EU market doors swung wide open

EU market doors swung wide open

MASERU – A CONSULTANCY company hired by the government says almost 40 products from Lesotho qualify for immediate access into the lucrative European Union (EU) market.
The EU has granted a 100 percent duty and quota free access to its markets for any product from Lesotho except for arms and ammunition.
The consultancy company, Mafi-a-Phuthi, listed maize, sorghum, wheat, plums, apricots, apples, quinces, peaches, cabbage, lentil, green beans, tomatoes, onions, butternut, dried fruits, spinach, potatoes, wool, mohair, cow milk, pork, poultry and chicken, eggs, flowers, pharmaceutical products, textiles and garments, leather products, bottled water, diamonds, trout fish, dried beans, processed fruits and vegetables, berries, peppers, rosehip, essential oils, aloe base petroleum jelly, asparagus and cherries.

“Each of the products listed was then checked against the rules of origin and possibilities of cumulating,” Mafi-a-Phuthi says in a report released last week.
“The result was that most of the products on the list that are currently produced in Lesotho qualify right away for market access in the EU even before cumulation is applied,” the report reads.
The World Customs Organisation (WCO) says the concept of accumulation/cumulation or cumulative rules of origin allows products of one country of a free trade area to be further processed or added to products in another country of that free trade area as if they had originated in the latter country.

In this way, production may be aggregated with other countries’ inputs, thus, offering additional opportunities to source input materials.
Mafi-a-Phuthi was engaged by the Ministry of Trade to develop a National Economic Partnership Agreement Implementation Plan (NEIP) for Lesotho.
The NEIP will be the roadmap towards full implementation of the SADC-EU Economic Partnership Agreement (EPA) in Lesotho.
The EU signed an EPA on June 10, 2016 with the SADC EPA Group comprising Botswana, Lesotho, Mozambique, Namibia, South Africa and Swaziland.
Mafi-a-Phuthi, in a draft final report released last week, observes that trade between Lesotho and the EU in particular is characterised by higher exports from Lesotho to the EU compared to EU exports to Lesotho, which is a positive trade balance.

Lesotho exports to the EU are however dominated mainly by diamonds, at 97.6 percent in 2017, followed by textiles at 1.4 percent.
“This leaves a lot of room for exploitation of the EPA to increase Lesotho’s exports to the EU coupled with diversification of export products,” reads that report.
Mafi-a-Phuthi says under the National Strategic Development Plan II (NSDP II), the priority sectors will be agriculture, manufacturing, tourism and creative arts as well as technology and innovation.

Mafi-a-Phuthi bemoans the lack of even a “single national trade policy document for Lesotho”.
“As a result, Lesotho’s trade and development agenda has been guided by the multilateral trade (WTO) agreements, regional trade (SADC & SACU) agreements, and other bilateral and preferential trade schemes including AGOA, EBA market access preferences, as well as the preferential market access agreements SACU has negotiated with the EFTA and MERCOSUR,” the report reads.
It says nevertheless, development of a single trade policy for Lesotho is in the pipeline funded by the EU together with a number of other projects under the SADC Trade Related Facility (TRF).
These projects include the setting up of quality infrastructure, capacity building in horticulture and capacitation of public institutions in trade management and trade facilitation broadly speaking.
The current funding is to the tune of about Euro 2.52 million (about M36.5 million).

Mafi-a-Phuthi says the one-on-one consultations with the private sector and civil society stakeholder groups and institutions served as a platform to assess and identify products that are already being produced in Lesotho and those that can be explored, their potential for the EU market and the constraints that could limit the ability to accessing such market.
This assessment was the first step in understanding the situation at hand in order to lay the foundation for strategic and specific interventions towards successful SADC-EU EPA implementation in Lesotho.

While the exercise was done with the EU market in mind, notably, its benefits for domestic trade and for trading with regional and international markets other than the EU was not overlooked.
The needs assessment exercise was meant to identify products which are already being produced in Lesotho and those that have the potential in order to obtain an initial scope for targeted market access in the EU.

Mafi-a-Phuthi also found that there are several constraints that impede Basotho from accessing the international market, especially the European Union.
The consultants found that it is often challenging to mobilise products from production to marketing point.
“Producers often do not have the means to deliver products to markets without a high risk of making losses,” the report reads.

“There is no middleman function between production and final consumption to take care of transportation, containerization and storage of goods.”
“Most sectors are negatively affected by this challenge. However, the wool and mohair industry is particularly strong in this area.”
Mafi-a-Phuthi also observes that requirements to access loans to start and support business operations remain stringent.

“Many of the products are rejected by the formal market because they are not what the buyers require. Neither is production guided by buyers’ needs.”
The report says many local producers are not able to afford appropriate infrastructure and equipment that enable highly efficient production because such infrastructure and equipment are usually expensive.

It also says most sectors do not have the facilities for collection, storage and marketing of products in order to relieve the producers of the burden after production.
“However, the wool and mohair industry is particularly strong in this sector,” the report reads.
“Many fields and other places of agricultural production are hard to reach, which makes it difficult and costly to collect produce from these places to markets.”
“Many producers are not known including what they have in stock, at what quantities and quality.”

It says most agricultural producers remain at risk of crops damaged by harsh and rapidly changing climate conditions in agriculture.
“Land degradation is also worsening.”
There is generally insufficient irrigation capability in agriculture despite Lesotho being a water abundant country, the report reads.
It says there is weak research capability for disease control mechanisms and extension services in agriculture to support production.

Staff Reporter

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