By SVEN LUNSCHE

SOUTH AFRICA in principle backed a free-trade agreement with the European Union in the first round of trade negotiations on Friday.

Sources close to the talks stressed, however, that the SA delegation spent the first day of the two-day talks emphasising the impact of the EU deal on SA industry and the southern African region. They cautioned about the impact of an open market on companies in the region.

"This was the first opportunity we had to listen to the views of the South Africans. They have previously indicated to us their support for a free-trade deal but are obviously concerned about the timing and asymmetrical approach that underlies it," a senior EU negotiator said.

The EU has proposed lifting tariffs and duties on most SA exports to Europe in return for a phased opening up of the SA market to European exports over a period of time to be negotiated.

SA officials called on the EU to rethink its approach, to ensure any accord was a wider package to promote development in the region, rather than just a reciprocal deal to cut industrial and agricultural tariffs.

The two-day meeting, which ended yesterday, was largely devoted to establishing ground rules and setting the agenda for future negotiations. Analysts expect the talks to conclude by year-end.

Prior to this week's Pretoria meeting both sides said they were committed to reaching agreement on a package which could reap rich rewards for their export industries.

"We hope that the negotiations will be very constructive and see the establishment of cordial relations," said SA ambassador to the EU and head of the delegation, Eltie Links.

EU officials have been waiting for over ten months for a response from South Africa to the bloc's initial call last March for negotiations on a free-trade deal with Pretoria, writes Sapa-DPA.

The free-trade pact aims to ensure a reciprocal reduction of European and SA tariffs in both the industrial and farm sectors.

But in a bid to protect European farmers from SA competition, the EU mandate calls for the exclusion of nearly 40% of SA agricultural products from the future free-trade deal.

The EU, however, has pointed out that 96% of South Africa's exports would still enter the EU duty free. The restrictions placed on SA farm exports, and the fact that the country is being offered only partial membership in the Lomé Convention, the trade and aid deal which links the EU to 70 African, Caribbean and Pacific states, has irked Pretoria, which says that the EU is reneging on its promise to aid SA development.

Pretoria officials have also expressed concern that the free trade deal will lead to a loss of income from customs tariffs for members of the Southern African Customs Union, which comprises South Africa, Swaziland, Botswana, Lesotho and Namibia.

Earlier this week, EU chief negotiator Philippe Soubestre said that given its level of economic development, South Africa could not be given the restriction-free access to European markets accorded to other, poorer African states.