Why Article 3 of the SADC Trade Protocol needs to be fixed
Gerhard Erasmus, tralac Associate, discusses the need to clarify Article 3 of the SADC Trade Protocol dealing with the elimination of barriers to intra-SADC trade
The problems faced by traders as well as trade officials in SADC are often compounded by the fact that the applicable law is vague or “under review”. This Discussion Note will consider one example where clarification of SADC law is urgently required.
Article 3 of the SADC Trade Protocol deals with the elimination of barriers to intra-SADC trade but also provides for derogations from the applicable obligations. It reads as follows:
1. The process and modalities for the phased elimination of tariffs and non-tariff barriers shall be determined by the Committee of Ministers responsible for trade matters (CMT) having due regard to the following:
(a) The existing preferential trade arrangements between and among the Member States.
(b) That the elimination of barriers to trade shall be achieved within a time frame of eight (8) years from entry into force of this Protocol.
(c) That Member States which consider they may be or have been adversely affected, by removal of tariffs and non-tariff barriers (NTBs) to trade may, upon application to CMT, be granted a grace period to afford them additional time for the elimination of tariffs and (NTBs). CMT shall elaborate appropriate criteria for the consideration of such applications.
(d) That different tariff lines may be applied within the agreed time frame for different products, in the process of eliminating tariffs and NTBs.
(e) The process and the method of eliminating barriers to intra-SADC trade, and the criteria of listing products for special consideration, shall be negotiated in the context of the Trade Negotiating forum (TNF).
2. The agreed process and modalities for eliminating barriers to intra-SADC trade shall upon adoption, be deemed to form an integral part of this Protocol.
This provision is critical for the functioning of the SADC Free Trade Area (FTA), in which substantially all trade must be liberalised within a reasonable period after the launching date. At the time of the adoption of this Protocol the parties were apparently not ready to agree to state the legal position and their obligations in clear and definite language. Critical elements such as the “appropriate criteria for the consideration of …. applications for grace periods … by Member States which consider they may be or have been adversely affected, by removal of tariffs and non-tariff barriers” had to be worked out subsequently. The CMT was tasked to elaborate appropriate criteria for the consideration of such applications. The process and the method of eliminating barriers to intra-SADC trade, and the criteria of listing products for special consideration had to be negotiated in the Trade Negotiating Forum (TNF). Once adopted, the process and modalities for eliminating intra-SADC trade barriers would form an integral part of the Trade Protocol and therefore of SADC law. The same applies to the application for derogations.
The underlying uncertainty has not yet been clarified. Since the launch of the SADC FTA in 2008 several derogations were granted under Article 3(c). The legal principles in terms of which this has happened and the procedure for monitoring compliance are not known. Although the applicable criteria and the procedures are to be considered an integral part of the law on this point, it remains a nebulous and unpredictable landscape. This state of affairs undermines legal certainty. It also results in the imperfect functioning of the FTA, where exceptions to the tariff and related trade rules should be based on those provisions allowing particular exceptions such as safeguards, trade remedies, security or general exceptions. The member states do not follow those routes and therefore objective criteria for justifying them are never invoked. Instead, the ad hoc and politically motivated derogations of Article 3 are employed.
The result is a rather serious flaw in how the system operates and how the applicable law is applied. It should be corrected as a matter of urgency; in particular if these same states want to embark on a more comprehensive Tripartite Free Trade Area. Their negotiations are said to be based on the acquis* of the different RECs. It must be rather difficult to decipher the SADC acquis on this point.
* Acquis is a French term meaning ‘that which has been agreed’.