Free Trade Agreement between EFTA and SACU

This Agreement is the first FTA that the EFTA States conclude with another trading bloc, and the first with partner countries in sub-Saharan Africa. It is also the first time that a least developed country (Lesotho) becomes an EFTA free trade partner. Through the Agreement, EFTA grants the SACU States free trade in all goods from the entry into force, whereas the SACU States will progressively dismantle their tariffs.

In 2007, the EFTA States exported goods worth 850 million US dollars to the SACU States, while bilateral merchandise imports amounted to 1.6 billion US dollars.. EFTA’s main export products to SACU were pharmaceutical products, machinery and mechanical appliances, while the main products imported from SACU were precious stones and metals, nickel, and aluminium.

The Free Trade Agreement between the EFTA States and the SACU States was signed in 2006. The main objective of the Free Trade Agreement (FTA) is to achieve the liberalisation of trade in goods in conformity with the relevant WTO provisions. The dismantling of tariffs is asymmetrical in that the EFTA States liberalise trade in goods in all fields on the entry into force of the agreement while the SACU States will do so gradually until 2014 on almost all industrial products.

The FTA also takes account of the Parties’ diverse levels of development by allowing for special treatment of Botswana, Lesotho, Namibia and Swaziland in some respects, and by setting out principles of economic co-operation and technical assistance.

Furthermore, the Agreement contains provisions relating to other trade barriers and trade-related disciplines, including rules on competition, state monopolies and subsidies,to the protection of intellectual property, investment, services, current payments and capital movements, government procurement, economic co-operation and institutional and procedural matters.

Currently, the EFTA States have established preferential trade relations with 20 States and Territories, in addition to the 27 Member States of the European Union.

Overview of areas covered by the EFTA-SACU Free Trade Agreement

Trade in Goods

Most industrial goods, including fish and other marine products, will benefit from duty-free access to the markets of the EFTA States as of the entry into force of the Agreement. For products imported into SACU, customs duties are to be eliminated after transitional periods of different duration or a joint review by the Parties depending on which products are at stake. This asymmetrical treatment reflects the variations in the economic development of the Parties. The Agreement also contains provisions on special treatment for Botswana, Lesotho, Namibia and Swaziland under certain circumstances.

Trade in basic agricultural products is covered by arrangements concluded bilaterally between the individual EFTA State and SACU. These Agreements, which form part of the instruments establishing the free trade area, are also asymmetrical, by giving SACU improved preferential access to the EFTA markets and by going beyond the existing preferential regimes in place.

The Agreement provides for liberal rules of origin and allows for the use of up to 60 per cent of non-originating input in the production of certain products. It also contains provisions for mutual administrative assistance in customs matters.

Competition

The Agreement contains provisions that allow for co-operation and exchange of information between the Parties if one of them finds that anti-competitive practices in another Party affect the benefits of the Agreement.  If such issues can not be solved between the Parties concerned, they can be taken up for consultations in the Joint Committee.

Intellectual Property

The Parties have agreed on granting and ensuring adequate, effective and non-discriminatory protection of intellectual property rights and to ensure the enforcement of such rights against infringement.  The Agreement sets out the objective of a progressive harmonization of the legal framework for intellectual property rights and will therefore review the rules in this field five years after the entry into force of the Agreement.

Services, Investment and Government Procurement

The Parties endeavour to extend the scope of this Agreement with a view to further liberalising trade in services. Furthermore, they share the goal of an attractive and stable environment for reciprocal investments and recognise the importance of cross-border investment and technology flows as a means for economic growth and development, Cooperation is in this respect foreseen in several ways.

Services, Investment and Government Procurement issues will be reassessed in the Joint Committee within five years after the entry into force of the Agreement.
If a Party enters into preferential agreements with a third country in any of the fields of trade in services, investment and government procurement, it shall, upon request, provide the other Parties with the opportunity to agree on comparable conditions on a mutually beneficial basis.

Economic Co-operation and Technical Assistance

In line with the declared goal to further economic and social development in the SACU States with the support of the EFTA States, the Agreement contains provisions on economic co-operation and technical assistance. The EFTA States undertake to provide technical assistance to the SACU States in order to assist them in the implementation of the Agreement. The Parties will also co-ordinate efforts with relevant international organisations. The assistance provided will focus on exchange of information, transfer of expertise, and training with regard to trade policy, trade facilitation and trade promotion; customs and origin matters; technical regulations, standards and conformity assessment as well as sanitary and phytosanitary measures; local enterprise development; and regulatory assistance and implementation of laws in areas such as services, investment, intellectual property and public procurement. 

Institutional and Procedural Provisions

A Joint Committee composed of representatives of the EFTA States and the SACU States will supervise and administer the application of the Agreement. The Parties may hold consultations and, failing agreement, apply provisional measures. Any Party may refer a dispute over the interpretation of rights and obligations under the Agreement to binding arbitration if consultations do not lead to a solution.