tralac’s Annual Conference 2008 took place on 12 and 13 June in Cape Town. The Conference focused on Southern Africa’s RTA (Regional Trade Arrangement) agenda.

Background

Countries in southern Africa are engaged in a complex RTA (Regional Trade Agreement) agenda. On the intra-regional front there is an emerging discussion on a deeper integration agenda; however politically the preoccupation is very much with the linear progression from a SADC Free Trade Area (FTA) which will be launched later this year, to a customs union in 2010. It is important to recall that in the SADC Trade Protocol member states committed to establish a free trade area; there is no mention of a customs union in this legal instrument. The objective of establishing a customs union came onto the agenda with the Regional Indicative Strategic Development Plan (RISDP) in 2003. An informed debate as to the rationale for establishing a SADC customs union still needs to take place.

On the SACU front implementation of the 2002 SACU Agreement proceeds very slowly; hampered by built-in shortcomings in the agreement itself, lack of political will to create a robust legal and institutional infrastructure for the customs union, and lack of clarity on the part of South Africa as to its position on SACU (and SADC). SACU is a functioning revenue sharing mechanism but is still very far from a vehicle for deeper regional integration. The revenue sharing arrangement is perhaps the glue that keeps SACU together but also that which prevents it from becoming an integrated region with common policies, legal and institutional infrastructure providing a platform for competitive integration into the global economy.

There is no doubt that a deeper integration agenda (focusing on behind-the-border issues such as services, investment, competition etc) can address some fundamental development and competitiveness challenges in the region. Even a cursory scan of the key constraints the circumscribe the competitiveness of our firms brings us to the high cost, unreliability and poor quality of services such as telecommunications, financial services, energy, transportation and others. These very issues are also primary development concerns, as households without bank accounts (the unbankable) are relegated to the periphery of the mainstream economy, and they battle unreliable energy supply, high costs of transportation and more. The trade-development links are quite obvious when reflecting on the new trade agenda.

While there are some related developments on the intra-regional agenda, as for example SADC’s work on services and finance and investment suggest; there is very little evidence of these being political priorities, and hence progress has been and will continue to be challenged.

On the extra-regional front, new generation issues feature prominently too. The Economic Partnership Agreement (EPA) negotiations continue. Some countries have signed an Interim EPA, and are now embarking on phase 2 of these negotiations, specifically on new generation issues such as services and investment. Others have not signed an Interim EPA, but remain engaged in the process. The EPA negotiations have highlighted important issues that countries in the region have to address; multiple membership of RTAs, new generation issues on the trade agenda, implications of extra-regional RTAs for the intra-regional integration agenda and the links between trade and development. The development of a coherent trade strategy is a key challenge for southern African countries.

Then, in the spirit of south-south cooperation, there is a strong focus on India and China, with SACU countries having started negotiations with India, for example and as the growing trade and investment links with China indicate. This south-south part of the RTA agenda (negotiations with India for example) seems to be politically supported, but there is not yet a sound analytical endeavour to motivate specifically the static and dynamic gains that are being pursued in such negotiations. And it is not clear that the beneficiaries of, for example a SACU-India FTA (e.g. private sector) are effectively involved in the process. This highlights some of the challenges of managing trade policy at the national and regional levels in southern Africa.