Building capacity to help Africa trade better

Monitoring Regional Integration in Southern Africa Yearbook 2011


Monitoring Regional Integration in Southern Africa Yearbook 2011

Monitoring Regional Integration in Southern Africa Yearbook 2011

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A number of important trade-related developments took place in southern Africa in 2011. Developments on the rest of the African continent as well as in the global economy had important implications for the southern African region.

The imperative for rules-based governance, for predictability, transparency and accountability, is as much a national concern as it is a regional development and governance issue. The suspension of the Southern African Development Community (SADC) Tribunal in September 2010 took place in a legally doubtful manner. Since that time all parties enjoying standing in this forum have been denied those important legal remedies which are vital for certainty and predictability in a rules-based system. The detrimental effects go way beyond trade issues. The right of judicial review of disciplinary proceedings is affected. This is a retrogressive step with major consequences for how we are governed in southern Africa.

A third Southern African Customs Union (SACU) Summit of Heads of State and Government took place in March 2011 in Pretoria, South Africa. Discussion focused on the customs union’s challenges, including the revenue dependence of some of the smaller member states. In Swaziland matters are more complicated because of that state’s dependence on contributions from the SACU revenue pool to fund public expenditure. A decline in payments from the pool caused a crisis for the government and fuelled widespread unrest. These are to some extent sui generis SACU issues but they clearly demonstrate the linkages between development, national stability and regional governance. The region requires strong leadership on many fronts.

This summit identified five priorities for the SACU work programme. Regional industrial development to support regional economic growth and equitable and sustainable development is the overarching objective of the SACU work programme. The aim is to develop a strategy to address some of the fundamental industrial development asymmetries among the member states. The second area for the work programme is a revision of the revenue-sharing formula. The enormous development asymmetry in SACU finds expression in significant dependence on international trade taxes for fiscal revenue among the smaller member states, while South Africa views the import tariff as an instrument of industrial development, to be used selectively to protect specific industries. The revenue-sharing arrangement therefore continues to bedevil SACU deliberations on a deeper integration again. Trade facilitation was identified as the third priority work area. There is cause for concern, as member states appear to be increasing, rather than decreasing, border measures and controls. This runs counter to the very nature of a customs union. The fourth focal point for the work programme is the development of SACU institutions. As at the end of 2011, there is still no SACU Tariff Board or Tribunal. It does seem as if member states are not keen to develop the institutional infrastructure for effective management of this aspect of the customs union. Strong leadership, especially from South Africa, remains a complicated challenge. The final point of focus is the development of a common negotiating mechanism for negotiations with third parties.

Important focus in SADC was on the establishment of the Free Trade Area (FTA). The SADC FTA was launched in August 2008 with the aim of full liberalisation by all member states, except Mozambique, by 2012. Mozambique had negotiated a longer time frame until 2015. During 2011, SADC considered applications from several member states for derogations from their negotiated tariff phase-downs. An application from Zimbabwe to suspend its tariff phase-down for category ‘C’ products until 2012 was approved. Tanzania applied for permission to reintroduce duties on sugar and paper imports. It was agreed that a study to investigate the impact of the derogations should be commissioned to assess what the impact of the derogations would be on intra-SADC trade. While important, there are more fundamental concerns regarding the very presence of provision for derogations in a free trade agreement. Such matters are far better addressed via the safeguards provided for in the SADC Trade Protocol. Safeguards and trade remedies cannot, however, be introduced without proper prior investigations along the applicable General Agreement on Tariffs and Trade (GATT) rules. That reminds us of deep-seated problems facing regional integration in this part of the world: the incomplete and unconsolidated nature of legal instruments and the absence of proper monitoring mechanisms.

There was very little discussion of the proposed SADC customs union, which according to the Regional Indicative Strategic Development Plan (RISDP), should have been established in 2010. A review of the RISDP was completed late in 2011 by the SADC Secretariat for the period 2005-2010. While there is acknowledgement of achievements in a range of areas such as infrastructure development, the holding of democratic elections in several countries and customs cooperation, there is still strict adherence to the linear model of regional integration with unrealistic deadlines. Recognising that the RISDP is a strategic plan and not a legally binding instrument is important; review and adaptation are to be expected as circumstances change. Unfortunately this did not happen, with this review.

The second COMESA-EAC-SADC Tripartite Summit, at which the formal Tripartite FTA negotiations were launched, was held on 12 June 2011 in Johannesburg, South Africa. The T-FTA is to be anchored on three pillars: market integration, infrastructure development, and industrial development. The Roadmap for Establishing the T-FTA and the Negotiating Principles, Processes and Institutional Framework were endorsed by the Summit. The first phase of negotiations will cover a trade-in-goods agenda, tariff liberalisation, rules of origin, customs cooperation and customs-related matters, non-tariff barriers, sanitary and phytosanitary measures, technical barriers to trade, and dispute settlement. It has also been agreed that the movement of business persons will be negotiated as a separate track of negotiations alongside the first phase of negotiations. The second phase will cover trade in services and trade-related issues, including intellectual property rights and competition policy. A time frame of 24-36 months has been set for the completion of the first-phase negotiations. There is no specific time frame yet for the second-phase of negotiations. The negotiations will be conducted in a Tripartite Trade Negotiations Forum (TTNF) which held its first meeting in December 2011 in Nairobi, Kenya.

2011 also saw the Economic Partnership Agreement (EPA) negotiations between the African, Caribbean and Pacific Group of States (ACP) and the EU back on the agenda, with the EU setting a deadline for the completion of the negotiations. The 18 ACP countries that have yet to conclude an EPA have until 1 January 2014 to do so. Since 1 January 2008 the European Commission (EC) has applied an interim regulation to allow the ACP countries that have initialled an EPA to benefit from continued EU market access, but a new market access regulation announced by the EC means that countries, including Botswana, Lesotho, Mozambique, Namibia, Kenya, Zambia and Tanzania, which have either not signed or not implemented their agreements, will be removed from the market access regulation at the beginning of 2014. For the least developed countries in this group, the fall-back position is Everything but Arms (duty-free, quota-free access to the EU market), but for the developing countries in this group (e.g. Namibia and Botswana) this will mean regression to the Generalised System of Preferences (GSP), much less favourable and comprehensive access than they currently enjoy.

At the multilateral level, the Doha Development Round made no discernible progress during 2011. Despite this, WTO issues remain important for the region. Issues of WTO compatibility feature in SACU as regards, for example, Article 26 on infant industry protection; in SADC as regards the discussion on trade remedy provisions in the Protocol on Trade; and also in the context of the tariff liberalisation negotiations which are just starting for the Tripartite Free Trade Area.

South Africa launched its first National Development Plan (NDP) in November 2011. The NDP sets out the vision of the National Planning Commission for South Africa’s growth and development to 2030. In addition to strong focus on domestic matters such as the reduction of poverty and inequality, industrial development and employment creation, infrastructure development and the development of a capable state, the NDP also sets out a vision for South Africa’s global integration. Two distinct strands of the global integration strategy are African integration and South-South partnerships. Commitment to SACU, SADC and the T-FTA are articulated. As the regional hegemon in southern Africa, South Africa’s policies are important for the region’s integration agenda.

This book was launched at the 2012 tralac Annual Conference, held on 19-20 April in Cape Town, South Africa.

© 2012 Trade Law Centre for Southern Africa and the Konrad-Adenauer-Stiftung

Publication of this book was made possible by the support of the Trade Law Centre for Southern Africa (tralac) and the Konrad Adenauer Foundation. The views expressed by the authors are not necessarily the view of any of these institutions.

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