What changed

Follow up to the European Parliament non-legislative resolution on the implementation of the EU-Southern African Development Community (SADC) Economic Partnership Agreement (EPA)

SUGGESTIONS

Rapporteur: Joachim SCHUSTER (S&D / DE)

The Committee on Development calls on the Committee on International Trade, as the committee responsible, to incorporate the following suggestions into its motion for a resolution:

Reference numbers: 2023/2065 (INI)/ A9-0024/2024 / P9_TA(2024)0121

1. Welcomes the first ex post evaluation of the EU-Southern African Development Community (SADC) Economic Partnership Agreement (EPA); stresses that the EPA envisages trade and investment contributing to the goal of sustainable development in its economic, social and environmental dimensions; notes, however, that many challenges remain in SADC partner countries in relation to economic diversification, competitiveness, growth, the rule of law, reducing poverty, labour rights, land grabbing and environmental protection;

Date of adoption of the resolution: 29 February 2024

2. Highlights the importance of development cooperation and technical and financial assistance as essential factors for achieving the objectives under the EPA and for beneficial cooperation between the Parties;

Competent Parliamentary Committee: Committee on International Trade (INTA)

3. Points out that regional and sub-regional integration features prominently in the EU-SADC EPA, as this represents a powerful instrument for achieving the objectives of the agreement; stresses that the EU-SADC EPA must support regional and sub-regional integration, promote regional value chains in the SADC and in Africa more broadly, and ultimately integrate developing countries into the world economy in a sustainable manner; stresses, furthermore, that the EU’s development finance cooperation with SADC countries must assist their regional economic cooperation and integration efforts in a way that boosts wider intra-African trade;

Brief analysis/assessment of the resolution and requests made in it

4. Recognises that SADC partner countries should benefit from the EPA, as it will increase their ability to boost economic diversification and produce value-added manufactured products; points out that the EPA should contribute to diversifying value chains in SADC countries and their economies, which also makes it necessary to have fair and pro-development global trade rules; points out, further, that it should encourage trade and development policies based on the promotion of human rights, the rule of law and democracy, create local jobs and added value and help to fight inequalities and reduce and eventually eradicate hunger and poverty in a sustainable manner;

The resolution covers the implementation of the Economic Partnership Agreement (EPA) between the European Union and its Member States, of the one part, and the members of the Southern African Development Community (SADC) on the other part, which has been provisionally applied since 2016. This is in the context of the ongoing EPA review process, as well as the ongoing ex-post evaluation of the EPA.

5. Underlines the financial and technical difficulties that local small and medium-sized enterprises (SMEs) experience in fulfilling the EU regulations and standards that are required before exporting to the EU market, which may exclude most SMEs from the EPA’s benefits; stresses the need to provide adequate assistance to SMEs in order to ensure their compliance with EU requirements and access to EU markets, and to raise awareness about utilising tariff rate quotas;

The Parliament welcomes the first review process of the EPA launched in November 2021 and invites the Parties to the agreement to consider other issues beyond trade in goods in future reviews in the light of the rendez-vous clauses present in the Agreement. The Parliament expects that the EPA will be adapted to consolidate and deepen the partnership between the EU and SADC States in response to geopolitical changes and the challenges of climate change. On the preparation of the joint monitoring report on the EPA, the Parliament notices that the process is advancing at a slower pace than expected, while acknowledging the capacity constraints faced by SADC EPA States in this regard.

6. Stresses that the EPA should contribute to enhancing competitiveness and sustainable economic growth in SADC EPA countries thanks to a fair trade and investment system that takes into account disparities in the level of development between the EU and its SADC EPA partners;

Besides, the Parliament stresses the importance of the involvement of civil society and all relevant stakeholders in the implementation and monitoring of the EPA, however noting the limited involvement of these actors during the implementation of the EPA. In particular, the Parliament advocates for a more structured participation of stakeholders with regard to the concrete implementation of all sustainability aspects in the EU-SADC EPA, in particular calls for the establishment of a Domestic Advisory Group.

7. Stresses that the EU’s request to ban export taxes on raw materials has been a long-standing stumbling block in the negotiation process on EPAs, considering that export taxes and duties are not prohibited under the WTO regime; recalls the right of African countries to regulate raw materials in their public interest; calls, accordingly, for the EU to refrain from adopting a trade policy that prohibits, as a general rule, developing countries from levying export taxes on raw materials, insofar as this is WTO-compatible;

On trade balances, the Parliament welcomes the fact that trade relations between the EU and the SADC EPA States have expanded significantly, both at regional and bilateral levels. SADC EPA States achieved a trade surplus which is seen as a welcome contribution to economic development. Yet, according to the Parliament, desired positive effects on employment, regional cooperation, diversification and modernisation of the economy have not yet reached their potential. As economic diversification and trade in manufactured products have yet to improve, SADC EPA economies remain vulnerable to external market shocks. Except for South Africa (SA), exports are dominated by commodities of little value added. Most SADC EPA States (except SA) primarily trade with each other, with differences in trade patters within SADC and with the EU. Further asymmetrical liberalisation and enhancing the partnership between the SADC countries and the EU can help address these challenges in diversification, resilience and regional integration.

8. Recalls that the SADC EPA countries were impacted by the pandemic due to reduced fiscal revenues driven, for example, by reduced economic activity and fluctuating commodity prices and trade flows; underlines, in this context, the importance of good governance and assistance in building capacity for sustainable development, in particular with regard to establishing sustainable fiscal systems and fighting tax evasion, in order to help unlock fiscal capacity for further economic and social development and to protect the environment; recalls that the EU needs to strongly support the strengthening of institutions and comprehensive capacity-building in the public sector of partner countries;

In terms of Technical Barriers to Trade (TBT), the SADC EPA aims to promote regional integration and to be a building block of the African Continental Free Trade Area (AfCFTA). However, regional integration is challenged by barriers, especially related to cross-border issues. Therefore, the Parliament calls on the Parties to increase cooperation in infrastructure, digital trade and certification including under the Global Gateway strategy. Promoting efficient cross-border infrastructure and harmonised regulations procedures related to customs and transportation shall further improve regional integration. Furthermore, the Parliament sees the necessity to further formalize cross-border work arrangements to promote decent work, respecting workers’ rights contributing to social and economic development.

9. Stresses that the EPA should support a new trade dynamic between the Parties by means of the progressive asymmetrical liberalisation of trade between them; stresses also that it can reinforce, broaden and deepen cooperation in all areas relevant to trade and therefore also enhance the partnership between the SADC countries and the EU; stresses the importance of the principle of asymmetric trade liberalisation as a tool to foster the economic growth and sustainable development of SADC EPA countries;

The Parliament welcomes the announcement of the activation of regional cumulation of Rules of Origin (RoO) by the Southern African Customs Union (SACU) EPA States, as flexible RoO are essential for regional integration. These RoO must also promote further development of the AfCFTA.

10. Calls for the EU to ensure that the EPA contributes to establishing an effective, predictable and transparent regional regulatory framework for trade and investment, in full respect of relevant international agreements and guidelines; emphasises that EPAs must positively contribute to the implementation of the African Continental Free Trade Area (AfCFTA) and the attraction of private capital, as well as to the building of resilient and sustainable regional value chains, thereby boosting and diversifying intra-African trade, which is indispensable for fostering sustainable long-term development and achieving the goals of the 2030 Agenda; takes the view that EU support for the AfCFTA should be accompanied by the development of regulatory frameworks, which, in turn, adhere to strict social and environmental standards;

The Parliament sees the need to address trade irritants related to Sanitary and Phytosanitary (SPS) standards at an early stage cooperatively through high-level political discussions between the Parties. Moreover, it wishes to be fully informed of any review of SPS requirements and to make sure EU standards are not compromised. SADC States received technical and financial support helping with SPS compliance which should be closely monitored by the Commission.

11. Recalls that the EPA’s current trade sustainability development (TSD) chapter has limited scope concerning binding commitments and provisions on dialogue with civil society; believes that EPAs should systematically integrate a mandatory and enforceable sustainable development chapter which reflects the highest labour and environmental standards in order to achieve the goals of the 2030 Agenda, which entails, for example, the inclusion of strong sustainability commitments related to the Paris Climate Agreement, the Kunming-Montreal Global Biodiversity Framework, international core labour standards, and gender equality and women’s empowerment; recalls, in particular, that, to be effective, the TSD chapter should be covered by the dispute settlement mechanism; welcomes the integration of a TSD chapter in the EU’s EPA with Kenya; urges the Commission to build on this and to strive to strengthen the EPA’s TSD chapter in the ongoing review process of the SADC EPA;

Governance and fiscal and institutional capacity remain the greatest challenges for the EPA’s effective implementation. Thus, development cooperation and technical and financial assistance from the EU to the EPA partners should help addressing these challenges.

12. Recalls the importance of allowing exceptions to the national treatment principle and the obligation to eliminate export taxes in order to promote and protect infant industries that are key to diversifying the economies of partner countries, thereby boosting their development in line with Article XVII:C and Article XXIV of the General Agreement on Tariffs and Trade;

As the EPA failed, according to the Parliament, in deepening regional value chains and diversifying exports, SADC EPA economies are left vulnerable to external shocks and problems of food sovereignty and poverty reduction remain.

13. Highlights the importance of broadly, systematically and meaningfully involving development partners, local and regional civil society, academia, trade unions and private sector representatives in the EPA’s implementation, monitoring and the ex post evaluations thereof in order to ensure that the EPA meets the needs of the population while guaranteeing the fundamental principles of sustainable development; notes that the scope of the EPA’s provisions on dialogue with civil society are limited when compared with other recent EU trade agreements; stresses the need to enhance the consultative role of civil society; calls for the establishment of a formal mechanism for civil society engagement, while recalling that current platforms, such as the multi-stakeholder national monitoring frameworks of the African Union’s Agenda 2063, can also be leveraged for engagement with civil society in the context of the EPA;

As a solution, the services value chain (including e-commerce), as well as other local and specialised added-value chains should be supported by cooperation with the EU, particularly in developing high-quality digital infrastructure.

14. Underlines that while EPAs can provide significant advantages for African, Caribbean and Pacific (ACP) countries, they also come with their own set of challenges and drawbacks; insists, therefore, that policymakers carefully consider these factors and work to ensure that EPAs are implemented in a way that maximises benefits for all parties involved;

EU Member States should ensure the effective application of the global minimum corporate tax rate of 15% for multinational enterprises emphasizing additional global tax revenues.

15. Recalls that all the Parties should always act on the basis of the principles of solidarity and mutual interest in order to enhance a fruitful collaboration, fulfil their commitments and obligations and facilitate the capacity of the SADC EPA countries to continue to implement the Agreement;

To improve their food security the Commission should ensure that developing countries fully exercise their rights under the World Trade Organization (WTO) special and differential treatment provisions.

16. Recalls that it can be challenging for smaller ACP countries lacking in resources and infrastructure to implement EPAs; calls for the EU and its Member States to assist their developing partner countries so that they can fully take advantage of the opportunities presented by EPAs;

The Parliament also stresses the importance of joint collaborations, substantial funding, technology transfers to advance decarbonisation efforts. At the same time, energy partnerships should also benefit local economic growth, employment and local energy supply in the region. The Parliament reiterates that the green transition holds opportunities for pro poor and inclusive job creation, which should be supported by specific investment in human capital. It notes the potential of decentralised climate partnerships, also on municipal level, to promote climate partnerships and enhance mutual understanding of EU climate initiatives. As SADC EPA States are particularly affected by climate change, the Parliament calls for more cooperation between the Commission and SADC EPA States in developing appropriate early warning systems and coordination to achieve objectives of NDCs.

17. Recalls the need to commit to international standards and agreements for efficient international cooperation;

The Parliament welcomes cooperation on resilient food systems and food sovereignty within the review process and suggests pushing forward the integration of International Labour Organization (ILO) conventions into this cooperation.

18. Underlines the importance of the EU’s commitment to multilateral co-operation and to securing Europe’s own trade interests while at the same time addressing some of the key interests of ACP countries, particularly with regard to regional integration;

The Parliament stresses the need for climate resilient value chains in the agricultural sector using new climate adapted technologies. Agricultural sustainability should be improved through knowledge exchange and sharing of best practices within SADC EPA States as well as through improved access to water and sanitation which is currently impeding sustainable development.

19. Recalls the two-pillar solution for addressing the tax challenges arising from the digitalisation and globalisation of the economy, as agreed by the members of the Organisation for Economic Co-operation and Development/G20 Inclusive Framework on Base Erosion and Profit Shifting;

The Parliament calls to prioritise social and gender issues in the implementation of the EPA by empowering women and young people in the SADC region. EU and the SADC EPA States should achieve this inclusion by enhancing equal access to financial services, other resources and contributing to economic participation.

20. Calls for the EU and its Member States to ensure that the agreed global minimum corporate tax rate of 15 % for multinational enterprises is applied effectively; underlines that this minimum tax rate is estimated to generate around USD 150 billion in additional global tax revenues annually.

The Parliament sees the need to scale up green finance and investment to achieve the Sustainable Development Goals (SDGs) of the Agenda 2030 and move forward with the low-carbon and climate-resilient transition of SADC economies. The EU and SADC EPA partners should explore new approaches to green finance including climate adaption finance and other innovative financing possibilities in strategic and innovative sectors. Using its influence, the EU should advocate for improved (climate) financing in international institutions like the World Bank and the International Monetary Fund. Furthermore, the Parliament stresses the need for proactive measures to attract investment in strategic and innovative sectors as well as novel financing instruments for critical public infrastructure. A transparent and predictable legal and fiscal framework is needed to help attracting Foreign Direct Investments (FDI).

ANNEX: entities or persons

Job creation, compliance with human rights and environmental due diligence ensured by robust domestic frameworks should be the goal of these investments. The involvement of local companies should improve investment retention and knowledge transfer. The Parliament further welcomes the introduction of EU programmes such as the Support to Improving the Investment and the Business Environment Programme and calls for additional funding in the next financial period.

from whom the rapporteur for the OPINION has received input

The Parliament calls for a better coordinated Team Europe approach to investment in infrastructure and economic diversification for resilience and sustainable development. The Parliament urges the expansion of funding of the Global Gateway and other necessary public investments. The Commission and Member States are called on to ensure social dialogue in the process of developing and implementing new Global Gateway projects.

The rapporteur declares under his exclusive responsibility that he did not receive input from any entity or person to be mentioned in this Annex pursuant to Article 8 of Annex I to the Rules of Procedure.

The Parliament calls on the Commission to support SADC EPA States to strengthen their export capacity and investment capacity while fostering a SME-friendly environment. In this context the Parliament calls for more funding in the next period to boost growth and thereby contribute to job creation and poverty reduction.

INFORMATION ON ADOPTION IN COMMITTEE ASKED FOR OPINION

The Parliament welcomes the Sustainable Investment Facilitation Agreement (SIFA) with Angola and acknowledges its potential to facilitate and attract sustainable investment and its potential contribution to sustainable development. Moreover, the Parliament welcomes Angola’s request to join SADC EPA and calls on the Commission to facilitate the necessary capacity building to overcome implementation capacity shortcomings and commence the negotiation process without further delay.

FINAL VOTE BY ROLL CALL IN COMMITTEE ASKED FOR OPINION

To ensure a sustainable supply of raw materials for the green, digital and just transition, the Parliament calls for increased cooperation between Commission and SADC EPA States. This also involves promoting responsible mining practices, respecting environmental and human rights standards, and involving local communities.

The Parliament welcomes the strategic partnership with Namibia on renewable hydrogen and critical raw materials, highlighting the need for local infrastructure development. In this context, knowledge sharing platforms and research networks can facilitate exchange of best practices which can be extended to technological cooperation in other fields.

The Parliament calls on the Commission to refrain from trade policy prohibiting developing countries from levying export taxes on raw materials if such taxes are in conformity with WTO rules process, as it is the right of African countries to regulate raw materials in their public interest.

The Parliament notes the original proposal for an Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) waiver for COVID vaccines was supported by the EU. It calls for further discussions on extending flexibilities to therapeutics and diagnostics. The Parliament invites the Commission to suggest a clear policy framework that is in line with the agreed TRIPS flexibilities. Finally, the Parliament welcomes efforts within the EU-South Africa partnership to create vaccine production infrastructure stressing that this must include the production of COVID-19 vaccines.

Response to the requests in the resolution and overview of the actions taken, or intended to be taken, by the Commission

The Commission welcomes the resolution of the Parliament on the implementation of the EU-Southern African Development Community (SADC) Economic Partnership Agreement (EPA). It is pleased that the resolution shows support for the consolidation and deepening of trade relations between the EU and SADC EPA States and recognises the EPA’s positive impact in terms of significant expansion of trade relations both at regional and bilateral level, and economic development in SADC EPA States.

On EPA monitoring and review process, the joint monitoring report, the ex-post evaluation and the joint review will help assessing the impact of the EPA and identify areas where the EPA’s functioning and implementation could be improved. The Commission agrees with the recommendation to work with SADC partners to advance fair, inclusive and sustainable trade (paragraph 1) – in fact the Commission has made it a practice to include on the agenda of the Trade and Development Committee (TDC) meetings a point on Trade and Sustainable Development (TSD). However, achieving results in this area will require stronger readiness from the SADC EPA States to discuss on their policies in this area. The Commission will continue emphasising the importance of such exchanges. In the ongoing ex-post evaluation of the EU-SADC EPA, the Commission is analysing also the economic, environmental and social impact of the agreement on the EU and SADC EPA States. This analysis covers, among others, the UN SDGs, human rights (including labour rights), the commitment of the Paris Agreement, the informal sector, along with the assessment of the agreement on economic diversification, SADC regional integration and the effectiveness of EU development cooperation support, all in line with Parliament’s suggestions (paragraph 1). The Commission also notes that another important point, and very relevant for EU-SADC relations, is that the Samoa Agreement (previously known as the “post-Cotonou Agreement”) – signed in November 2023 and started to be provisionally applied as from 1 January 2024 – further reinforces our cooperation on TSD matters and foresees enhanced involvement of civil society. All SADC EPA States signed the Samoa Agreement, with exception of South Africa, following its decision to leave the Organisation of the African, Caribbean and Pacific States (OACPS).

On the EPA review process, the Commission notes the Parliament’s recommendation to consider issues of trade in services, investment, intellectual property rights, competition and public procurement. The ongoing process aims to review the Agreement, as mandated by its Article 116. So far, SADC EPA States have not expressed an interest in broadening the scope of the EPA to services, investment or other ‘new generation’ issues.

On the involvement of civil society in the implementation and monitoring of the EPA, the Commission fully agrees that active participation of civil society should be promoted (paragraph 2). The Commission is making considerable efforts in this direction, bearing in mind that the SADC EPA does not provide for such a civil society dialogue. The Commission has nevertheless proposed to SADC EPA States a joint platform for non-state actors – in 2020, the Commission presented to SADC EPA States a non-paper on the involvement of non-state actors in the monitoring of the EPA. However, at the 9th TDC meeting in November 2022, SADC EPA States explained that they were not ready for such a joint involvement and would rather rely on their own domestic mechanisms for consulting civil society (the same was confirmed at the 10th TDC meeting in February 2024). The Commission regularly consults EU civil society on implementation of Free Trade Agreements (FTAs). In addition, in the framework of the ex-post EPA evaluation study, the contractor organised several workshops on EPA implementation with local stakeholders in SADC EPA States, in particular civil society and social partners – business and workers representatives - which provided valuable insights into how the EU – SADC EPA is perceived. The Commission will continue to bring up the issue of joint involvement of non-state actors with SADC EPA States. However, the formal establishment of a Domestic Advisory Group, as called for by the Parliament, would require an amendment of the EPA and thus agreement of the SADC EPA States.

On the joint monitoring report, the Commission acknowledges that there have been delays in the process, due to capacity issues in SADC EPA States (paragraph 3). Nevertheless, the 1st Joint Monitoring report has now been published based on EU and international data. The Commission will further work with SADC EPA States to streamline the preparations of the next editions of the report. SADC EPA States benefitted from technical assistance throughout 2023 to improve their capacity to collect and analyse data.

On trade and flows (paragraphs 8 and 42), the Commission considers that the EPA represents a stable and predictable legal framework to conduct trade and investment and enhances cooperation between the Parties. It is development-oriented, offering asymmetrical market access opening - it consolidates preferential access to the EU market for SADC EPA States, while progressively liberalizing access to SADC EPA States’ markets for EU exporters. The Commission welcomes that the Parliament considers the positive contribution made by EPA to economic development. Indeed, since the provisional application of the EPA in 2016, EU27 imports of goods from SADC have increased by 85% between 2016 and 2022, and its exports, by 29%. The EPA has also reinforced EU-SADC trade relations, as the EU remains SADC countries’ first trading partner, with 20% of its exports of goods and 21% of its imports. When it comes to trade diversification, the Commission stresses that the automotive sector is an example of successful diversification of South African exports and creation of value chains with high value addition. In fact, since 2016, South Africa exports to the EU in this sector increased by 22% and its imports from the EU by 18%. EU exports mainly engines and South Africa exports cars to the EU. Trade in automotive sector reached EUR 9.5 billion in 2022 (17% of overall trade between the EU and South Africa). Besides, the EU remains the most important foreign investor in the region, and the framework offered by the EPA contributed to this trend. The Commission acknowledges that the full potential of the EPA has not yet been reached, especially regarding diversification of SADC economies and regional economic cooperation.

By opening up new markets and ensuring smooth trade between the parties, the EU-SADC EPA offers opportunities to businesses on both sides, especially small and medium-sized enterprises (paragraph 46). Accordingly, the Commission, together with its Member States and also through the EU delegations, is actively promoting the agreement and awareness of its benefits, along with dedicated programmes to increase investment and export capacities and to improve SADC States’ business climate. The Commission is also promoting the agreement among EU businesses to increase trade and investment opportunities and actively handling trade barriers for EU companies.

The Commission acknowledges that the EPA also comes with some challenges, similarly to any other trade agreement (paragraph 11). Aware of the presence of trade irritants –in relation to SPS measures in particular – the Commission is in regular dialogue with SADC EPA partners and especially with South Africa on both technical and political level (paragraph 17).

The Commission notes that the Parliament concludes that the EPA has not succeeded in deepening regional value chains in the SADC region (paragraph 22). As the Parliament mentioned, South Africa continues to account for 80% of EU’s trade with SADC EPA States. The EPA provides the necessary tools to enhance regional integration - by foreseeing a regional preference clause and the possibility of regional cumulation for Rules of Origin (RoO). As the Parliament noted, SACU States have recently activated regional cumulation, which should facilitate development of regional value chains (paragraph 16). On the African continental level, the Commission stresses that the African Continental Free Trade Area and EPAs, including the SADC EPA, are mutually reinforcing, as EPAs have allowed the African states to familiarise themselves with the advantages of liberalisation, to enact development-friendly and progressive fiscal policies, to reform and modernise their administrations and to attract foreign capitals, conducive to additional wealth, jobs, value and business creation. All these elements will also support the implementation of the AfCFTA. The Commission believes that the EPAs and bilateral preferential trade with the EU have played an important role as catalysts of overall economic development in the partner countries. Without the EPAs, the attractiveness of the African market to foreign capital as well as the trade creation among EPA countries and regions, and with the rest of Africa, would not be as high as it is now.

The Commission acknowledges the importance of services sector in fostering economic growth and regional cooperation in partner countries (paragraph 24). The Commission also notes that the rendez-vous clause of the EPA also covers services and investment and these areas might be included in the Agreement in the future if the Parties agree. It should be noted that the EPA is still in provisional application and has not yet been ratified by 15 Member States. For this reason, a substantive deepening of the EPA would not seem appropriate before the EPA is ratified by all Member States. Concerning the implementation of the EPA, the Commission agrees that development cooperation and technical and financial assistance are essential factors, taking into account the different needs of each SADC EPA partner. This will also be the case for Angola when it will join the EPA, in line with the relevant Commission’s impact assessment.

Each SADC EPA State has drawn up, jointly with the EU, National EPA Implementation Plans (NEIPs). The purpose was to identify necessary steps and measures to fully implement the EPA and maximize the contribution of the EPA to long-term sustainable development. Under the 11th European Development Fund (EDF) 2014-2020, the EU has provided support to the operationalization of the NEIPs with a total of EUR 30 million covering Botswana, Eswatini, Lesotho, Mozambique and Namibia. Under the Development Cooperation Instrument (DCI), EUR10 million have been allocated to South Africa for the same purpose.

The Commission has also provided capacity building to SADC EPA States for the implementation of the Rules of Origin, notably, on the implementation of diagonal cumulation by SADC EPA States, which has resulted in the activation of diagonal cumulation by SACU EPA States. Mozambique informed that they may be ready to activate it during the second half of 2024.

In addition, the Commission recalls the support it has been providing through the 11th EDF’s regional programmes:

- The Tripartite Transport and Transit Facilitation Programme (TTTFP) with EUR 18 million assisted the Common Market for Eastern and Southern Africa (COMESA), East African Community (EAC) and SADC (Tripartite) Member States to harmonize road transport laws, policies, regulations, standards and systems with the aim to facilitate increased trade.

- EU-SADC Support to Improving the Investment and the Business Environment in the SADC region (SIBE) (EUR 14 million) supports the implementation of the SADC protocol on investment and finance by improving and harmonising the investment policy framework in the region to facilitate and enhanced integration of financial markets.

- EU- SADC Support to Industrialisation and Productive Sectors in SADC Region (SIPS) (EU contribution: EUR 18 million + EUR 4 million from Germany) supports the development of two regional value chains (leather and pharma), to enhance policy and regulatory environment and improve private sector participation.

- EU-SADC Trade Facilitation Programme (TFP) (EUR 15 million) aims at facilitating intraregional trade their supports implementation of the SADC Protocols on Trade and Trade in Services and Annexes as well as implementation of EU-SADC EPA. It also addresses customs procedures.

Under the current Programming exercise (2021-2027) Sub Saharan Africa (SSA) regional Multi-annual Indicative Programme (MIP), ‘Trade and Economic Integration’ continues to be a key regional priority (EUR 630 million). Within this priority we are looking at the complementarity of support for economic integration, AfCFTA and EPA implementation, and programmes are being discussed.

When it comes to infrastructure and transport network, the Commission is aware of difficulties in the SADC EPA States. In this regard, the Global Gateway will support strategic transport corridors and also leverage EU investments towards sustainable infrastructural projects in the SADC region. In context of the 2021-2027 EU programming exercise, the identification and prioritisation of key Strategic Corridors in Africa, and focus on their development, is an opportunity to deepen the Africa-EU partnership from a “policy first” perspective. Strategic Corridors are meant to support territorial development, both rural and urban, through the deployment and maintenance of reliable transport and logistics networks and services, as well as digital and energy-related infrastructure. They are intended to facilitate intra-African and Africa-Europe trade, and improve sustainable, smart, efficient, and safe mobility and connectivity in line with the Sustainable Development Goals between both continents. Strategic Corridors are also supposed to support the development of value chains in Africa that can benefit industries in both Africa and Europe and contribute to development objectives. The EU Member States will act together with the Commission as Team Europe to reach these shared sustainability objectives. The Commission deems its efforts in this regard in line with the Parliament’s calls concerning support to SADC’s cross-border customs procedures, connectivity, transport and sustainability efforts (paragraphs 13, 23, 32 and 43).

The Commission agrees on the need to undertake far-reaching joint efforts towards decarbonisation and recognizes that cooperation with partner countries, such as the SADC EPA States, is of fundamental importance for both fighting climate change and promoting sustainable development and foster economic growth (paragraph 29). In this regard, the Commission stresses the importance of the Just Energy Transition Partnership (JETP) with South Africa, signed at COP26 in Glasgow between South Africa and Germany, France, USA, UK, and the EU, pledging USD 8.5 billion to support South Africa to decarbonise and become climate neutral. Under this initiative, the European Investment Bank (EIB) has earmarked EUR 1 billion for South Africa to accelerate an inclusive transition towards a net zero and climate resilient economy, in line with the highest ambitions of South Africa’s Nationally Determined Contribution (NDC). This has now increased to USD 9.3 billion via increases from original members and two new partners joining (Denmark and The Netherlands). The EU is supporting the JETP with grants (EUR 114 million) and loans (EUR 1 billion) from the EIB. This comes on top of the support of EU Member States.

The Commission agrees with the need to assist SADC EPA States in facilitating the implementation of EU environmental policy measures and to ensure dialogue to promote mutual understanding on the objectives and impact of EU environmental and climate initiatives (paragraph 32). The EU has an overall external engagement approach aiming to place EU sustainability measures within a wider, collaborative, international context that responds to the climate emergency in a decisive manner while creating new opportunities for the EU and for its international partners. Particularly for African countries, including the SADC EPA States, the Commission recognises that the continent faces specific challenges. Accordingly, the Commission has been engaging with countries affected by the Carbon Border Adjustment Mechanism and the EU Deforestation Regulation both bilaterally and in multilateral fora. The SADC EPA framework provides a valuable forum for these exchanges and bilateral sessions for discussions were held in the context of the relevant Committees. On the multilateral level, the Commission, on behalf of the EU, has regularly presented both measures to the WTO, including but not exclusively in the framework of the Committee on Trade and Environment and organised several information sessions and workshops since their drafting stages in order to ensure appropriate engagement, transparency and genuine consideration of concerns voiced on the new EU environmental policy requirements. The Commission will continue this dialogue and engagement with its trading partners both at political and technical level.

The Commission also agrees that the green transition and the achievement of the goals of the 2030 Agenda for Sustainable Development and the Paris Agreement will require substantial financial resources, both public and private. This is why the Commission will soon launch the Global Gateway flagship initiative “Global Green Bond Initiative” (‘GGBI’), as announced in 2023 by President von der Leyen. This initiative aims at supporting the development of green bond markets in low- and middle-income countries, and to scale up flows of private capital from European but also international and domestic institutional investors towards sustainable projects in partner countries, including in SADC EPA States. Furthermore, in a context of fiscal constraints and limited availability of concessional finance, the Commission mandated a High-Level Expert Group (HLEG) to identify the challenges and concrete actions that could be taken to scale up sustainable finance in low- and middle-income countries. The HLEG is expected to publish its key findings and final recommendations to the Commission in the Spring 2024. The Commission has also launched an expert group on enhancing coordination of EU financial tools, which brings together EU Member States export credit and development finance agencies, alongside EU level financial providers such as the EIB and the European Bank for Reconstruction and Development (EBRD) (paragraphs 40 to 45), with the aim to help deliver on the objectives of the Global Gateway initiative. The Commission agrees on the importance to increase support for investments in Global Gateway priorities, for which different payment modalities have a role to play (paragraph 44).

The EU is strongly committed to address food security both at global level and in its regional/bilateral relationships. This is an essential part of its support for the international rules-based order and Agenda 2030. The EU-SADC EPA foresees in favour of SADC partners, the exclusion of sensitive products from liberalisation, long liberalisation periods, flexible rules of origin, and special safeguards and measures for agriculture whose essential purpose is to ensure that their food security is not affected. In the same vein, a great deal of sensitive agri-food products that are crucial for food security are permanently excluded from trade liberalisation. In particular, the EPA itself foresees food security safeguards for SADC partners and the possibility for SADC States (except for South Africa) to introduce temporary customs duties or taxes imposed on or in connection with the exportation of goods. In addition, food security is also discussed regularly within the Agricultural Partnership and the Trade and Development Committee established by the EPA (paragraphs 22 and 28).

Outside the scope of the EU-SADC EPA, the Commission agrees with the Parliament that the EU-Angola SIFA represents an innovative tool to make it easier to attract and expand investments while integrating environment and labour rights commitments in the EU-Angola relationship (paragraph 51). The Commission agrees that the SIFA complements the EPA to a certain extent, however, underlines that they represent two separate legal instruments with no legal connection between them. For this reason, the Commission does not consider that any adjustment of the EU-Angola SIFA would be necessary after Angola joints the EPA.

On trade and raw materials, the Commission agrees on the importance to strengthen cooperation through formal forums and strategic partnerships – such as the one concluded with Namibia on renewable hydrogen and critical raw materials (paragraphs 54 and 55). For the EU these partnerships are essential to deliver on the Green Deal ambitions, empowering the green and digital transitions. For our partners, these win-win partnerships of equals offer benefits to ensure that their resources underpin a sustainable, clean and inclusive economic growth and development, enable transformation and economic diversification, as well as local beneficiation and value addition. In this context, the strategic partnerships contribute to the development of industrial projects along the raw materials value chain with capacity to supply to the EU industry and deploy a set of measures aiming to support local infrastructure (energy, roads, ports) that will also benefit local surrounding communities, delivery of training, development of skills and capacity building all while upholding high environmental standards respecting labour and human rights and improving governance. The Commission acknowledges the importance of including all relevant stakeholders, in particular local and indigenous communities, and will continue to support multistakeholder fora such as the European Partnership on Responsible Minerals (EPRM) to foster cooperation.

The development of science, technology, and innovation (STI) roadmaps tailored to Sustainable Development Goals, such as the initiative underway in Namibia, holds the potential to expedite the integration of hydrogen and renewable energy solutions. By delineating strategic investments in STI, these roadmaps pave the way for advancements in green and digital transitions. On 3 March 2024, the Minerals Security Partnership (MSP) Forum was formally endorsed at the MSP Principals’ meeting in Toronto. The MSP Forum inaugural meeting took place on 5th April in Leuven. The MSP Forum is co-chaired by the US and the EU and has two main components: (1) a project group that will focus on supporting and accelerating individual critical mineral projects and (2) a policy dialogue on a secure, sustainable supply of critical raw materials for the green and digital transition. The “Critical Raw Materials (CRM) Club” announced by the President of the Commission is thus integrated in and becomes a foundational part of the MSP Forum. 5 SADC EPA countries have been invited to the MSP Forum launch as prospective MSP Forum members (Angola, Mozambique, South Africa, Botswana and Namibia). Namibia in fact participated physically in the launching event.

The Commission notes that export taxes constitute barriers to trade. However, The EU – SADC EPA does not contain a ban on export taxes on raw materials (paragraph 57). It contains provisions that allow SADC EPA States to apply export taxes in exceptional circumstances for a limited number of products. This includes, for all SADC EPA States except South Africa, where such measures are required for “specific revenue needs, or where necessary for the protection of infant industries or the environment, or where essential for the prevention or relief of critical general or local shortages of foodstuffs or other products essential to ensure food security”.

Furthermore, all SADC EPA States can temporarily introduce export taxes on no more than eight products at a time (for a maximum of 12 years to satisfy industrial development needs).

The Commission underlines the constructive engagement of the EU in the complex and multifaced discussions on whether to extend the scope of the WTO TRIPS Decision to COVID-19 therapeutics and diagnostics. The Commission notes that, despite considerable efforts of WTO Members, consensus on the extension could not be reached. At the 13th Ministerial Conference, the WTO Members agreed on the need to continue the work of building on the lessons learned from COVID-19 pandemic to create effective solutions in case of future pandemics. The Commission is ready to continue its constructive engagement at the WTO and with the SADC EPA States on these matters. In line with the EU's international obligations for compulsory licensing laid down in the TRIPS Agreement, the Commission has proposed a Regulation on compulsory licensing for crisis management, as part of the ‘Patent Package’ adopted on 27 April 2023. The proposed regulation aims to create, at EU level, an efficient compulsory licensing framework to address EU-relevant crises. The Union compulsory licence will serve as an exceptional tool in crisis times when voluntary agreements do not offer adequate solutions and ensure an appropriate territorial reach of compulsory licensing to cover cross-border supply chains. It will build on the existing system of EU crisis instruments.