2010-01-27 tralac Newsletter
2010-01-27
Hotseat Comment
Taku Fundira, a tralac Researcher, discusses the SADC FTA Tariff Phase-down Schedule.
The Southern African Development Community (SADC)1 adheres politically to an agenda that extends well beyond the target of achieving the free trade area (FTA) that SADC member states are legally bound to implement in terms of the SADC Trade Protocol. Apart from the Trade Protocol, the SADC also follows a linear model of regional integration articulated in the Regional Indicative Strategic Development Plan (RISDP).
The RISDP differs from the Trade Protocol in having a strategic plan which is not legally binding but has political legitimacy, having been accepted by the member states. The Trade Protocol, by contrast, is a legally binding instrument, which contains no reference to the additional RISDP goals of attaining, in sequence, a customs union, a common market and a monetary union.
To date the SADC Trade Protocol, as amended, has enabled member states to launch a FTA. The FTA allows for duty free trade on an estimated 85% of all trade in goods among members. With the exception of Angola, DRC and Malawi, other member states have notified their compliance to the SADC Secretariat.
Attainment of the FTA meets a key objective of the Protocol and is a major milestone towards establishing a customs union as envisaged in the RISDP. Despite the strong political commitment to the RISDP, past experience reveals that political decisions taken at the regional level by Heads of States have been made without any pragmatic economic considerations taken into account. There has been a tendency to set overly ambitious and unrealistic targets within limited timeframes and often with limited financial support for implementation.
This has led to missed deadlines and postponements of set targets. This was highlighted by the recent decision of member states not to launch the customs union in 2010. This precedent reflects and encourages a culture of member states not being held fully accountable and of easily reneging on their commitments. This is a problem that highlights the absence of an effective implementation and monitoring mechanism. This prompts the question of whether the initial 12 members have actually met the 85% liberalisation threshold mandated by the Protocol. Clarity on this is obscured by the lack of updated tariff schedules submitted to the SADC Secretariat, outlining each member’s list. Therefore, there is no indication of which products have been fully liberalised and which products fall into the sensitive and exclusion lists.
To date, information supplied by the Secretariat’s trade division reveals that member states have not yet submitted their updated schedules. The Secretariat is only in possession of the original commitments made at the launch of the Protocol in 2000. Even these schedules are not readily or easily available in the public domain.
According to the commitments made by members, tariff phase down would be implemented in stages with products placed in categories for phase down. These categories are as follows:
Category A - Immediate liberalisation
All tariff lines within this category are immediately reduced to 0% as from the date of implementation.
Category B - Gradual liberalisation (The Principle of Asymmetry)
- Front-loading: gradual liberalisation by SACU; tariff lines are reduced by equal instalments from year 1 to year 8.
- Mid-loading: gradual liberalisation by Mauritius and Zimbabwe; tariff lines are reduced by equal instalments from year 4 to year 8.
- Back-loading: gradual liberalisation by Malawi, Mozambique, Tanzania and Zambia (MMTZ); tariff lines are reduced by equal instalments from year 6 to year 8.
Category C - Sensitive goods
- These refer to goods of economic importance to Member States.
- Tariff reduction on such goods only starts after the 8 year period and is to be completed by 2012.
- They represent 15% or less of tariff lines.
Category E - Exclusion list
This list consists of very few goods such as fire arms.
Based on this implementation schedule, the only products which still attract tariffs are in Category C, bearing in mind that category E is not subject to negotiation at this stage. The unavailability of ready information on the specific product lines in Category C is creating uncertainty amongst exporters and has prompted us to attempt to highlight for the initial 12 countries, the product lines that still attract duties in the SADC amongst members.
The SACU members (South Africa, Botswana, Lesotho, Namibia and Swaziland) are excluded from this analysis because according to the Department of Trade (dti), South Africa and the BLNS countries have fully liberalised all imports from SADC, except sugar and worn clothing and other worn articles. Chapter 98 products (MIDP) fall in the exclusion list but these have limited impact as no SADC country supplies any of these products under the MIDP.
For the rest of the seven countries that are purportedly in compliance with the FTA requirements the tariff schedules as reported to the United Nations Market Access Map (MacMap) database are used. All products are listed at the Harmonised System (HS) 4 level of product classification that still attract tariffs. However, it is difficult to establish whether these products only account for the 15% or less threshold as required in Category C. This is simply because there is an ambiguity in the interpretation of the wording as contained in the Protocol over the threshold limits which has permitted an asymmetrical understanding which confronts the reality of the different levels of development of the SADC Member States.
The table below provides a summary of each country’s tariff schedule and compliance with the SADC FTA.
| Country | Reported FTA compliance | Number of Product lines with tariffs > 0% @HS4 level |
| Angola | No | - |
| DRC | No | - |
| Madagascar | Membership suspended | 226; Min=0.01%; Ave=7.7%; Max=20% |
| Malawi | No | - |
| Mauritius | Yes | 86: Min=0.13%; Ave=5.4%; Max=14.8% |
| Mozambique | Yes | 1140: Min=0.03%; Ave=1.3%; Max=20% |
| Seychelles | Informal member | - |
| Tanzania | Yes | No updated schedules reported to ITC |
| Zambia | Yes | 1029: Min=0.01%; Ave=3%; Max=19.2% |
| Zimbabwe | Yes | No updated schedules reported to ITC |
Source: Based on ITC MacMap database
To view spreadsheet containing the member countries tariffs applied for SADC [click here]
1 Members of SADC comprise Angola, Botswana, DRC, Lesotho, Madagascar*, Malawi, Mauritius, Mozambique, Namibia, Tanzania, Seychelles**, South Africa, Swaziland, Zambia and Zimbabwe. *Madagascar was in March 2009 suspended from the regional body over Rajoelina's ouster of the Island's democratically- elected president of seven years, Marc Ravalomanana. **Seychelles was formally readmitted in SADC in 2007 but still needs to sign the Treaty to become a full member. At this point it is regarded as an informal member.
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