President Thabo Mbeki to hold Discussions with President of the European Commission, José Manuel Borroso

Tshwane - South African President Thabo Mbeki will hold discussions with the President of the European Commission José Manuel Barroso at the Presidential Guesthouse, Pretoria on Saturday 25 June 2005.

The meeting between President Mbeki and European Commission President José Manuel Barroso comes within the context of South Africa's stated commitment to:

  • Strengthen South Africa-European Union (EU) relations;
  • Consolidate the African agenda including NEPAD through co-operation with its partners in the developed world; and
  • Consolidate North-South relations.

In this regard, issues on the agenda of discussions are expected to include:

  • The proposed EU funded programme similar to the EU's Structural and Cohesion Funds used to support small - and - medium enterprise (SME) development;
  • Developments in Africa including the African Peace Facility Fund which was established by the EU following a request from African leaders as well as governance, peace and security initiatives;
  • The forthcoming G-8 Summit to be hosted by Britain in Gleneagles, Scotland on 7-8 July 2005, including debt relief for Highly Indebted Poor Countries (HIPC) proposed by the Ministers of Finance of the G-8;
  • The United Nations Millennium Review Summit to be held in New York 14-16 September 2005 that will focus primarily on the achievement of the Millennium Development Goals; and
  • The reform of the United Nations and its institutions that will be discussed at the 60th General Assembly of the United Nations later this year.

South Africa interacts with the EU at various levels and in many fora.

Bilaterally, the Trade, Development and Co-operation Agreement (TDCA) governs South Africa's relations with the EU. At the regional and continental levels, several processes relate Africa (South Africa included and playing a very significant role) to the EU. These include the Berlin Process (SADC), the Cairo Process (Africa), the Cotonou Partnership Agreement (CPA) and the New Partnership for Africa's Development (NEPAD).

SA-EU Trade, Development and Co-operation Agreement (TDCA)

Following the first democratic elections in 1994, the South African Government decided to reintegrate into the world economy as a trading nation. To this end, South Africa needed to urgently spur its economic growth by attracting investments and securing market access for goods and products. The then EU Council of Ministers called for a package of immediate measures to support South Africa's transition to democracy. These measures included granting South Africa improved market access through the Generalised System of Preferences (GSP) in the short term, with an offer to negotiate a long-term trade and co-operation agreement with the EU.

After more than 20 formal rounds of negotiations, South Africa and the EU reached broad agreement on the contents of the TDCA in December 1998. The central component of the Agreement revolves around a tariff phase-down schedule for agricultural and industrial products.

In terms of this agreed schedule, South Africa will eliminate tariffs on 86% of EU exports to South Africa over a period of 12 years. The EU, in turn, will eliminate tariffs on 95% of South African exports to the EU over 10 years. In addition to the tariff liberalisation schedule, agreement was reached on the numerous articles dealing with trade-related issues such as intellectual property rights, competition policy and Rules of Origin. South Africa and the EU also agreed to co-operate in a number of non-trade fields, such as the fight against drugs, money laundering and the protection of data.

The finalised SA-EU TDCA was signed on 11 October 1999. The South African Parliament ratified the TDCA in November 1999 and the Agreement was provisionally implemented from 1 January 2000.
The ratification process of the TDCA by all fifteen Member States (EU-15) was completed on 27 April 2004. An exchange of Notes on the ratification of the TDCA took place on 30 April 2004 and the TDCA fully entered into force on 1 May 2004, the same day as the Enlargement of the EU from fifteen to twenty-five Member States. The ten new EU Member States (EU-10) thus inherited a fully ratified Agreement to which they automatically became Parties. The EU is already South Africa's largest trading partner while South Africa ranks as the EU's 15th largest trading partner.

The TDCA is premised on three main areas of co-operation, i.e. Political Dialogue, Trade and Economic Co-operation and Development Assistance/Co-operation.

Political Dialogue

The TDCA provides for regular, high-level structured Political Dialogue at Ministerial Level. The Political Dialogue forum enables the Minister of Foreign Affairs Dr. Nkosazana Dlamini Zuma and her counterpart, the EU's High Representative for Common Foreign and Security Policy (CFSP), to discuss bilateral, African and global issues. These include the eradication of poverty, NEPAD, peace-building measures, conflict prevention, respect for human rights, democratic principles, the rule of law, and good governance. The 1st SA-EU Ministerial Troika Meeting took place in Dublin on 2 April 2004 and was followed by a visit by President Mbeki to the European Institutions from 15-18 November 2004.

This was followed by the 1st SA-EU Ministerial Joint Co-operation Council (JCC) meeting on 23 November 2004.

The Joint Co-operation Council (JCC) is a forum of the TDCA established to monitor the implementation of the provisions of the Agreement. The 2nd Ministerial JCC will take place towards the end of 2005.

Trade and Economic Co-operation

With regard to trade and economic co-operation, the TDCA provides for a Free Trade Agreement (FTA) by 2012. The trade chapter of the Agreement provisionally entered into force in January 2000. The reciprocal elimination of trade tariffs and the resultant access to the EU market improved two way trade by close to 50% to a total value of R200 billion. During this period South Africa exported to the EU an annual average of R80.6 billion worth of goods and imported annually an average of R120.2 billion worth of products from the EU. On economic co-operation South Africa and the EU are investigating the possibility of sectoral agreements on co-operation in investments, mining, information society, agriculture, research and SMMEs. In addition to these areas the TDCA makes provision for co-operation in trade related aspects, which include co-operation in competition policy, customs, statistics, standards and conformity.

The EU is the largest source of Foreign Direct Investment (FDI) to South Africa. It accounts for 44% of the total FDI flows to South Africa and six out of the top ten foreign investors in South Africa are Member States of the European Union.

Development Co-operation

The TDCA also provides the legal basis for continued EU support for development co-operation activities in South Africa. This support is channelled through the European Programme for Reconstruction and Development (EPRD). The EPRD is funded directly from the EU Commission budget at 127.5 million Euro per annum. The EPRD is the largest single development programme in South Africa financed by foreign donors. Further assistance from the EU comes in the form of soft loans from the European Investment Bank (EIB).

A unique feature of the TDCA is that it has a regional development dimension. To this end up to 15% of the EPRD can be used for regional development. This provision in the Agreement created a legal basis for the decision of the 1st SA-EU Ministerial Troika Meeting which decided that 1.5% of the amount allocated to South Africa under the EPRD will be made available towards the Africa Peace Facility (APF). Amongst others, funds in the EPRD also serve to strengthen South Africa's democratic institutions. Hence, the EU donated R80 million in January 2005 to South Africa's Parliament and the nine provincial legislatures to help strengthen democracy and the rule of law.

Issued by Ronnie Mamoepa on 082 990 4853

Department of Foreign Affairs
Private Bag X152
23 June 2005

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