tralac held its 2009 Annual Conference on the 3rd and 4th of September in Cape Town, South Africa. The aim of the Conference was to critically review the past year’s key trade-related developments, both at a regional level in southern Africa, and at the global level. The Conference also served as a forum to look ahead to the future trade agenda for the region and to provide the participants with an opportunity to discuss important issues and share their insights. 

Background

The following are some of the key trade-related developments for Southern Africa during the past year:

Four members of the SADC Economic Partnership Agreement (EPA) Group signed an Interim Economic Partnership Agreement (IEPA) with the European Union. The fact that Botswana, Lesotho and Swaziland, who are members of SACU signed the IEPA raised the ire of South Africa, with discussions about the dominant economic member of the customs union considering its continued membership of SACU being reported in the media. It is important of course to recognize that the SACU revenue pool and its distribution has for some time been the focus of controversy. According to media reports, South Africa’s National Treasury regards these as transfers to Botswana, Lesotho, Namibia and Swaziland, that are received without any conditionalities.

The countries in the region have been in some sense shielded from the rules-based dispensation of international trade governance because a very large portion of their trade has taken place under preferences, but this has changed with the expiry of the waiver under which the Cotonou Agreement and its preferences for ACP countries operated. For the first time, this preferential treatment came under threat, as countries like Botswana have realized.

The EPAs have exposed the weaknesses of the regional integration plan of southern Africa. The European Union did not determine the negotiating configurations; countries in the region decided membership of negotiating configurations. And of course the fact that EPA configurations cut across existing regional economic communities, which overlap to a significant degree, does bring important challenges. It can be argued that although regional integration has featured many treaties, protocols and other agreements to further integration, member states have not treated these as rules-based dispensations. The implementation, compliance and enforcement record of regional economic communities is very poor. Member states sign agreements or protocols and often continue with business as usual, knowing that they are unlikely to be challenged. Regional integration can thus be characterised in terms of friendly political clubs, with at most, best endeavour commitments. Economic Partnership Agreements are different - non-compliance will be challenged. These will be effective rules-based systems of governance.

The twenty-six member states of the Southern African Development Community (SADC), the Common Market for East and Southern Africa (COMESA), and the East African Community (EAC) resolved at a Tripartite Summit in Kampala, Uganda in October 2008 to establish Tripartite Free Trade Area (FTA) with a further goal to become a customs union. Although the Southern African Customs Union (SACU) was not invited to formally participate in this Summit, perhaps because it does not feature on the list of the regional economic communities (RECs) that are to be building blocks for the African Economic Community, this development is of course relevant for SACU since all SACU member states are also members of SADC, and Swaziland is also a member of COMESA. A roadmap is to be developed with a year (from October) to establish the Tripartite FTA, and work in various task forces is underway in this regard. What can this Tripartite FTA mean for regional integration in Southern Africa?

Significant policy shift is taking place in South Africa, with Polokwane and the elections of April 2009 providing key milestones in this process. Policy is perceptibly more inward looking and focusing specifically on employment issues. It is clear that industrial policy is seen as the pivot policy intervention to address the employment and other issues such as the decline of specific industries.

The Department of Trade and Industry is in the final stages of preparing a new trade policy document. This document is expected to confirm that trade policy is very much considered as a means of direct industrial development support. According to media reports quoting the Ministry of Trade and Industry Rob Davies, positions on regional integration, specifically on SACU and SADC will also be articulated in this document, as will the country’s quest for South-South partnerships. South Africa’s policy direction matters for the region. It is the largest economy in the region, its trade footprint is large and the integration of its firms into the economies of most countries have implications for the region.

At the multilateral level progress in the Doha Round of trade negotiations is as yet difficult to discern, despite encouraging feedback from the WTO Secretariat. What is important for developing countries are the emerging debates and discussions on institutional and governance matters related to the WTO, the role of developing countries in the WTO, taking into account the focus in many parts of the developing world on the negotiation of regional trade agreements.

The WTO, despite the lack of progress on the Doha Round of negotiations, remains relevant for the region as the anchor of rules based governance of international trade. The WTO agreements (in particular Art XXIV of the GATT and Art 5 of the GATS) are the rules which regional trade agreements must comply with. So even if little progress is made in the near future on the current negotiations, we cannot ignore the rules-based dispensation of the WTO.

tralac’s Annual Conference provided a forum for the discussion of these and other important trade issues for Southern Africa.