tralac Annual Conference 2013
tralac hosted its 2013 Annual Conference in Cape Town, South Africa, on 25 and 26 April, providing an opportunity for frank engagement among stakeholders on the trade and regional integration agenda for eastern and southern Africa (‘the region’).
Discussion was focused at three levels: first, Africa, and specifically regional developments; second, Africa and its relationship with other developing countries, in particular China, India and Brazil; and third, a consideration of developments in multilateral trade governance.
The Tripartite Free Trade Area (T-FTA) has become an important focus for the region, as well as being held as a model for broader pan-African integration. The T-FTA is an ambitious integration project, spanning the 26 member states of the Common Market for East and Southern Africa (COMESA), the East African Community (EAC) and the Southern African Development Community (SADC), which includes all the member states of the Southern African Customs Union (SACU). The agenda is anchored on three pillars: the traditional market integration agenda characteristic of all African integration initiatives, and then infrastructure and industrial development.
The first phase of the negotiations covering the trade-in-goods agenda and on a separate track, the movement of business persons, was officially launched at the second Tripartite Summit held in South Africa in June 2011. The negotiations began early in 2012. To date there have been meetings of various task teams, and trade negotiations forums, with negotiations about modalities and principles. Substantive negotiations, for example, on tariff liberalisation, have not yet begun. Despite this, the deadline for completion of the first phase remains mid-2014.
On tariff liberalisation, it is clear that ambition varies considerably. Ironically, the country with the most industrialised economy, South Africa, appears least ambitious, while many others are keen to push the boundaries towards a real free trade area (FTA). Rules of origin are likely to be one of the most contentious issues on this first phase agenda, signalling the fact that this instrument can be used very effectively to protect domestic industry, rather than essentially to prevent trade deflection. What transpires on rules of origin will also be an important indicator of what kind of FTA member states want to establish; will this be an inward looking enclave or an outward-oriented FTA providing a platform for integration into the global economy?
The fact that very little has actually happened in the negotiations process, does, however, provide an opportunity for debate and engagement, and potentially for shaping a new integration trajectory in this region.
Looking beyond the market integration pillar to the infrastructure and industrial development pillars is an interesting exercise. A range of infrastructure development programmes are underway in the region, with a strong focus on transport infrastructure development. Industrialisation is also an important item on the development agenda of all 26 member states, as well as the constituent regional economic communities.
In principle, there appears to be broad agreement on the importance of infrastructure and industrial development across the Tripartite region. Is it possible to use this concurrence to shape an agenda which can, in a sui generis manner, reduce the costs of doing business in the region, promote intra-regional trade and business linkages, and support competitive integration into the global economy? This will require the development of a new integration model that takes leads from the private sector, with a regulatory reform and harmonisation agenda, and very specific governance instruments including the speedy, and cost effective resolution of disputes. We hope to encourage new thinking about Africa’s integration along these lines.
While regional integration occupies a pre-eminent position on the trade agenda of most African countries, it is impossible to ignore global economic developments and the impact of key players in Africa and on Africa’s development possibilities; for example, competition from Brazilian agriculture, Chinese industry and India’s services. During the Conference we focused on specific aspects of South-South relationships, and what they mean for Africa. tralac has recently completed a research project on the BRICS (Brazil, Russia, India, China and South Africa), highlighting interesting trade, investment and development questions for African countries. One such question is, for example, whether, and if so, to what extent, the role of China in Africa circumscribes industrial development opportunities for African countries.
Finally, we considered developments related to multilateral trade governance. Although there are some expectations of small wins at the ninth World Trade Organisation (WTO) Ministerial Conference in Bali in December 2013, the systemic malaise of the multilateral trading system requires a brave new approach to define 21st century economic and specifically trade governance. Global economic and trade developments have outstripped a model that was developed prior to, for example, the changes in information technology and communication and transport, that have changed the fundamental configuration of economic linkages and relationships, and expanded the consumption frontier for consumers across the globe. Currently, regional trade agreements are leading the development of a new governance pathway; what will be the role for multilateralism?