Topics publications: African regional integration
Trade Briefs
What has happened to the protection of rights in SADC?
For about the last year and a half a vital aspect of the Southern African Development Community (SADC) legal regime, the ability to enforce the rights and obligations in the legal instruments of this regional arrangement, has been suspended. The terms of the Judges (Members) of the Tribunal have also not been renewed. There are no indications yet as to when and how the judicial function in the organization will be restored or what new arrangement might be put in place. And there is no public debate about the issues at stake.
Since the Windhoek meeting of the SADC Summit in August 2010, the SADC Tribunal has not been allowed to hear any new cases. This is a consequence of decisions taken by the SADC Summit at is Windhoek Summit. At this meeting it discussed, amongst other matters, the recent rulings by the SADC Tribunal against Zimbabwe. Those judgments were not implemented. It was, instead, decided to commission a new study on the role, responsibilities and terms of reference of the SADC Tribunal. This development was triggered by the rulings by the Tribunal that provisions in the SADC Treaty had been breached by the actions of the government of Zimbabwe.
The SADC Summit decisions give rise to serious concerns about the rule of law in this organization and about the protection of rights. The decision to suspend the functioning of the Tribunal has resulted in the de facto amendment of the Treaty and Protocol on the Tribunal, but involving what is prima facie an ultra vires action on the part of the Summit. It does not have the power to suspend the judicial arm of SADC or any part of the Treaty. If changes to existing legal instruments become necessary they should be brought about by giving effect to the amendment provisions in the applicable 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.
Trade Briefs
Empowerment policies in SADC and their effect on agreement design
Empowerment policies may give rise to discrimination when local suppliers are treated more favourably than foreign ones, and can even limit market access opportunities for foreign suppliers, when, for example, the equity share of the foreign partner is limited. However, the flexible rules incorporated in services agreements provide countries with the ability to schedule empowerment policies in order to legally maintain restrictions against foreign services providers and investors.
SADC member states are in the early stages of negotiations on trade in services and certain member states are currently applying empowerment policies that are in danger of contravening the rules of the anticipated services agreement. It is necessary that these measures are clearly identified and accurately recorded in the schedules of the respective countries.
This brief considers the effect of earlier GATS commitments on scheduling empowerment restrictions in the regional context and the challenges posed by the SADC standstill clause and the requirements of GATS Article V. The brief also proposes some alternatives to safeguard local industries and concludes by evaluating the possible exceptions provided by the services agreements.
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
Trade Facilitation in the COMESA-EAC-SADC Tripartite Free Trade Area
The COMESA-EAC-SADC Tripartite was created in 2006 to assist in the process of harmonising programmes and policies within and between the three Regional Economic Communities of COMESA, EAC and SADC and to advance the establishment of the African Economic Community. The three main pillars of the Tripartite strategy, as contained in the Vision and Strategy document that was endorsed at the second Tripartite Summit in June 2011 are Market Integration, Infrastructure Development and Industrial Development.
In the Tripartite region the costs of transport, in particular road transport (which accounts for about 95% of the volume of cargo transported in the region), is directly related to the time taken for the journey. The typical charge for a stationary truck is between US$200 to US$400 a day. Therefore, if a truck takes 3 days to clear a border (which is not excessive in the COMESA-EAC-SADC region) the transporter will pass on an additional cost of between US$600 to US$1,200 for the cost of the truck sitting idle at the border to the importer. This will, in turn, be passed on to the importer’s client and ultimately, to the consumer.
Until the underlying causes of these high costs of transport are addressed African countries will remain high-cost producers, with no major direct investments taking place in non-mineral sectors, restricted economic growth opportunities and slow progress made in poverty alleviation. An integral part of the Tripartite Free Trade Area is the design and implementation of a programme that is aimed at improving trade and transport measures and reducing non-tariff barriers to trade.
The aim of this paper is to describe the main components of the Tripartite trade facilitation and non-tariff barrier programmes and put these programmes into a regional and a multilateral context.
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 – Making the Tripartite Free Trade Area work
The Heads of State and Government of the 26 member states of the Common Market for East and Southern Africa (COMESA), the East African Community (EAC) and the Southern African Development Community (SADC) agreed in October 2008 to establish a grand Free Trade Area (FTA) which is now referred to as the Tripartite FTA (T-FTA). This integration initiative has in the (almost) three years since this political decision, followed a course rather different from other regional integration initiatives in Africa.
Since October 2008 various task teams of technical experts have been engaged in analytical work and have prepared a Draft Agreement and 14 annexes, dealing with issues, in addition to tariff liberalisation, ranging from Rules of Origin (RoO) to the Movement of Business Persons and Dispute Resolution. The most recent iteration of this technical process has produced drafts of these instruments, dated December 2010. These drafts provide points of reference in many of the chapters of this book.
Negotiations, however, were only officially launched at a Summit, held in South Africa, in June 2011. It is, therefore, very important to recognise that the Tripartite FTA does not exist yet and substantive negotiations have not yet begun. The Draft Agreement and the 14 annexes lack official status, yet it is a useful exercise to review these draft instruments and the emerging negotiations process, as member states deliberate negotiating guidelines, and soon start substantive negotiations.
The Trade Law Centre (tralac) has already published a book, Cape to Cairo – An Assessment of the Tripartite Free Trade Area, on specific issues related to the Tripartite FTA (INSERT LINK) to coincide with the Summit in June 2011. The book focuses on economic analysis, and a broadly focused assessment of the impact of the T-FTA, with particular focus on agriculture and agri-business development.
This second book delves more deeply into a range of issues relevant to a discussion about what will make the T-FTA work. At this early stage of the process, before negotiations begin in earnest, there are important issues to consider that could contribute to making the T-FTA a successful integration arrangement. Thus far, Africa's integration record is marked by 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. Can the T-FTA be different?
The answer to this question lies not in the draft instruments, but the outcome of the political economy process that will begin as member states negotiate the legal instruments of the T-FTA. However, the analysis in this book can provide an opportunity to reflect on what exists already in terms of regional integration in East and Southern Africa, and what lessons can be learned from this experience. Specific issues covered include sugar trade, RoO, trade in services, movement of business persons, dispute settlement and trade remedies and safeguards, as well as World Trade Organisation (WTO) rules on regional trade agreements and implications for the T-FTA.
© 2013 Trade Law Centre, the Danish International Development Assistance and the Swedish International Development Cooperation Agency
Publication of this book was made possible by the support of the Trade Law Centre (tralac), the Danish International Development Assistance (Danida) and the Swedish International Development Cooperation Agency (Sida). 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 publications for educational, non-profit purposes, provided the source is acknowledged. Please contact us to obtain authorisation for reproducing this material.
Trade Briefs
Policy Brief: Southern Africa Customs Union – Getting ready for services negotiations
tralac has worked with Trade and Industrial Policy Strategies (TIPS) on Trade in Services matters in the Southern African Customs Union (SACU). Although the 2002 SACU Agreement does not cover services, SACU member states are engaging trade in services issues in the context of regional trade agreement negotiations and this Policy Brief considers how SACU can prepare for services negotiations.
Overview
For many African states, negotiations to liberalise trade in services is a relatively new experience. Southern African Development Community (SADC), Common Market for Eastern and Southern Africa (COMESA) and East African Community (EAC) member states are set to negotiate services at several levels – regional, bilateral, multilateral and even at the supra-regional level in the context of the Tripartite agreement.
Trade in services is not a feature of the 2002 Southern African Customs Union (SACU) agreement, and although the Heads of State and Government hinted at the possibility when they undertook to develop “SACU positions on new generation issues”, it is unlikely that services will be negotiated in the context of SACU any time soon. SACU member states already have to contend with bilateral services negotiations with the European Union (EU) (Botswana, Lesotho, Swaziland), regional negotiations as part of SADC (all five SACU member states), regional negotiations as part of COMESA (Swaziland), and even at the supra-regional level as part of the Tripartite negotiations. This is already ambitious, particularly for a country with limited capacity such as Swaziland.
These negotiations are mostly focused on services liberalisation, which addresses regulatory barriers relating to the access and treatment of foreign services suppliers. If SACU member states feel the need to directly address the issue of services within the configuration, the basis of the discussion should be deeper integration. With deeper integration, the focus should be shifted from liberalising the barriers that exist at the borders, towards addressing the behind-the-border issues, which exist within the jurisdiction of the member states.
Deeper integration, among other things, includes domestic issues such as transparency, competition regulation, specific sectoral disciplines, mutual recognition and the harmonisation of certain areas. Some of these issues are, however, also addressed at the regional level of SADC, so SACU member states will have to carefully define the scope of the negotiations according to their needs and expectations.
In the wider region, only EAC member states have concluded binding commitments to liberalise certain services sectors. COMESA member states still have to start negotiating rounds to agree on binding commitments, while the SADC member states are in the final stages of approving the SADC Protocol on services. According to the draft text, SADC negotiating rounds to liberalise trade in services will be concluded within three years after the adoption of the Protocol. During these negotiating rounds, countries will draft ‘schedules of specific commitments’ which will form an integral part of the services framework.
These specific commitments are legal obligations undertaken by the individual countries concerning the level of market access permitted to foreign services suppliers and the conditions under which they are allowed to operate domestically. Specific commitments are recorded in the national schedules of each member state on a sector-by-sector basis and only bind the countries to the extent that they have committed themselves. Basically these schedules set the parameters for foreign participation in a country’s domestic services industries.
Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged.
Books
Monitoring Regional Integration in Southern Africa Yearbook 2010
The Monitoring Regional Integration Yearbook 2010 marks the tenth edition of this publication. This monitoring exercise, ten years on, is no less relevant than it was at the project’s inception. Although there have been significant regional developments during the past decade, many challenges still remain. During the past decade developments in the Southern African Development Community (SADC), as well in the Southern African Customs Union (SACU) have been reviewed. Given the significant overlap of membership among the regional economic communities in Eastern and Southern Africa (ESA), reference in recent years to developments in the Common Market for Eastern and Southern Africa (COMESA) and the East African Community (EAC) have also featured in the yearbook.
The SADC Trade Protocol was signed by member states in 1996, and implementation began in 2000. The Trade Protocol provides a framework for SADC’s trade integration programme, emphasising the establishment of a free trade area as a key objective. In 2003, an implementation strategy for SADC’s trade integration was agreed by member states. This Regional Indicative Strategic Development Programme (RISDP) provided important milestones for SADC to establish a free trade area by 2008, a customs union by 2010, a common market in 2015, a monetary union in 2016 and a common currency in 2018. This very ambitious integration agenda follows the linear textbook model of regional integration. As at 2010, the free trade area has not been fully implemented and the goal of establishing a customs union by 2010 has not been met. The establishment of SADC customs union, however, remains on the agenda albeit without a definite time line at this stage. Is this linear textbook model appropriate for addressing the development challenges of the Southern African region? This and many related questions have been raised in the yearbook during the past decade.
This 2010 yearbook reminds us that regional integration is multifaceted, covering not only trade and market integration, but also peace and security, geography, and related matters. It is essential that countries in Southern Africa take a step back to reflect on the broad dimensions of development and the kind of regional integration agenda that will assist countries to promote not only intraregional trade, but also competitiveness and development.
© 2011 Trade Law Centre for Southern Africa and the Konrad-Adenauer-Stiftung
Publication of this book was made possible by the support of the Trade Law Centre for Southern Africa (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 publications for educational, non-profit purposes, provided the source is acknowledged. Please contact us to obtain authorisation for reproducing this material.
Trade Reports
Services negotiations under the Tripartite Agreement: Issues to consider
The Tripartite Free Trade Area (FTA) is envisaged not only to cover trade in goods, but also trade in services. It is, however, expected that the services negotiations at the tripartite level will begin only once the regional processes to liberalise trade in services have been completed, and most likely after the issues relating to trade in goods have been addressed.
Due to the varying pace of progress made by member states of the Southern African Development Community (SADC), the Common Market for Eastern and Southern Africa (COMESA) and the East African Community (EAC), it is difficult to provide a comprehensive analysis on the state of services liberalisation in the tripartite region. This paper therefore begins with an analysis of the services liberalisation commitments made by the tripartite member states at the multilateral level since it is the only experience some of these countries have had with regard to services negotiations. This analysis also attempts to set a benchmark for the calculation of ‘substantial sectoral coverage’ which all services agreements will have to comply with.
The progress, or rather lack of progress, in the SADC and COMESA configurations is considered and a more in-depth analysis on the services liberalisation commitments made by the EAC member states is provided. The EAC is the only configuration to have drafted its services schedules, so no comparison can be drawn between outcomes of the regional services negotiations. The paper therefore compares the process and liberalisation commitments of the EAC with that of the Mercosur member states to put the progress of the African countries into context. The more lessons regional member states learn from their individual services liberalisation processes, the better they can design and implement a larger tripartite strategy.
An important aspect that this new situation of supra-regional services negotiations will demand is the need for continuity; the need for the converged tripartite market to build on what has already been achieved in the markets of COMESA, EAC and SADC. The paper examines the services provisions in the draft Tripartite Agreement and looks at the services negotiating guidelines that were originally published in November 2009. It also compares the proposed process under the Tripartite Agreement with the ongoing processes at the regional level and highlights some of the challenges member states may encounter.
The regional negotiations are taken as the starting point for thinking around the larger tripartite integration, and on this basis the paper provides challenging suggestions on the way forward. It presents innovative ideas on the sequencing of the negotiations, the manner and degree of liberalisation, the responsibility of the more developed member states, deeper integration in a services market and the administration of regulatory information. The paper concludes by making brief recommendations on how member states can prepare for services negotiations at the tripartite level.
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 – An Assessment of the Tripartite Free Trade Area
In recent years countries have increasingly focused on enhancing market access through regional integration in light of the stalled decade-long WTO Doha Round of trade of negotiations. Africa is no exception and in 2008, Heads of State and Government from the member states of the regional economic communities (RECs) of the Common Market for East and Southern Africa (COMESA), the East African Community (EAC) and the Southern African Development Community (SADC), agreed to establish a Free Trade Area (FTA).
The aim of the FTA among others is to enhance market access, harmonise policies in areas of common interest and address the issue of multiple membership. This new configuration would see an expanded market covering 26 countries with an estimated population of 500 million people and a GDP of US$624 billion.
The objective for this book is to examine the trade and specifically agricultural production, agri-business and the agricultural policy regimes in East and Southern Africa. A computer analysis of the benefits of the proposed is also presented, along with a review of sensitive products and non-tariff barriers in the region. Member states of SADC, EAC and COMESA are due to begin negotiations to establish the Tripartite FTA in 2011.
© 2011 Trade Law Centre for Southern Africa and the National Agricultural Marketing Council
Publication of this book was made possible by the support of the Trade Law Centre for Southern Africa (tralac) and the National Agricultural Marketing Council (NAMC). 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
An assessment of agricultural sensitive products within the Cape to Cairo Tripartite Region
The issue of sensitive products for exemption from tariff liberalisation in the different countries/regional groupings may become an area of contention in the tripartite FTA negotiations, simply because much of the basis for this exemption designation is likely to be arbitrary, and the sensitive products are more likely to reflect protectionist interests or rent-seeking behaviour, both of which will perpetuate inefficiencies.
There have been discussions around the issue of sensitive products within the individual RECs and within the tripartite FTA itself, thus emphasising the significance of this issue and therefore we urge countries to base their selection on genuine public policy objectives.
This paper provides an overview on what motivates countries to seek flexibilities for certain products from full liberalisation. We start with a review of how the issue of sensitive products is being handled at the multilateral and regional level before focusing on agricultural trade liberalisation within the tripartite FTA and to what extent agricultural products form part of the sensitive products list.
Sensitive products can undermine the process of deeper integration, and furthermore the lack of resources and analytical capacity to undertake detailed analysis and the lack of properly defined guidelines and benchmarks also hinders the process. We presume that this may partly explain the delays by some countries in COMESA and SADC to identify and notify to the respective Secretariats, their lists of sensitive products.
The paper concludes by highlighting the need for policy makers to find ways to develop a systematic approach to determining sensitive products and to ensure that all stakeholders are aware of the purpose of a sensitive products list. The current list of sensitive products reflects poorly on the desire to establish a CU with a CET, to which all the RECs have or aspire to attain.
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
Non-tariff barriers affecting trade in the COMESA-EAC-SADC Tripartite Free Trade Agreement
Successive rounds of multilateral trade negotiations have led to a decrease in the use of tariffs as barriers to trade. However, the reduction in tariffs has been substituted by the utilisation of non-tariff barriers (NTBs). NTBs are defined as any barrier to trade other than import and export duties. This includes export taxes, import bans, government monopolies, cumbersome documentation requirements and a lack of physical infrastructure. The utilisation of NTBs is a growing concern in Africa and a major obstacle to regional integration, since these barriers increase business costs and restrict market access.
The most prevalent NTBs hindering regional trade in the Tripartite Territory (COMESA, the EAC and SADC) include customs procedures and administrative requirements, technical standards, government participation in trade and the lack of physical infrastructure. This is of particular importance to agricultural trade within the region. Cumbersome documentation requirements, stringent standards and inefficient road and rail networks cause time delays and increase the cost of intra-regional trade. This has a direct and indirect impact on the quality and price of agricultural products available in the regional market.
The member states of COMESA, the EAC and SADC have realised that NTBs are a major impediment to the expansion of intra-regional trade and identified the elimination of NTBs as one of the key objectives of the Draft Tripartite Agreement. In order to reach this objective a Web-based NTB Monitoring Mechanism has been put into place. Although the mechanism has been successful in resolving various NTB complaints among trading partners, there is still a range of NTBs prevalent in the region. In order to enhance regional development and promote intra-regional trade the Tripartite member states need to intensify efforts to address NTBs on a regional basis.
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.