Topics publications: African regional integration
Trade Reports
The role of customs management in the facilitation of trade in the region
The role of customs in the 20th and 21st centuries has evolved in many respects. With the proliferation of regional trading arrangements (RTAs) whose main objective is to increase trade between the parties through elimination of tariff and non-tariff barriers to trade, the role of customs in trade facilitation has gained increasing prominence in most regional trade agendas. This is largely because it is a customs responsibility to implement the tariff liberalisation commitments under the RTAs.
Equally important is the undeniable fact that burdensome customs procedures have been cited as one of the huge non-tariff barriers (NTBs) to trade. In addition, customs cooperation is an important aspect in the successful implementation of RTAs. It is not surprising therefore that most preferential trade agreements now include provisions on customs in the areas of simplification and harmonisation of trade procedures, documentation and customs cooperation. In addition, most of the RTAs now contain specific provisions on trade facilitation; however, in most such RTAs the details on the specific measures for achievement of the facilitation are usually either sketchy or non-existent.
The Southern African Development Community (SADC) launched its free trade area (FTA) in 2008, in accordance with the provisions of the SADC Trade Protocol (STP) as a culmination of a process of progressive tariff phase-downs on originating goods that had begun in 2000. At the same time all forms of existing NTBs were to be eliminated with no new ones introduced. It is clear that while there has been significant success on removal of tariffs and on non-tariff barriers to trade, little progress has been made. The continued incidence of NTBs is a direct affront to efforts in the region to facilitate intraregional trade in accordance with the STP in fulfilment of the objectives of the SADC FTA, itself one of the key milestones of the SADC regional integration agenda.
Part Three of the STP provides for Customs Procedures that underpin the role of customs in the attainment of the objectives of the protocol. These procedures relate to rules of origin (Article 12), customs cooperation (Article 13), trade facilitation (Article 14) and transit trade (Article 15). In light of these articles, this paper seeks to explore:
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the general role of customs in regional trade
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key aspects of customs management in regional trade
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the role of customs in the implementation of the World Trade Organisation (WTO) Agreement on Trade Facilitation
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the role of customs in the 21st century and regional integration
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some of the challenges faced by customs administrations in the facilitation of regional trade.
Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.
Trade Briefs
The proposed Tripartite Non-tariff Barrier Elimination Mechanism: An Evaluation of Legal Texts and Practice
One of the priority areas of the Tripartite Free Trade Area (TFTA) is the elimination of non-tariff barriers (NTBs) to address the impact of these barriers on the cost of doing business in the region. In order to do so the TFTA Draft Agreement and its Annex 3 make provision for an online NTB reporting, monitoring, and eliminating mechanism. This mechanism has been developed to address the shortcomings in the respective NTB elimination systems of the East African Community (EAC), the Common Market for Eastern and Southern Africa (COMESA) and the Southern African Development Community (SADC).
The TFTA NTB mechanism has been hailed as a vast improvement on the NTB elimination mechanisms of the Regional Economic Communities (RECs). The new mechanism aims to create an accessible online reporting mechanism, it establishes various national and regional institutions to administer the operationalization of the mechanism, and it wants to formalise the complaint resolution process. The TFTA Draft Agreement goes beyond the existing commitments of the respective RECs but various caveats about its effectiveness remain.
The aim of this trade brief is to examine the content of Annex 3 of the TFTA Agreement, to trace its evolution, and to assess its potential as an effective instrument for eliminating NTBs. The efficacy of the TFTA online NTB mechanism will be evaluated in terms of the extent to which the shortcomings in the existing mechanisms of the EAC, SADC and COMESA will be addressed, the elimination of current NTBs, and whether the mechanism will ensure that member countries will refrain from implementing new NTBs.
Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.
Books
Monitoring Regional Integration in Southern Africa Yearbook 2013/2014
Regional and especially economic integration holds potential and strong benefits for Africa. But this is true only if Africa could succeed in identifying a successful formula to counter challenges confronting the project of regional integration. I call it a project because it is, and, according to existing and new evidence available, will remain work in progress for the foreseeable future. Such challenges include capacity issues, financial and resources concerns, expertise, overlapping membership of Regional Economic Communities and, most importantly, the political will to succeed with the project.
The subject of regional integration and the topics it comprises are complex issues that need time to study and research. A platform to discuss and present findings of such work is necessary and always crucial, now more than ever. The Monitoring Regional Integration Yearbook, now in its 13th edition, is therefore necessary. It is for this reason that the Konrad Adenauer Foundation is pleased to be associated with the yearly publication.
This 13th edition of the publication critically examines strengths and weaknesses in the development of southern Africa as a region. It also reveals interesting findings and data about issues confronting the region as it struggles to find its feet in the challenging process of regional integration.
This annual publication has now become a household name in the region as it has made a mark as one of the best publications to consult on issues related to regional integration. It therefore serves as a reliable source of reference for students, academics, researchers, analysts, policy-and-decisionmakers, as well as other interested people, across the region and beyond.
The Konrad-Adenauer-Foundation is proud to be part of this successful undertaking that also marks the length and strength of our relationship with a partner in this project, namely the Trade Law Centre (tralac) over the years.
We trust that our relationship and this project in particular, will both continue to blossom unabated.
I therefore wish everyone happy reading.
© 2014 Trade Law Centre and the Konrad-Adenauer-Stiftung
Publication of this book was made possible by the support of the Trade Law Centre (tralac) and the Konrad Adenauer Foundation. The views expressed by the authors are not necessarily the view of any of these institutions.
Readers are encouraged to quote and reproduce the material contained in these books for educational, non-profit purposes, provided the source is acknowledged. Please contact us to obtain authorisation for reproducing this material.
Trade Reports
Assessing the implementation of the East African Community Common Market: A preliminary scoping study
Five years have now elapsed since the Heads of State of the five East African Community (EAC) partner states (Burundi, Kenya, Rwanda, Tanzania and Uganda) signed the Protocol on the Establishment of the East African Community Common Market on 20 November 2009. In those five years, intraregional trade has grown significantly from US$ 3,148.7 million in 2008 to US$ 5,470.7 million in 2012, an increase of 73%. However, reports of continued delays and other impediments to the integration process continue to crop up amid the undoubted progress that has taken place.
It is therefore an opportune moment to examine the extent to which the Common Market Protocol has been implemented in order to determine whether the fears were justified or not and whether the use of flexible, ambiguous provisions has been a hindrance or a catalyst to the process of integration. Identification of the achievements as well as the challenges faced along the way can also be of assistance in charting a way forward for the deeper integration that is underway within the Common Market for Eastern and Southern Africa (COMESA) and Southern African Development Community (SADC) regions.
Given the broad scope of sectors covered by the Common Market Protocol, the aim of this paper is not to engage in an in-depth analysis of all its key components but to provide a preliminary analysis, from a legal perspective, of a selected number of those components, with the main emphasis being on the provisions that exist to facilitate the free movement of goods. This will lay the ground for subsequent, more detailed research on the various aspects of the Common Market.
Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.
Trade Reports
Market Access in Africa: A review of existing tariff structures and the road to a Continental Free Trade Area
Regional integration remains a prominent policy objective for Africa. Its emphasis at continental level was confirmed by the decision of the members of the African Union to establish a Continental Free Trade Area (CFTA) in accordance to the Abuja Treaty. While this is an appealing idea, it is fraught with challenges. Chief of these is the fact that among the existing regional integration communities in Africa, very few have met their commitments by implementing their treaties and protocols. Furthermore, not all countries are signatories to regional trade protocols and even after signing the protocols, trade tariffs and non-tariff barriers still continue to impede intraregional trade.
While challenges exist, what is critical to note is the fact that liberalisation is continuing in Africa, albeit at different rates among different RECs. The objective of this study is to assess the state of liberalisation among African countries both at the multilateral level and at the regional level with the aim of highlighting the challenges that the attainment of a CFTA will face in achieving its goal.
The paper is organised as follows: We begin by looking at the methodology and data concerns in analysing tariff data. This is followed by a section presenting the status of tariff regimes and then we focus on issues related to the achievement of the CFTA itself. Conclusions are then presented. As 53 countries are analysed and in some instances data is not available, we have split the analysis and focused more on the main RECs recognised by the AU for the purposes of this paper. In our view, focusing on these will give clear indications where the gaps exist that require countries to make concessions if a CFTA is to be achieved.
Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.
Trade Reports
Burundi: a perspective on the Tripartite Free Trade Area negotiations
The objective of this paper is to firstly set the background for a discussion and analysis of Burundi and its merchandise trading background before presenting a more detailed analysis of this trade and possible implications for Burundi of wider trade and economic integration. Specifically, for the Tripartite Free Trade Area (TFTA) Burundi is expected to negotiate with the Southern African Customs Union (SACU), Angola, Eritrea, Ethiopia, Mozambique and the Democratic Republic of the Congo (DRC). Emphasis will be placed upon this negotiation in the final sections of the paper. The paper will also introduce some background principles to assist officials in understanding and engaging in these negotiations.
Basically, we find that within the set of countries that Burundi will negotiate with, the real focus must be on South Africa. This economic and trade powerhouse dominates regional trade, and as the key member of SACU with its common external tariff, becomes the key focus for negotiations in the TFTA. Indeed, the only other reported exports by Burundi to SACU are coffee exports to Swaziland, exports that are duty free in any event.
Burundi’s other negotiating partners raise several issues. Angola and Burundi report no common trade in recent years; the same applies to Eritrea and Burundi. There is limited reported trade between Burundi and Ethiopia and Burundi and Mozambique. That leaves its neighbour, the Democratic Republic of the Congo (DRC), where a great deal of reported and probably some informal and unreported trade takes place. This presents Burundi with a challenge, as the severely limited negotiating intent and capacity in the DRC is to be spread across all other 24 members of the TFTA. Similarly, Angola, Ethiopia and Eritrea are scheduled to negotiate with the full suite of TFTA partners, and getting them to focus on Burundi’s interests may be problematical.
Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.
Trade Reports
The New Protocol for the SADC Tribunal: Jurisdictional Changes and Implications for SADC Community Law
The Southern African Development Community (SADC) will get a new Tribunal. This will happen because the Summit of SADC Heads of State and Government so decided. SADC has been without a functioning Tribunal since 2010. In 2008 the Tribunal gave a ruling against Zimbabwe in a dispute involving the expropriation of private land without compensation and found Zimbabwe to be in violation of Articles 4 and 6 of the SADC Treaty. These provisions oblige Member States to act in accordance with democracy, human rights and the rule of law.
The 2008 decision by the Tribunal in favour of the applicant, a private party, was never implemented. When the matter was referred to the SADC Summit (which is responsible to take action in cases of non-compliance) it decided, instead, to develop a new Protocol for the SADC Tribunal. The Summit also decided not to renew the terms of the serving Judges and not to appoint new Judges; thereby effectively suspending the Tribunal. Thus the Tribunal, despite not being formally abolished, could not hear any new cases and could not finalize pending matters. Legal questions about the interim period and transitional arrangements were, however, not clarified.
At the SADC Summit of August 2014, a new Protocol was adopted and signed. It may, however, take quite some time (perhaps years) before SADC will have an active judicial organ again. The new Protocol shall enter into force thirty days after the deposit of the Instruments of Ratification by two-thirds of the Member States. Ratification takes place in terms of the national constitutional procedures of the Members. This may, in some instances, involve national legislatures. At the time of writing (January 2015) nine Members have signed, but apparently no ratifications have yet been deposited.
The new Protocol will bring about far-reaching institutional and practical modifications. Such changes should be founded on sound legal principles and procedures. This did not happen. The Summit did not, for example, invoke the amendment clause in the original Protocol, which would have been the correct procedure. The Summit’s modus operandi raises serious questions about the binding nature of SADC legal instruments, as well as the functioning of SADC as a rules-based arrangement. The dispute settlement dimension of SADC and the enforcement of its legal instruments during the interim period (between the ‘suspension’ of the previous Tribunal and the entry into force of the new Protocol) are de facto and de jure in limbo.
Where do these developments leave the Organization and what are the prospects for the enforcement and development of SADC law? How will essential rights be respected and who will be able to bring applications to the Tribunal? What has been lost (or gained) and what are the bigger picture implications? How will the SADC FTA and trade among the Members be affected? This paper discusses these issues and the implications of the recent developments. The document which will be analysed is the final and official version that the Summit adopted and which nine member states have signed.
Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.
Trade Briefs
Review of trade-related developments in 2014
In some respects the end of 2014 brought some light to a quiet year on the trade front. This Trade Brief reviews some of the trade-related developments of the past year at the global, continental, and regional levels.
As could be expected, the experiences at the global, continental and regional levels were quite varied. There have been concerns in recent years that the multilateral trading system has been heading to a stale-mate. The Doha Development Round of the World Trade Organisation (WTO), which started in 2001, had been progressing at a considerably slow pace. Meanwhile, bilateral and regional trade agreements continued to be on the rise, epitomised by negotiations towards two mega agreements involving the United States namely the Transatlantic Trade and Investment Partnership with the EU, and the Trans-Pacific Partnership (TPP) with the Asia-Pacific region.
In November, a significant breakthrough was reached in bilateral negotiations between the US and India which brought momentum towards conclusion of WTO negotiations on the Trade Facilitation Agreement (TFA), adopted in Bali in December 2013 with the aim of ‘expediting the movement, release and clearance of goods, including goods in transit’. Resultantly, negotiations were effectively concluded and the General Council of the WTO adopted the amendment to the WTO agreement that inserts the TFA, as well as other decisions on public stockholding for food security purposes and post-Bali work.
The breakthrough in negotiations between the US and India was achieved just before the G20 Summit. The previous month, there was another significant development namely the launch of the World Bank’s Global Infrastructure Initiative (GII). This is a multi-year programme that seeks to unlock additional infrastructure financing in the region of US$ 1 trillion annually for developing countries up to the year 2020. The G20 Summit also endorsed the initiative and established its own Global Infrastructure Hub, which will work with the Global Infrastructure Initiative in some of the key activities.
The growing focus on the importance of investing in infrastructure to address supply-side constraints has not only been at the global level, but at the continental level in Africa as well. There has also been a growing recognition of the importance of home-grown solutions, with structural transformation increasingly being at the core of national growth and development plans developed as such. This recognition is now at the centre of developmental efforts and has informed the Common African Position (CAP) on the Post-2015 Development Agenda, adopted by the 22nd Summit of African Union Heads of State and Government held in Addis Ababa, Ethiopia, from 21 to 31 January 2014.
Efforts towards establishment of the CFTA significantly gathered pace. A series of meetings were held throughout the year, culminating in the 9th Conference of African Union Ministers of Trade, held in Addis Ababa, Ethiopia, from 1 to 5 December, 2014. There is now considerable momentum towards the commencement of negotiations towards establishment of Africa’s own mega FTA. The robustness of the institutional framework that will be set up by the end of January 2015 following a High Level African Trade Committee (HATC) meeting will be critical for the effective development of the CFTA within the indicative timeline of 2017 that was set at the beginning of the process.
As 2014 drew to a close, it became evident that 2015 will be a highly important year. Progress that will be attained on the different fronts will be crucial for the trade and development prospects of African countries in the short, medium and long term.
Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.
Trade Briefs
The SADC Model Bilateral Investment Treaty Template: Towards a new standard of investor protection in southern Africa
Trade and investment are the two fundamental pillars of international economic relations. Almost all international trade flows are governed either by bilateral or regional trade agreements or by the multilateral trade rules established under the various World Trade Organization (WTO) agreements. Efforts to establish a multilateral governance framework for cross-border investment, however, have thus far failed to bear fruit. In the absence of multilateral rules on foreign investment, states have resorted to using bilateral investment agreements to establish legally binding rules on the treatment of foreign investment. While some of these agreements take the form of dedicated investment chapters in comprehensive trade agreements, the vast majority are in the form of bilateral investment treaties (BITs).
BITs are binding international agreements between two states that establish the terms and conditions for private investment by nationals and firms of either state in the territory of the other. In particular, BITs grant investments made by an investor of one contracting state party (contracting party) in the territory of the other, a number of guarantees which typically include fair and equitable treatment, full protection and security, protection from discriminatory treatment, protection from expropriation and free transfer of funds. Notably, BITs also provide for international investor-state dispute settlement.
Southern African countries are no strangers to the use of BITs. According to the United Nations Conference on Trade and Development (UNCTAD), every one of the 15 member states of the Southern African Development Community (SADC) is party to at least one BIT, and together they have signed over 250 BITs to date, of which over 100 are currently in force. The BITs concluded by SADC member states largely follow the form, structure and content of traditional BITs.
The publication in 2012 of the SADC Model Bilateral Investment Treaty Template (Model BIT) provides a clear example of a shifting approach to investment governance in southern Africa. This Trade Brief shows how the Model BIT encapsulates new thinking about investment governance by recommending an approach to investment governance that deviates quite sharply from the status quo provided by the BITs currently in force in southern Africa. In particular, the brief examines the specific suggestions and recommendations the Model BIT makes with regard to individual BIT provisions and demonstrates how these differ from the typical form such provisions take in the BITs previously concluded by SADC member states.
Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.
Trade Briefs
SADC Summit’s emphasis on industrial development: implications on practical policy formulation
The curtain came down at the 34th Annual Summit of the Southern Africa Development Community (SADC) with special emphasis on the importance of beneficiation of exports.
The Summit was held under the theme: “SADC Strategy for Economic Transformation: Leveraging the Region’s Diverse Resources for Sustainable Economic and Social Development through Value Addition and Beneficiation.”
An extract from the Summit Communiqué reads: “Summit directed that industrialization should take centre stage in SADC’s regional integration agenda. To this end, Summit mandated the Ministerial Task Force on Regional Economic Integration to develop a strategy and roadmap for industrialization in the region”.
A lot of policy questions arise from this strong emphasis on industrialisation. What is the relationship between the region’s trade and industrial policies? What are the resource endowments of SADC member states, labour policies, investment regimes, and size of economies? How feasible is it to structurally transform the SADC economies? What is the role of the revised Regional Indicative Strategic Development Programme in championing the new mandate?
Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.