Topics publications: African regional integration
Trade Briefs
Shaping a 21st Century Trade Integration Agenda for Africa
The SADC Summit of Heads of State and Government takes place this week (17-18 August 2014). This occasion presents an important opportunity for decisive deliberations on an integration agenda that reflects and addresses the challenges of the 21st century.
This tralac Trade Brief outlines some of these challenges and identifies priorities for an integration agenda to deliver the development aspirations of the SADC Treaty. We urge SADC to prioritise the following complementary and mutual reinforcing areas:
(a) Making rules of origin more flexible and less restrictive
(b) Advancing a ‘services regulatory reform’ agenda
(c) Supporting interventions on trade facilitation
(d) Implementing the infrastructure development master plan
(e) Embracing a ‘deep integration’ agenda through a comprehensive FTA
(f) Fostering a ‘rules-based trade governance’ agenda with an effective dispute settlement mechanism
Two tralac submissions were made during the preparatory process leading to the 2014 SADC Summit covering trade issues in the review of the RISDP and the dispute settlement mechanism, including views on the architecture of the revised SADC Tribunal. Click here to download the submissions.
Trade Reports
The SADC Protocol on Trade in Services: What is necessary to support the establishment of an integrated market?
In August 2012, the Members States (MS) of the Southern African Development Community (SADC) adopted the Protocol on Trade in Services. The preamble to the Protocol provides for the establishment of “an integrated regional market for services”, to unlock the potential of the region’s services market so that businesses and consumers may take full advantage of the opportunities that this Protocol presents.
The establishment of an integrated market involves a complex collection of issues – from setting minimum regional standards and prescribing national administrative procedures to creating regional and national institutional settings so as to ensure and maintain regulatory cooperation and to address potential disputes. Many different procedures should be undertaken simultaneously. SADC MS have adopted various other protocols on specific services sectors.
This sectoral approach of SADC dates back to the days of its predecessor, the Southern African Development Coordination Conference. The challenge now created by the Protocol on Trade in Services is to find synergy between different policy and regulatory streams (i.e. the SADC Protocol on Trade in Services and other SADC Protocols on specific services sectors) to provide a coherent framework for an integrated market for different services sectors. The interface between services sector regulation and other regulatory areas such as competition policy is extremely important in this context.
This paper outlines the rationale for services sector regulation at the national level. It then considers the objectives, scope and application of the Protocol on Trade in Services and the implications it may have for trade negotiations with third parties. The relationship between the Protocol on Trade in Services and other SADC Protocols on specific services sectors is discussed with specific focus on infrastructure services sectors.
A key consideration in the context of this discussion is to what extent the services sector protocols have been implemented, because they all include provisions that relate directly to issues covered in the Protocol on Trade in Services. The important question is how will this be dealt with in the current negotiation process? Finally, the paper considers the requirements for the implementation of the Protocol on Trade in Services.
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
Africa’s clothing trade – trading less amongst ourselves than with other partners?
Much of the focus for African industrialisation must be on the clothing sector, as this is the classic low-tech and low-wage sector for an industrial base to assist an economy with limited industrial capacity (as in Africa excluding South Africa). We have defined clothing as all the products included in HS Chapters 61, 62 and 63, as these encompass most of what may be construed as clothing.
Outside South Africa, the ITC data shows that for the 2011 and 2012 years (the only complete years providing aggregate African exports) these three chapters represented 1.94% and 1.73% of total African exports to the world. While this pales beside the 69.2% and 70.8% export share from minerals and fuels for the comparable years, it nonetheless contributes a significant portion of the nonagricultural, nonminerals and fuel components of African exports.
This paper concentrates upon the export profile from the continent as well as provide a closer examination from the South African perspective. We note at the outset that analysis of the South African trade and consequently intra-Southern African Customs Union (SACU) trade is hampered by the under- or even non-reporting of the intra-SACU trade; however, we will try to address this problem.
The paper begins with the ‘big picture’, namely trade with the new, old and good friends for both exports and imports before focusing on the individual profiles of the main countries and examining South Africa’s trade in more detail. It is well known that China dominates the clothing import market for the continent while the United States (US) and the European Union (EU) are generally thought of as the major export markets from the continent. However, we would like to test this initial hypothesis against an examination of the intra-African trade to assess where the ‘good friends’ feature.
Our main data sources include the International Trade Centre (ITC), augmented by the commercially obtainable Global Trade Atlas (GTA) trade data for South Africa. Generally, our starting year is 2001 although aggregate African data is only available for 2011 and 2012. Some data is available for 2013 but as it is not, at the date of publication, complete we use it cautiously. In addition, we note that sometimes our data sources do not reconcile and recognise that this is a generic problem when dealing with African trade data. This is complicated by the necessity to often use mirror data (data that is taken from the ‘mirror’ of the trading partner rather than the actual trade data of the country in question).
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 Tripartite FTA: Background and overview of progress made in developing new harmonized Rules of Origin
Rules of Origin (RoO) are instruments used to determine the real source and economic origin of traded goods. Different types of RoO however serve different objectives. Non-preferential RoO are used by countries for various commercial policy objectives, and are criteria that define the origin of goods with the purpose of capturing and classifying trade flows for statistical and record-keeping purposes, for labeling and related marking purposes, for the implementation of policies around anti-dumping duties and safeguard measures, government procurement and so forth. On the other hand, preferential RoO are those contained in specific preferential trade arrangements (PTA) and are thus, in effect, bilateral arrangements tailored to the specific trade regime. They are used to determine the economic origin of a traded good in the context of trade within a specific preferential trade area, and may or may not be more restrictive than a country’s standard origin criteria. The ultimate objective of preferential RoO is to facilitate preferential trade between preferential trade partners without opening such a trade regime up to goods simply transshipped from third countries.
Rules of Origin in African trade regimes span a wide range of methodological approaches in the determination of preferential origin status. However the conditionalities that they impose, by and large, go well beyond one of the key objectives for RoO, being the avoidance of trade deflection, often being influenced by protectionist attitudes relating to incumbent operators more generally, or specific national industries. Their implementation and consistent application also continues to be a challenge for customs authorities and traders alike, often resulting in the creation of unnecessary RoO-related trade barriers. The (African) RoO history and experience, in the absence of any international or WTO multilateral best-practice standards that go beyond mere guiding principles, and given the inherent challenge associated with RoO, is likely to create difficulties for the realization of any practical benefits accruing to traders for example under a (future) African continental FTA.
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
2014 SADC Summit – tralac submissions
As the region prepares for the 2014 SADC Summit to be held in August, tralac takes note of two articles from the SADC Treaty:
- Article 23 of the Treaty states that SADC “shall seek to involve fully the people of the Region and key stakeholders in the process of regional integration”.
- Article 5(2)(b) states that SADC shall, in order to achieve its objectives, “encourage the people of the Region and their institutions to take initiatives to develop economic, social and cultural ties across the Region, and to participate fully in the implementation of the programmes and projects of SADC”.
Supporting the full participation of the ‘people of the region and their institutions’ in the process of regional integration; tralac is pleased to submit two contributions to the preparatory process and to the deliberations at the SADC Summit.
The first submission deals with trade aspects of the review of the Regional Indicative Strategic Development Plan (RISDP); and the second focuses on dispute settlement matters.
You are welcome to disseminate these contributions and to use them to support informed debate on SADC’s regional integration process, provided the source is acknowledged.
Trade Reports
Industrial policy in Southern African regional integration and development
This paper builds on the theme of regional industrial policy addressed in a number of recent tralac Working Papers and Trade Briefs (McCarthy 2013; Sandrey 2012 and 2013; Woolfrey 2013; and Zarenda, 2012, 2013a and 2013b), and a paper in the Yearbook 2012 (Zarenda, 2013b). The intention is not to repeat what had been written in this spate of tralac documents or to present a summary review but to ask critical questions about what can realistically be expected of industrial policy in southern African integration and development. The paper is largely speculative, and to make it clear at the outset, it represents the views of a sceptic, someone who would like to be convinced that conventional industrial policy can work in the region’s integration arrangements.
The interest revealed in industrial policy reflects the priority attached in the region to microeconomic intervention to allocate resources in support of the faster growth of manufacturing as a driver of economic development. In South Africa, the dominant economy in the region, there is concern about the relative decline in the contribution of manufacturing to the Gross Domestic Product (GDP), seen as a problem of the deindustrialisation of a developing economy. This concern underlies a number of policy interventions and government initiatives, and, recently, an observable move towards a more protectionist stance in national policy.
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
High Court of Botswana steps into void left by SADC Tribunal
The suspension in 2010 of the SADC Tribunal has left a serious gap in the functioning of the Organization. The integrity and operations of SADC are affected if it is impossible for the judicial organ of the Organization to adjudicate the various types of disputes which can arise under SADC law. An example of the detrimental consequences is already available. The High Court of Botswana (where the SADC Secretariat is housed) made an unusual ruling and decided that it has jurisdiction over a dispute between an official of the SADC Secretariat and the Organization.
The Summit decision to disband the Tribunal was adopted by consensus. The basic rule is that SADC institutions take decisions on the basis of consensus. This must give rise to the question whether the Member States are committed to honouring their obligations under the SADC Treaty. It has been argued that it was never intended that the SADC Tribunal should exercise human rights jurisdiction.
That might be true, but this raises familiar debates about the careful drafting of legal instruments. Articles 4 and 6 of the SADC Treaty contain undertakings to protect and promote democracy and human rights. Courts of law have to interpret international agreements by giving effect to the words in light of their ordinary meaning in the context in which they have been used. If this is the problem which the Member States want to address now they should limit their drafting of the new protocol for the Tribunal to this aspect.
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
Cape to Cairo: Exploring the Tripartite FTA Agenda
On 22 October 2008 in Kampala, Uganda, the Heads of State and Government of the Member States of the Common Market for Eastern and Southern Africa (COMESA), the East African Community (EAC), and the Southern African Development Community (SADC) agreed to establish a grand Free Trade Area, which is now referred to as the Tripartite FTA (T-FTA). This is supposed to encompass all 26 Member States of the three Regional Economic Communities (RECs). Apart from the economic imperative arising from such an enlarged regional market, the T-FTA initiative has received wide support as it was expected to address the problem of conflicting trade regimes due to overlapping memberships of most members in the three RECs.
The Trade Law Centre (tralac) has been following this development with keen interest through the publication of three books focusing on the T-FTA process.
The first book presented an economic impact assessment of the T-FTA, with particular focus on agriculture and agri-business development. The second book, published in 2011, delved more deeply into a range of issues relevant to making the T-FTA work, drawing from Africa’s experience of grand schemes, weak legal and institutional foundations for a rules-based dispensation of regional integration, and an implementation record that demonstrates very little serious commitment. The third book, published in 2012 and influenced by an explicit decision by Member States to include the infrastructure and industrial development pillars, aimed at encouraging an enquiry and new thinking about the African paradigm of regional integration, specifically about the nature, design and architecture of a T-FTA to address the region’s fundamental development challenge, i.e., the inadequate capacity to produce goods and services competitively.
This fourth book presents a collection of papers that explore a range of issues that are shaping important debates about the T-FTA in particular and the African regional integration agenda more generally. During the past five years there has been a sea change from the vision of the T-FTA as a grand FTA integrating the 26 Member States of COMESA, EAC and SADC, to a much less ambitious plan for only those Member States that are not parties to FTAs to engage in negotiations. This book includes an analysis of the implications of the ‘clarification’ of the T-FTA Negotiating Principles. It is now clear that the T-FTA will not address the problem of overlapping membership. What would happen if a smaller group of ‘willing participants’ decided to integrate at a faster pace? Two country case studies (Malawi and Rwanda) are also included; they provide insight into the important questions that Member States are engaging to assess what’s in the T-FTA for them.
Two chapters focus on industrial development issues. The industrial development pillar of the T-FTA requires innovative approaches to addressing the region’s competitiveness challenges. What are the options to support regional industrial development? Energy sector development and climate change issues, both integral to the development of the region’s integration plan, are also addressed in the book.
T-FTA developments are important not only for the eastern and southern African region; they also provide a reality check on the feasibility of establishing a Continental Free Trade Area by (indicative date) 2017.
© 2013 Trade Law Centre and the Swedish Embassy, Nairobi.
Publication of this book was made possible by the support of the Trade Law Centre (tralac) and the Swedish Embassy, Nairobi. 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 Briefs
Negotiations on movement of business persons in the COMESA-EAC-SADC Tripartite region
The Communiqué of the first COMESA-EAC-SADC Tripartite Summit of Heads of State and Government held in October 2008 provides, in the area of trade, customs and economic integration, that the Tripartite Summit establish measures ‘to facilitate the movement of business persons across the RECs’.
One possible interpretation of this objective can be derived from the Final Tripartite Working Document of the three Regional Economic Communities (RECs) that led to the first Tripartite Summit. This preparatory document was developed by the Tripartite Task Force of the Secretariats of the three RECs. It sets out the background, purpose and objectives of the TFTA and contains all the relevant recommendations.
This raises an important question. Was the initial intention of the TFTA member states to only develop an agreement or protocol for the relaxation of visa requirements and the recognition of regional passports for the facilitation of movement of business people, professionals and eventually citizens across the TFTA region?
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 COMESA Court of Justice: Regional agreements do protect private parties
States are the parties to international agreements; only they derive rights from such agreements and only they can litigate before international courts when violations occur. Natural or legal persons do not enjoy rights under international agreements and they cannot bring claims to international courts. Their states of nationality have to act on their behalf but this does not amount to a legal entitlement.
This is the traditional approach. However, in the context of Regional Economic Communities (RECs) it is ineffectual and has to be modified. Regional integration arrangements are about more than inter-state obligations; they establish a sui generis legal regime which has to provide for the protection of private parties too. Regional integration promotes and extends trade and commerce (involving mostly private entities) across borders and into other national jurisdictions. These activities need the protection of appropriate legal instruments and procedures and should accommodate the reality of an enlarged market arrangement.
Effective regional integration has to accommodate private parties in order to achieve the very objective behind the exercise and to prevent the uncertainty and costs which will result from fragmented and ad hoc national actions. This requires the enforcement of rights where needed; which happens typically via the establishment of regional courts and the uniform domestic application of regional legal instruments.
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.