The European Union (EU) has extended the deadline for African, Caribbean and Pacific (ACP) countries, including Malawi, to negotiate the Economic Partnership Agreements (EPAs) from 2014 to 2016, Business News has learnt.
The extension of the deadline will give time to Malawi and other ACP countries to improve their bargain in the proposed agreement before the decision is taken to withdraw their free access to the European Union (EU) market.
The deadline extension of the dragging trade arrangement follows a decision by members of the European Parliament (MEPs) who voted last Wednesday in Strasbourg, France to extend the 2014 deadline proposed by the European Commission and give ACP countries until 2016 to ratify their EPAs.
Minister of Industry and Trade John Bande has since welcomed the decision by EU, but has insisted that the extension will simply provide more consultations between ACP and EU member States on the trade arrangement.
Said Bande in an e-mailed response to a questionnaire from South Africa on Tuesday: â€œThe stand by Malawi regarding EPAs is that development should be at the heart of the negotiations as Malawi is one of the countries facing supply side constraints which have had an impact of Malawiâ€™s competitiveness.â€
EPAs are essentially a reciprocal Free Trade Agreements (FTAs) between an economic giant, EU, and 39 ACP countries that will require them to open up their markets to EU States.
The negotiations began on September 27 2002 and were supposed to be concluded in 2007.
Malawi is negotiating an EPA under the Eastern and Southern Africa (ESA) grouping which is negotiating in six clusters of market access, agriculture, services, fisheries, trade-related issues and development.
But over the years, the private sector in the country has been supporting the endorsement of EPAs by the Malawi Government while on one hand, former president, the late Bingu wa Mutharika, alongside the civil society, have held dissenting views not to accommodate the EPAs, saying the trade deal would harm Malawi by accelerating poverty levels.
Local opponents of EPAs argue that Malawi must first jack-up its competitiveness in the manufacturing sector, infrastructure development, export taxes, and infant industries.
They also contend that by fully liberalising trade with the EU, the move would rob Malawi of a good chunk of fiscal revenue which they argue would exert pressure on the country to look for alternative sources of revenue to meet its budgetary requirements.
Online publication Europolitics, quoted legislator and rapporteur David Martin saying the EU should allow a â€œrealistic time-frameâ€ to work towards â€œfair and development-focusedâ€ EPAs with ACP partners.
â€œNo ACP country should be forced to sign an unsatisfactory EPA. This is not the trade and development relationship we should have,â€ said Martin before the vote.
Responding to the EU Parliament vote on the extension of EPA deadline, the Secretary General of the ACP, Dr. Mohamed Ibn Chambas, is also quoted in the international media as saying the decision to extend the proposed deadline is prudent.
He also said the decision by the European Parliament has shown wise political judgement in extending the period for negotiation of EPAs to January 1 2016.
â€œNegotiating the EPAs is a complicated process, involving a number of complex and diverse issues which can impact heavily on our developing economies. It requires careful and thorough discussions, without the pressure of unreasonable deadlines,â€ he said.
Chambas also hoped that the two-year extension can help to facilitate â€˜a more sereneâ€™ environment to make balanced decisions beneficial to all parties.
From a consumer perspective, Malawi is likely to benefit from better and cheaper goods from Europe if the country endorses EPAs.
It will also benefit from investment and technological transfer if the agreement is to go beyond trade in goods.
In addition, competition due to goods from the EU is likely to prompt efficiency in our local industry which will ultimately benefit the consumer,â€ said the trade analyst who did not want to be identified.