Read the Annual Conference REPORT and Trudi Hartzenberg’s opening remarksPosted on Monday, September 12th, 2011 by Hartzenberg, Trudi in Events, Hot Seat Comments
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Opening Remarks by Trudi Hartzenberg
“This multi-stakeholder forum provides an opportunity to engage in debate and dialogue on the trade agenda of countries in East and Southern Africa, with a strong focus on regional integration. Regional integration has featured very prominently in the development strategies of African countries since independence, with many belonging to multiple regional economic communities.
African countries therefore contributed to the global proliferation of regional trade agreements. There are however important trends towards deeper integration in other parts of the world, in pursuit of competitiveness in cross-border supply chains or production networks, yet Africa’s integration agenda is still predominantly a ‘trade-in-goods agenda,’ with strong reluctance to engage a deeper integration agenda.
While regional integration may well be argued to be a viable strategy to address the African challenges of small markets, small economies and small countries (many of which are least developed, and several of which are landlocked), the appropriateness of the predominant regional integration agenda is certainly questionable, especially recognizing that the real challenges may well be on the supply side: the capacity to produce tradeables competitively. The limited success of African integration arrangements (measured for example in terms of intra-regional trade) is well –documented. Africa’s integration record is marked by grand schemes, weak legal and institutional foundations for rules-based systems of regional trade governance, and an implementation record that does not demonstrate serious commitment to obligations undertaken.
The most recent regional integration initiative in east and southern Africa is the proposed Tripartite Free Trade Area (T-FTA) consisting of the 26 member states of SADC, EAC and COMESA. Heads of State and Government agreed in October 2008 to establish a grand FTA – from Cape to Cairo. Since 2008 a great deal of analytical work has been undertaken, and the outcome is a Draft Agreement and 14 Annexes. It is important to recognize that negotiations have hardly begun and that these documents lack official status.
The T-FTA will be anchored on three pillars: market integration, infrastructure development and industrialisation. The following are among the issues that merit consideration at this stage of the T-FTA process:
- Liberalisation of trade in goods could proceed expeditiously, building effectively on the tariff liberalisation that has already been achieved by the constituent regional economic communities (COMESA, EAC and SADC). It is possible however, that such liberalisation could be seriously hampered by extensive lists of sensitive products, and restrictive RoO.
- Infrastructure development is essential to reduce the transaction costs of doing business generally, and of trade specifically. However the effective use of (hard) infrastructure requires appropriate policy and regulatory (soft) infrastructure, which forms part of a services and regulatory reform agenda. Trade in services liberalisation has not been embraced as part of a regional integration agenda by many member states in the T-FTA region, yet without serious work on a services liberalisation and regulatory reform, the benefits of the T-FTA are likely to remain elusive, and costs of doing business and trade in region may still hamper global integration initiatives
- A rules-based regime provides certainty, predictability and transparency for regional trade and investment. Explicit undertakings in the legal instruments by member states with effective implementation are integral to a rules-based regime, as is effective dispute resolution. On this score the track record in the region is not impressive, neither with respect to dispute resolution nor with regard to effective implementation of undertakings. How committed are the member states are to a rules-based regional integration regime?
- African integration has generally been state-driven, with very little input from other stakeholders, especially the private sector. Design and negotiation of regional integration initiatives without effective private sector involvement may well lead to agreements that frustrate business, investment and trade, both in the region and in global markets. A good example where private sector input is important is RoO; these could well express protectionist interests and frustrate intra-trade, rather than providing a workable framework for determination of origin to avoid trade deflection.
There is currently much focus on regional integration, not only in Africa, but globally. Global features of the current wave of regional integration include the development of comprehensive FTA agendas, extending well beyond trade in goods, with strong emphasis on deeper integration. The role of services liberalisation, regional investment governance, competition policy and other behind-the-border issues to promote competitiveness find expression in these deep integration arrangements. The development of robust, efficient and competitive trade and production chains benefits from rules-based governance that extends well beyond border measures such as tariffs.
We’ll have an opportunity to reflect on global trends in regional trade agreements, and what these trends mean for African countries. Given this global perspective on regional trade agreements, we’ll focus on the Tripartite FTA; reviewing the current draft Agreement and annexes and reflecting on is required to make this FTA work. Can the Tripartite FTA mark a watershed for African integration?
To conclude this first part of the Annual Conference we’ll have a discussion on what happens after the current round of multilateral trade negotiations; an emerging post-Doha Debate.
Following this, we’ll have the launch of the tralac Alumni Network; a workshop which will bring together some of the alumni of tralac’s postgraduate training programme, which is presented in collaboration with the Graduate School of Business, University of Cape Town.