European Commissioner for Trade Cecilia Malmström will use her recent visit to South Africa to urge business to take fuller advantage of the recently concluded trade agreement between the European Union (EU) and six Southern African countries. The deal came into force just over a year ago on October 10, 2016.

The EU-Southern African Development Community Economic Partnership Agreement (EPA), which took more than ten years to negotiate, offers improved market access for some South African agricultural products, compared with the previous Trade, Development and Cooperation Agreement. It also includes rules-of-origin flexibility for Botswana, Lesotho, Mozambique, Namibia and Swaziland. Under the arrangement, the five countries can use inputs from their EPA neighbours without forfeiting EU access, as well as from non-EPA countries that benefit from duty- and quota-free access to the EU.

In an interview with Engineering News, Malmström described the EPA as a potentially “beautiful tool” for increasing trade between the two regions. However, she lamented the fact that it was not yet being extensively used by the six Southern African signatories.

“We have here a tool to intensify our trade relations and it can be a very beautiful tool, but we need to work harder together to make sure all the benefits of it are both well known and used,” she said by phone from Brussels.

It was particularly important, she added, to expose and educate small and medium-sized enterprises about the opportunities created by the EPA. In addition, development assistance had been built into the EPA, which could enable the Southern African signatories to improve their capacity to conduct trade with the EU.

The visit came a month after the European Commission released its new ‘Trade Package’, which emphasises the importance of trade to the EU, with more than 30-million jobs supported by European exports to the rest of the world.

“The Trade Package is a signal that the EU wants to do business in a context where other countries are becoming more protectionist and are raising questions about the importance of multilateral institutions. We don’t want to play that game. We want to ally with our partners, such as South Africa and others, to fight for the multilateral system and to strengthen it, not weaken it.”

During her visit, Malmström also communicated a growing concern among some European investors about policy and regulatory uncertainty in South Africa, including ongoing uncertainty relating to the signing of power purchase agreements (PPAs) for renewable-energy projects legally procured by South Africa’s Department of Energy in late 2015.

The commissioner did not disclose details of her discussion with Trade and Industry Minister Dr Rob Davies, confirming only that the IPP issue had been raised as a particular area of concern. “Renewable-energy IPPs are worried, because investors want predictability,” she said.

On September 1, South Africa’s former Energy Minister, Mmamoloko Kubayi, who was replaced by State Security Minister David Mahlobo in another surprise Cabinet reshuffle by President Jacob Zuma last week, said that PPAs for 26 outstanding renewable-energy projects would be signed by October 28.

However, Kubayi, who is now Communications Minister, also stipulated that all the projects would be subject to a 77c/kWh tariff cap, rather than the tariff procured during bid windows 3.5 and 4 of the Renewable Energy Independent Power Producer Procurement Programme.

While there was initial support for the breaking of the impasse, solar and wind IPPs have since grown reluctant to embrace what was held up as a compromise. It is believed that some IPPs are again considering their legal options.

A legal opinion secured by the South African Renewable Energy Council in 2017 stated that the IPPs “would be entitled to approach a court to enforce the signature of the PPAs”.