to the SACU states have been placed at 6-11
times the annual level of EU aid disbursements in these countries.[33] It is thus unclear
whether the concerns and broader developmental disadvantages the BLNS would
suffer under a FTA between South Africa and the EU have been adequately
considered, indeed Goodison argues that the EU could have done much more to assist
the BLNS in restructuring.[34] On the other hand, the mere proposal of an EU-SA FTA
has been enough to galvanise efforts for regional co-operation, leading to the
acceleration of trade relations within SADC. On the importance of regional
arrangements, the tenacity of South African negotiators bore fruit. The EU was forced
to compromise and to recognise that South Africa also had other priorities.
It is clear that the 'developmental' aspects of the trade provisions of the EU-South
Africa Agreement are minimal. The provisions on asymmetry and differentiation do
not go far enough. Whilst South African concerns have been taken into consideration,
the EU has pursued a 'tit for tat' policy implying that economic gain has been more
important than the developmental needs of the Republic.[35] Sensitive sectors have
been excluded on both sides and both South Africa and the EU have access to the
safeguard measures (for a full list of excluded products, see Appendix 3).
Nevertheless, the few concessions won by South Africa were well-earned. South
Africa had a very proactive approach, exerting considerable counter- pressure on the
EU, indeed, Elias Link, Chief Negotiator for South Africa, rejects the idea that the
agreement is a one-sided pact, referring to the toughness and determination of the
South African negotiators.[36]
The above discussion is highly critical of the EU's position taken with regard to trade,
however, as the EU would be keen to stress, the TDCA finally signed in October 1999
is very diverse (see Appendix 2).[37] The TDCA was not just about establishing a
'developmental free trade area' but also contained specific provisions on development
cooperation. In this field, the EU can be judged in a more favourable light. The ESP
which had operated from 1985 was replaced in 1995 by the European Programme for
Reconstruction and Development (EPRD), “the largest and most generous aid
programme in Africa” (Lister, 1997: 163). A 500m ECU package was agreed to
cover the period from 1995 –1999 and in May 1997, a Multi-annual Indicative
Programme (MIP) was signed to implement the policy.[38] Table 3 shows the
allocation of resources between different programmes in 1998.
Table 3. The European Programme for Reconstruction and Development in 1998
SECTORS
Basic
social
services
IMPLEMENTING
PARTNERS
Regional Government Decentralisation
Private
Good
sector governance and cooperation
democratisation
58%
11%
29%
2%
(Commission of the European Communities, 2000)
66%
34%
However, the EU has been criticised for its development policy. In 1999 the
Commission commissioned a report to assess the country strategy applied to South
Africa (See Montes et al, 1999). The major finding related to the large amount of
undisbursed funds from the EPRD, due to the Commission's resource limitations and
time-consuming procedures. Despite a large growth in programme commitments, in
1999 two-thirds of the amounts committed between 1994-1998 remained undisbursed,
mainly as a result of extremely long project cycles. Box 3 gives a summary of further
shortfalls identified by Montes, Migliosori and Wolfe (1999).
Box 3. Criticisms of the EU's Country Strategy in South Africa 1996-1999














Strategy prepared on a weak knowledge-base
Strategy not sufficiently operational nor focussed
Insufficient indicators of progress were relied upon
Strategy not sufficiently realistic
Strategy not sufficiently flexible or tailored to the capacity of South African
institutions
There is little complementarity between the member states and the European
Commission and little exchange of information
The European Commission has weak learning systems Common monitoring
systems for projects do not exist
There is no pragmatic specialisation regarding interventions and resources
have been limited
There have been few joint actions and no examples of co-financing of
programmes
There has been a continuous large backlog of undisbursed funds
There has been a shortage pf staff with specialist skills
Complex and centralised administrative controls
There has been insufficient consultation with beneficiaries
Procedures for selecting CSOs are burdensome and insufficiently transparent
(Reproduced with information from Montes et al, 1999)
Nevertheless, despite these shortfalls, the EU has shown signs of learning from past
mistakes. More focussed and selective interventions have been planned, with
emphasis being given to economic transformation and job creation in line with South
Africa's own policies. In the TDCA, Philip Lowe, the EU Chief Negotiator, actually
refers to the recommendations of the independent report, identifying failed attempts to
manage too many projects with limited resources and suggesting that there may be a
move towards budgetary support.[39] These are hopeful signs that a constructive
development programme can be forged, indeed, genuine attempts are being
undertaken to make aid work more effectively. It is also important to note that the
South African government clearly leads coordination of development programmes
and is determined not to become reliant on aid. Unlike many donors in South Africa,
the EU seems keen to intervene only at the government's request and to use
government structures to implement the EPRD. As Montes et al point out, the South
African government sees aid as a matter of foreign policy and approaches donors as
equals. Indeed, the EPRD is one of the only recipient not donor driven programmes in
Africa (Lister, 1997: 164). This is not due to a change of heart on the part of the EU,
but to a proactive approach from South Africa.
Nevertheless, it is undeniable that the developmental possibilities of the EPRD have
been frequently undermined by less favourable terms in the trade relationship. As
such, it is worth finally considering the motivations for South Africa signing the
Agreement. After all, it was clear throughout the negotiations that South Africa would
have to settle for less than the optimum outcome from an outwardly protectionist EU.
Three main reasons can be identified for South Africa entering into the TDCA.
Firstly, as mentioned above, the importance of the EU as a trading partner and a
realistic attitude on the part of the South Africa government towards the changed
global environment led to an underlying belief in free trade as a long-term goal.
Secondly, it is clear that South Africa sees itself as having a key role to play in
bridging the gap between North and South to ensure a more equitable international
situation (http://www.gov.za). Acknowledging that lowering tariff barriers tends to
lead to the industrialisation and increasing wealth of the North and the marginalisation
of South, the South African government nevertheless believes that sound cooperation
with clients and suppliers in the North has to be an integral part of foreign policy and
of economic policy (http://www.gov.za). South Africa clearly saw positive and long
term spin-offs for South Africa and the Southern African region from this unique
agreement between an African nation and the world's largest trading bloc, and the
sense of pride and history in concluding this Agreement can clearly be discerned from
statements from the South Africa government. Thirdly, the renegotiation of the Lomé
Convention was already on the EU agenda when South Africa emerged from isolation
in 1994. The Convention was not largely seen as a success and had not solved the
economic, political or social problems of the ACP states (http://www.gov.za). The EU
had made it clear from 1995 that the principles of special status and non-reciprocity
enshrined in the Lomé Convention would be abandoned in favour of reciprocity and
differentiation. In the Green Paper of 1996 the EU argued that both discrimination
against non-ACP countries and Lomé's existence under a special waiver from the
WTO were no longer sustainable. The Green Paper stated that the amounts of aid to
the ACP countries under Lomé would be at least partially replaced by trade
development in line with Europe's desire to help countries become globally
competitive rather than continue to disperse aid. Ironically, as Sudworth and Van
Hove highlight:
“South Africa was excluded from the Lomé trade chapter in part because it was
considered not to be a typical ACP country. It is ironic that the type of agreement
now being negotiated with it has become the favoured model for 'typical' ACP
countries” (Sudworth and Van Hove, 1998).
The Lomé IV Convention expired on 29 February 2000 and its successor
fundamentally changes the nature of the EU's development policy towards the world's
poorest countries. Here is not the place for a discussion of the new agreement.
However, it is possible that in the long term, South Africa would not have benefited
more from membership of the Lomé Convention than from the TDCA. In fact, South
Africa has been fairly privileged in being able to deal with the EU on a one-to-one
basis, with limited control over negotiations and participation in discussions over the
future of relations between the EU and the ACP. South Africa's agreement to the
TDCA must be seen in this light.
In conclusion, the EC's policy towards South Africa during and after apartheid
demonstrated the conflict between official rhetoric and domestic interests, between
genuine, but often disorganised, attempts to initiate and implement development
programmes and the primacy of economic concerns. In many ways, the development
of EC policy in the post-1994 period is a continuation of earlier policies and attitudes,
with positive measures introduced through the ESP or EPRD being undermined by the
inadequate application of sanctions or by less than optimum trade provisions. Since
1994, EU policy has fallen short of the generous pledges of support made to the postapartheid Republic. Member states' domestic policy concerns have heavily influenced
and sometimes stalled the progress of negotiations and commitments made to foster
harmonious and sustainable economic and social development in South Africa have
largely been forgotten in favour of the pursuit of trade advantage. Indeed, negotiations
over the TDCA dragged on for two years, while small but powerful lobbies in the EU
were able to undermine the developmental impact of what had originally been hoped
for.
Furthermore, the EU is set to benefit more than South Africa from the TDCA, both
through protection in agriculture and through lower adjustment costs. However, whilst
the EU has sought to dictate and not negotiate the terms of the agreement, South
Africa can not entirely be seen as a victim. Official documents within South Africa
seem to indicate that the TDCA is largely in line with South African foreign policy,
with the dynamic and geopolitical benefits of a FTA seen to outweigh any direct and
static costs involved (Goodison, 1999). South Africa deserves credit for obtaining
important concessions - a slightly improved form of reciprocal free trade, with token
gestures to the development requirements and terms that its negotiators tried to
introduce. Nevertheless, despite substantial aid in the form of the EPRD, the EU could
have done far more to use trade as a developmental tool and to support the credible
and democratically elected South African government.
The TDCA is one of the most ambitious cooperation agreements the EU has ever
concluded with a third country and, as such, the EU-South Africa negotiations can be
seen as a test case for future agreements between the EU and a developing country
eager to use trade and not aid to further economic and social progress. However, this
analysis has revealed a fairly pessimistic picture, in which poor countries will have to
fight for even minor concessions on trade terms from the EU.
APPENDIX ONE. Key dates in the development of EU-South African
relations
July 1977 Code of Conduct for European companies in South Africa
July 1985 Package of restrictive (sanctions) and positive (European Special
Programme) measures agreed.
September 1986 Second package of restrictive measures agreed
1991 EU established a local programme coordination office in SA
1991-1994 Gradual lifting of sanctions against South Africa
November 1993 Joint action taken through the framework of the Common Foreign
and Security Policy
December 1993 Commission delegation set up in Pretoria
January 1994 EU Electoral Unit established
April 26-28 1994 First universal suffrage elections. Nelson Mandela elected President
of the democratic Republic of South Africa.
April 1994 Package of immediate measures agreed
September 1994 South Africa joins the Southern African Development Community
September 1994 South Africa admitted to the Generalised System of Preferences for
industrial products
October 1994 European Union and SA signed a simplified Cooperation Agreement
November 1994 EU turned down South Africa's request to join the Lomé Convention
June 1995 Negotiating directive for a long term framework for cooperation with
South Africa
July 1995 Scope of tariff preferences for South African agricultural imports under
GSP increased from 24.2% to 66% of total volume of SA's agricultural imports to the
EU.
September 1995 SA accepted the EU's offer of a FTA with separate agreements for
wine, fisheries and science and technology.
March 1996 Complementary negotiating directives for a Trade and Cooperation
Agreement with South Africa
August 1996 SADC trade protocol signed in Maseru
November 1996 European Commission Green paper on the Future of the Lomé
Convention
November 1996 Council regulation on development cooperation with South Africa
December 1996 Parallel agreement on Science and Technology signed between the
EU and SA.
January 1997 SA formally presents own negotiating position and the possibility of a
Trade and Development Agreement
May 1997 Multi-annual Indicative Programme signed.
October 1997 Detailed trade negotiations begin
March 1999 Conclusion of negotiations
October 1999 Signing of the Trade, Cooperation and Development Agreement
APPENDIX THREE. Summary of the exclusion lists

Main products excluded at EU
side

Main products excluded at SA
side
1.
2.
3.
4.
5.
6.
7.
8.
9.
Beef
Sugar
Some dairy
Sweet corn
Maize and maize products
Rice and rice products
Starches
Some cut flowers
Some fresh fruits
1.
2.
3.
4.
5.
6.
7.
8.
9.
Beef
Sugar
Some dairy
Sweet corn
Maize and maize products
Barley and barley products
Wheat and wheat products
Starches
Chocolate
10. Prepared tomatoes
11. Some prepared fruits and fruit
juices
12. Vermouth
13. Ethyl alcohol
14. Some fish
10. Ice cream
1. Unwrought aluminium
1. Petroleum and petroleum
products
2. Some chemical products
3. Some textiles
4. Automotive
Total of 304 tariff positions, representing
3.4% of total imports from South Africa
Total of 120 tariff positions,
representing 10.9% of total imports
from EU
Commission of the European Communities, October 1999, 'Partners in Progress'.
APPENDIX FOUR: Provisions on trade-related issues, Title III
Non-tariff barriers
Consultations on agricultural policy
Avoidance of fiscal discrimination
Rules of Origin
Anti-dumping and countervailing measures
Links to existing customs unions and FTA agreements
A safeguard clause and the associated implementational procedures
Rights of establishment for the provision of services
Current account payments and capital movements
Competition policy
Public aid
Government procurement
Intellectual property
Customs and statistical cooperation
Commission of the European Communities, October 1999, 'Partners in
Progress'.
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[1]
Foreign policy cooperation between member states was launched under the name European Political
Cooperation in 1970. Although outside the framework of the Treaties, there were few international
issues on which the EU did not pronounce (Nugent, 1995: 392).
[2]
The unity of any Community position was also undermined by unilateral action taken to oppose
apartheid on the part of the French and Danish governments (see Holland, 1987: 301-302).
[3]
In the revised Code of Conduct, greater emphasis was placed on relations with black trade unions,
training and promotion, supplementary benefits and improving the co-ordination of the code, but these
were essentially minor policy revisions.
[4]
Between 1985 and 1990, total funding reached 110.5m ECU, financing approximately 350 separate
projects, under the headings of education and training, humanitarian and social aid and legal assistance.
Education and training accounted for 45% of Community support throughout this period, humanitarian
and social aid received 44% of funds and legal assistance accounted for 11% of support through this
period (European Commission, 1990). Examples of programmes funded between 1985 and 1990
include supplying training for childminders for black children whose parents go out to work; through
training black teachers and offering scholarships for black students at secondary or higher education
levels; by providing mobile medical teams for black squatter communities; or by paying the legal fees
incurred for the defence of detainees.
[5]
This included a ban on sales of oil and arms to South Africa, the suspension of co-operation in the
military and nuclear fields, the discouragement of cultural, scientific and sporting links, a ban on
imports from South Africa of iron and steel products and gold coins and a ban on new investment.
[6]
It should also be noted that the Nordic countries had a higher degree of support for the ANC than
other Western governments. Indeed, in the 1950s and 1960s, only Norway and Sweden were
forthcoming with contributions to the ANC, providing assistance and scholarships, money for legal
defence and humanitarian aid for political prisoners (Mandela, 1994: 603-604).
[7]
Between 1980 and 1987, EC apple imports from South Africa rose by 36% (Goodison, 1990: 321).
The debate over the effectiveness of sanctions is a long and intense one. For example, it is estimated
that the oil embargo was not very successful, in so far as South Africa only experienced brief problems
in importing oil between 1979 and 1982. Sanctions-busting measures and violations were also common
– in violation of the arms embargo, West Germany transferred plans and technology for submarines to
South Africa. Whilst it is recognised that import substitution can negate the effects of international
sanctions, the ANC clearly felt that international sanctions placed considerable pressure on the
government and served as a lever to extract concessions and eventually political change. In terms of
direct effects, international pressure forced many companies to leave South Africa, earnings from sales
of iron and steel were drastically affected and South Africa was denied access to modern weapons and
technology. Indirectly, one can point to economic and political pressure placed on the government, the
fragmentation of the white power bloc, the psychological impact of cultural and political isolation and
the release of political prisoners, including Nelson Mandela himself.
[9]
Holland analyses EC policy towards South Africa using three approaches; that of 'domestic politics',
'symbolic and pseudo politics' and 'agenda management' (see Holland, 1987).
[10]
It should also be noted that whilst the smaller states of Belgium, Denmark, Ireland and the
Netherlands had strong anti-apartheid lobbies and were active in criticising EC policy, there were
domestic lobbies in both West Germany and UK which favoured the maintenance of relations and
sought to minimise anti-apartheid criticism.
[11]
Sanctions were lifted mainly in response to the release of Nelson Mandela from prison in February
1990 and the unbanning of the ANC and other political parties. However, the international community
generally lifted sanctions sooner than the ANC would have wished (see Mandela, 1994).
[12]
The TEU introduced the CFSP pillar with a shared right of initiative and fully associated status for
the EU in foreign affairs.
[13]
The constraints of EPC meant that the need for unanimity and the lack of enforcement powers
invariably led to a limited, lowest common denominator approach to foreign policy actions, with
national diversity persisting.
[14]
In his article, Olsen generally concludes that the EU has lacked serious commitment with regard to
questions of democracy and human rights in Africa. However, in the case of South Africa, his
assessment is far more favourable (Olsen, 1998).
[15]
Stevens et al (1993: 91) highlight the main trade preferences offered by the EU. The main four
options available were the Generalised System of Preferences (GSP), Association Agreements, the
Super GSP, which had been offered to countries of the Andean Pact, and the Lomé Convention.
[16]
The Lomé convention provides for non-reciprocal duty-free access for 95% of the exports of the
ACP states, with exceptions for products under the CAP. The Convention consists of an aid and a trade
pillar. There are special protocols for bananas, rum, sugar, beef and the ACP are guaranteed a fixed
quantity and a set price for their exports. The Lomé Convention has a wide coverage, from human
rights, aid and industrial development, to cultural cooperation. The great advantage of Lomé is the
emphasis on preferential and not equal treatment.
[17]
As an example of this, Stevens et al state the fact that South African exports of cut flowers to the
EC pay a tariff of 20% while those of Colombia enter duty free (Stevens et al, 1993: 91).
[18]
Flexibility was an important part of any future agreement since there was great uncertainty over the
nature of South African exports in 1994, due to the fact that South African trade had developed behind
international sanctions.
[19]
South African negotiators would have had to achieve an increase in their aid allocation of about
one-quarter [and maintain this premium every year] in return for forgoing trade preferences simply to
cover the additional revenue that could be earned by one economic sub-sector (Stevens et al, 1993:
104).
[20]
As Lister notes, this was not evidently the case with South Africa (See Lister, 1990: 28).
[21]
Stevens et al estimate that giving South Africa Lomé preferences would have resulted in South
Africa having an advantage over its competitors in 14 products, whilst Super GSP treatment would
result in advantage for South Africa in only 7 products (Stevens et al, 1993: 101).
[22]
In 1992, per capita GNP in South Africa was $2,670, according to a World Bank Development
Report. The respective figures for Mauritius, Botswana and Gabon were $2,700, $2,790 and $4,450
(Financial Times, 02.05.95).
[23]
South Africa has evidently been a low priority behind Eastern Europe, the Mediterranean and North
Africa. This implies that the EC follows what Graumans dubs 'a policy of proximity' (Graumans,
1997).
[24]
The decision to pursue an FTA with South Africa reflects a new thinking and favouritism for this
kind of agreement in the EU. The EU has signed FTAs with some countries in Central and Eastern
[8]
Europe, Switzerland, Malta, and Israel, mainly as a consequence of stricter WTO provisions and the
belief that European export interests are best served by FTAs. EU policy must be seen in the context of
a changing multilateral system, with changing notions of development and the usefulness of aid. The
EU has also been increasingly self-obsessed in the 1990s, with the 'completion' of the SEM, EMU,
enlargement and institutional change all high on the agenda..
[25]
Commissioner Pinheiro, January 1995, quoted by Asante, 1997.
[26]
Under the tendering provisions, ACP countries can tender for contracts which come out of projects
financed under the European Development Fund. ACP countries are given a margin of preference over
EU firms when tenders are evaluated. Under the rules of origin provisions, products can qualify for
duty free access to the EU market if a manufacturer can show that the product is made from materials
from an EU or ACP country (Financial Times, 02.05.95).
[27]
The EU exports mainly industrial imports into South Africa while South Africa exports mainly
primary exports to the EU.
[28]
Differentiation reflects the difference in the coverage of free trade between the two sides at the end
of the transition period. Asymmetry has to do with the timing of the respective tariff dismantlement
schedules.
[29]
The proposed principle of parallel tariff dismantlement was replaced with the notion of similar
efforts, and no exclusions were to be allowed for industrial products. The EU was forced to reconsider
its position after South Africa's reaction (see Sudworth and Van Hove, 1998).
[30]
There has been particular concern over the EU canning industry, indeed South Africa has called on
the WTO to discipline the EU. In a statement to the WTO, South Africa highlighted that trade diversion
within the EU was rife. South Africa's share of the canned peaches market in Japan declined from 38%
in 1983 to 18.3% in 1995, while the market share for Greece increased from 0.6% to 27.8%. South
Africa sees this as the result of CAP subsidies paid to EU farmers (Sudworth and Van Hove, 1998).
[31]
Parallel agreements were to be concluded on wine and spirits, fisheries, science and technology.
These were initially linked to the conclusion of the general negotiations on an 'all or nothing' basis, but
this threatened to hold up the entire agreement, thus it was agreed that the parallel agreements could be
delinked.
[32]
Thabo Mbeki, quoted by Jessop, 1999.
[33]
It must be noted that multilateral liberalisation of trade is already bringing tariffs down. This means
that South Africa, the EU, SACU, SADC and the ACP will face more competition in their preferred
markets regardless of the outcome of these negotiations.
[34]
Goodison, 1999. It is not possible to go into all of the details of the effects of the other states in the
Southern African region here. For this, see Goodison, 1999 and Graumans, 1998.
[35]
This can also be seen through the inclusion, against South African wishes, of trade-related issues in
the Agreement, particularly public aid and competition policy (see Appendix 4). For example, in a
move reminiscent of the failed OECD proposal for a Multilateral Agreement on Investment (MAI), the
EU-South Africa Agreement grants EU companies the freedom to repatriate profit, the benefits of
which are contentious.
[36]
European Commission, 1999: 40.
[37]
The five key areas of the Agreement relate to general objectives and principles, tariffs and other
measures to be applied to trade between the EU and South Africa, provisions on trade-related
measures, economic cooperation and development cooperation. The Agreement covers co-operation on
SMEs, energy, mining, transport, tourism, rural development and consumer awareness, to name but a
few sectors.
[38]
There was a particular focus on poverty, integrating South Africa into the world economy,
improving living conditions and the delivery of basic social services and supporting democratisation
and civil society, with a mainstreaming of human resource development, gender issues and
environmental concerns. Focus sectors included education, health, water and sanitation, housing,
support to the private sector, good governance, capacity building and regional integration. The 1998
report shows the diversity of programmes funded (see European Commission report, 2000).
[39]
Moving to pure budgetary support was recommended by Montes et al in the 1999 report (Montes et
al, 1999).