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When Trade Negotiations are a top-down Affair: Whereto with the Tripartite FTA?

When Trade Negotiations are a top-down Affair: Whereto with the Tripartite FTA?

03 Dec 2014

Gerhard Erasmus, tralac Associate, comments on the state of the Tripartite FTA negotiations

It has just been announced (and not via a public media statement) that the final Summit to conclude the Tripartite FTA negotiations will not be convened, as promised, on 20 December this year. This important event has been postponed into the new year but without any indication of when the third TFTA Summit might take place. The announcement circulated to official negotiators simply informs them that “due to inadequate consultations among SADC Member States coupled with the unavailability of the SADC Chair who is also the Chair of the Tripartite Summit, the date for the Third Tripartite Summit scheduled to take place in Sharm El-Sheikh in Egypt on 20 December 2014 is not convenient.”

This is not good news; for several reasons. If at the ninth hour the SADC states, representing the major block of the proposed Tripartite Free Trade Area, could not find time to consult each other in order to conclude negotiations which started three years ago, or make available a Chair, it gives rise to serious questions about their commitment and the nature of the process. We will of course not know the truth; there might be other reasons for this postponement. And that is part of the problem; the lack of transparency and participation. These negotiations have been conducted without meaningful participation by the public. We are ill informed about the progress made, the objectives, and the technical aspects. There was in fact more information in the public domain about the negotiations to conclude the Economic Partnership Agreements with the EU than about our own endeavours.

The fact that there is no public outcry or demand for an explanation also indicates a lack of interest on the part of SADC’s citizens and the businesses operating in the region. It is unrealistic to expect wide-spread popular interest in the technical issues which characterize trade negotiations but basic information should be available, and progress should be monitored. Such agreements have far-reaching consequences. Governments do not trade and ideally the flag should follow the trade. In our part of the world it seems that government officials have a free hand when it comes to essential policy choices and taking decisions on matters of trade; with extensive implications for consumers, national development plans, legal remedies for private traders, and regional stability.

We would be extremely uncomfortable if national economic policy and law would be determined in such an opaque and non-participatory manner. Policies and legal arrangements on international trade are not different in terms of outcomes and effect. They may in fact often deal with more urgent and complicated matters such as global competitiveness, trading and industrializing under the conditions of the 21st century, and dealing with the many technical challenges of cross-border business transactions. The essential interests of other states have to be accommodated and new obstacles, such as border controls, have to be dealt with. Ultimately we need the certainty and predictability of suitable legal instruments in order to reap the benefits of trade.

Trade agreements are legal instruments which impact directly on businesses and consumers. States have to take the necessary follow-up action in order to implement their obligations in such agreements and to give effect to the entitlements of private parties. These instruments usually have to be domesticated in order to be effective and are frequently complemented by national rules and regulations and administrative procedures. The fact that they are negotiated between states is a reflection of the historical features of states (sovereignty and territorial jurisdiction), not of the ability of nations to prosper in isolation. The ability to do business with other nations (actually businesses in other nations) will determine the success of national development plans, employment strategies, attracting investment etc. It is inconceivable that the essential decisions which will inform these important policy choices and the acceptance of binding obligations could be taken in the absence of public participation and the availability of basic information.

The very important distinctive feature of international trade agreements which should concern us in the context of the TFTA negotiations is that states are the parties to such agreements and state officials negotiate these texts. Confidentiality is often emphasized. Once such negotiations are done it will be too late to change them. Parliaments are often ex post facto involved in the approval of the texts negotiated by the executive, but this procedure comes too late to bring about change or to include missing elements. Private sector and public concerns should guide the negotiating process while it happens, not once concluded.

There is general agreement that the strong international growth momentum of 2000-12 is unlikely to be repeated.* Demand for African commodities will generally slow down. This is one of many reasons why intra-African trade has to be enhanced and be facilitated by clear arrangements and effective procedures. In order to bring these much needed changes about, we need the right inter-state legal arrangements. The Tripartite FTA is an important building block in this endeavour and it would be extremely disappointing if the opportunities potentially offered by such an inclusive deal do not materialize. Unfortunately we do not know the answers to these questions. Present indications are disappointing.

tralac has been writing about the Tripartite FTA process and the negotiations since the launch of this endeavour in 2008. Initially there was a great deal of enthusiasm because of the promise that one single FTA would be formed and that overlapping membership problems would be resolved. This potential also convinced the African Union to follow the same path and to use the TFTA example as the starting point for a Continental FTA. Things have since turned out quite differently. One inclusive FTA will not be formed; separate tariff arrangements are being negotiated. It is not yet known who exactly will be the parties to these arrangements and what the trade benefits might entail. However, the more important concern is that tariffs are not the major feature of successful modern trade pacts; they should address such related matters as regulatory reforms, trade facilitation, infrastructural development, and getting rid of red tape. These should be the priorities on the TFTA agenda. We do not yet know if they are addressed in any meaningful manner. And we do not know what the so-called “built-in agenda” is about, which is now being mentioned.

Indications are that a basic (but incomplete) TFTA document will be signed at some point in 2015 but that negotiations will continue to deal with the unfinished work. New negotiations on services and the movement of business persons (which was meant to form part of Phase One of the negotiations) will also have to be launched.

This is not a tidy picture. There is a lot which the general public and the private sector should be monitoring and should be concerned about. We are not exactly inundated with reliable information in order to make up our minds.

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* See for example the recent IMF Working Paper No. 14/205: Slowdown in Emerging Markets: Sign of a Bumpy Road Ahead? Available at: http://www.imf.org/external/pubs/cat/longres.aspx?sk=42453.0

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