The Implications of COVID-19 for regional trade
COVID-19 is a global pandemic and will have severe implications for African nations. Inadequate public facilities, wide-spread poverty and crowded living conditions make them particularly vulnerable.
One of the sad ironies is that while regional integration makes perfectly good sense on a continent with many small national economies and land-locked states, the member states of Regional Economic Communities (RECs) have not succeeded in establishing the institutions and inter-state arrangements necessary for effective cross-border governance. The COVID-19 pandemic has revealed this governance deficit in a dramatic fashion.
International trade agreements contain, as a rule, provisions allowing the Member States the freedom to protect essential national interests in times of an emergency. GATT Article XX is the typical example. It sets out the specific circumstances under which a World Trade Organisation (WTO) member may now be exempted from its GATT obligations. African regional trade arrangements include similar exceptions. The Southern African Development Community (SADC) Protocol on Trade provides for general exceptions in Article 9 of this Protocol. The Southern African Customs Union (SACU) Agreement, does, to some extent, the same. The same approach is being replicated in the African continental free Trade Agreement (AfCFTA).
These General Exception clauses allow, under certain conditions, for temporary national measures to deviate from obligations to liberalize trade. Export restrictions may be justified by General Exception clauses. Practically all countries, including in Africa, have responded to the COVID-19 crisis by invoking national emergency powers. The trade disruption and hardship caused by uncoordinated responses to the pandemic could have been checked and the effects of unilateral action ameliorated by joint action, or at least by consultation.
Regional integration in Southern Africa is, from a trade perspective, a success story for South Africa. Its merchandise trade in southern Africa is facilitated by especially its logistics and distribution services (wholesale and retail), transport, financial and communication services. But services are regulatory intensive and member states emphasise their “right to regulate”. If relevant regulations are not harmonised across the region (and across the continent), this frustrates trade and integration. A good example is transport regulation. It is characterized by different national technical requirements and cabotage restrictions.
National processes and emergency guidelines are important, but border posts by definition require, at the very least, bilateral cooperation. This is where the roles of Regional Economic Communities become vital. The SADC emergency guidelines (issued on 6 April 2020) refer to digital trade solutions, including the use and, recognition by trade partners, of e-certificates of origin and standards. These are examples of trade facilitation measures in a digital trade strategy. Unfortunately, these guidelines are not binding and have not been implemented as part of any regional emergency strategy.
The justification for regional integration is straightforward – to reap the benefits of larger markets. What has become clear now is that the design of regional integration arrangements has not paid sufficient attention to emergencies such as the present pandemic.
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