Topics publications: Trade law and regulation
Trade Reports
Burundi: a perspective on the Tripartite Free Trade Area negotiations
The objective of this paper is to firstly set the background for a discussion and analysis of Burundi and its merchandise trading background before presenting a more detailed analysis of this trade and possible implications for Burundi of wider trade and economic integration. Specifically, for the Tripartite Free Trade Area (TFTA) Burundi is expected to negotiate with the Southern African Customs Union (SACU), Angola, Eritrea, Ethiopia, Mozambique and the Democratic Republic of the Congo (DRC). Emphasis will be placed upon this negotiation in the final sections of the paper. The paper will also introduce some background principles to assist officials in understanding and engaging in these negotiations.
Basically, we find that within the set of countries that Burundi will negotiate with, the real focus must be on South Africa. This economic and trade powerhouse dominates regional trade, and as the key member of SACU with its common external tariff, becomes the key focus for negotiations in the TFTA. Indeed, the only other reported exports by Burundi to SACU are coffee exports to Swaziland, exports that are duty free in any event.
Burundi’s other negotiating partners raise several issues. Angola and Burundi report no common trade in recent years; the same applies to Eritrea and Burundi. There is limited reported trade between Burundi and Ethiopia and Burundi and Mozambique. That leaves its neighbour, the Democratic Republic of the Congo (DRC), where a great deal of reported and probably some informal and unreported trade takes place. This presents Burundi with a challenge, as the severely limited negotiating intent and capacity in the DRC is to be spread across all other 24 members of the TFTA. Similarly, Angola, Ethiopia and Eritrea are scheduled to negotiate with the full suite of TFTA partners, and getting them to focus on Burundi’s interests may be problematical.
Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.
Trade Reports
Trade Agreements as Part of the Law of the Land: The Example of SACU and Namibia
The Constitution of the Republic of Namibia contains in Article 144 a provision which purports to make international agreements part of the national law. It reads:
Unless otherwise provided by this Constitution or Act of Parliament, the general rules of public international law and international agreements binding upon Namibia under this Constitution shall form part of the law of Namibia.
The implications of this provision for the domestic application of international trade agreements to which Namibia is a party, has never been ruled upon. This paper investigates some of these implications and tries to clarify the position of trade agreements in Namibian law. It will refer to theoretical issues pertaining to the relationship between international and national law and will seek guidance from the Namibian Constitution. Some of the trade arrangements of which this country is a party, including the 2002 Southern African Customs Union (SACU) Agreement, will be examined. The focus is on international trade agreements.
The objective is to draw attention to bigger picture issues around compliance with international (including regional) trade obligations by Southern African states. This matter has become increasingly relevant as the rules-based nature of the Regional Economic Community (REC) regimes is being questioned, and as concerns about non-compliance by governments and the absence of remedies for private sector firms and traders are being raised.
Namibia provides a useful case study for investigating these issues. Its Constitution, which is supreme law, contains a unique and international law friendly provision; while private parties have begun to invoke trade agreements in commercial disputes before domestic courts. Namibia is a member of the WTO, of SACU as well as SADC. It is presently involved, as a member of SACU, in the negotiations to conclude the Tripartite Free Trade Agreement. Negotiations on the Continental FTA (CFTA) will be launched in June 2015.
Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.
Trade Reports
The New Protocol for the SADC Tribunal: Jurisdictional Changes and Implications for SADC Community Law
The Southern African Development Community (SADC) will get a new Tribunal. This will happen because the Summit of SADC Heads of State and Government so decided. SADC has been without a functioning Tribunal since 2010. In 2008 the Tribunal gave a ruling against Zimbabwe in a dispute involving the expropriation of private land without compensation and found Zimbabwe to be in violation of Articles 4 and 6 of the SADC Treaty. These provisions oblige Member States to act in accordance with democracy, human rights and the rule of law.
The 2008 decision by the Tribunal in favour of the applicant, a private party, was never implemented. When the matter was referred to the SADC Summit (which is responsible to take action in cases of non-compliance) it decided, instead, to develop a new Protocol for the SADC Tribunal. The Summit also decided not to renew the terms of the serving Judges and not to appoint new Judges; thereby effectively suspending the Tribunal. Thus the Tribunal, despite not being formally abolished, could not hear any new cases and could not finalize pending matters. Legal questions about the interim period and transitional arrangements were, however, not clarified.
At the SADC Summit of August 2014, a new Protocol was adopted and signed. It may, however, take quite some time (perhaps years) before SADC will have an active judicial organ again. The new Protocol shall enter into force thirty days after the deposit of the Instruments of Ratification by two-thirds of the Member States. Ratification takes place in terms of the national constitutional procedures of the Members. This may, in some instances, involve national legislatures. At the time of writing (January 2015) nine Members have signed, but apparently no ratifications have yet been deposited.
The new Protocol will bring about far-reaching institutional and practical modifications. Such changes should be founded on sound legal principles and procedures. This did not happen. The Summit did not, for example, invoke the amendment clause in the original Protocol, which would have been the correct procedure. The Summit’s modus operandi raises serious questions about the binding nature of SADC legal instruments, as well as the functioning of SADC as a rules-based arrangement. The dispute settlement dimension of SADC and the enforcement of its legal instruments during the interim period (between the ‘suspension’ of the previous Tribunal and the entry into force of the new Protocol) are de facto and de jure in limbo.
Where do these developments leave the Organization and what are the prospects for the enforcement and development of SADC law? How will essential rights be respected and who will be able to bring applications to the Tribunal? What has been lost (or gained) and what are the bigger picture implications? How will the SADC FTA and trade among the Members be affected? This paper discusses these issues and the implications of the recent developments. The document which will be analysed is the final and official version that the Summit adopted and which nine member states have signed.
Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.
Trade Briefs
The SADC Model Bilateral Investment Treaty Template: Towards a new standard of investor protection in southern Africa
Trade and investment are the two fundamental pillars of international economic relations. Almost all international trade flows are governed either by bilateral or regional trade agreements or by the multilateral trade rules established under the various World Trade Organization (WTO) agreements. Efforts to establish a multilateral governance framework for cross-border investment, however, have thus far failed to bear fruit. In the absence of multilateral rules on foreign investment, states have resorted to using bilateral investment agreements to establish legally binding rules on the treatment of foreign investment. While some of these agreements take the form of dedicated investment chapters in comprehensive trade agreements, the vast majority are in the form of bilateral investment treaties (BITs).
BITs are binding international agreements between two states that establish the terms and conditions for private investment by nationals and firms of either state in the territory of the other. In particular, BITs grant investments made by an investor of one contracting state party (contracting party) in the territory of the other, a number of guarantees which typically include fair and equitable treatment, full protection and security, protection from discriminatory treatment, protection from expropriation and free transfer of funds. Notably, BITs also provide for international investor-state dispute settlement.
Southern African countries are no strangers to the use of BITs. According to the United Nations Conference on Trade and Development (UNCTAD), every one of the 15 member states of the Southern African Development Community (SADC) is party to at least one BIT, and together they have signed over 250 BITs to date, of which over 100 are currently in force. The BITs concluded by SADC member states largely follow the form, structure and content of traditional BITs.
The publication in 2012 of the SADC Model Bilateral Investment Treaty Template (Model BIT) provides a clear example of a shifting approach to investment governance in southern Africa. This Trade Brief shows how the Model BIT encapsulates new thinking about investment governance by recommending an approach to investment governance that deviates quite sharply from the status quo provided by the BITs currently in force in southern Africa. In particular, the brief examines the specific suggestions and recommendations the Model BIT makes with regard to individual BIT provisions and demonstrates how these differ from the typical form such provisions take in the BITs previously concluded by SADC member states.
Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.
Trade Briefs
SADC Summit’s emphasis on industrial development: implications on practical policy formulation
The curtain came down at the 34th Annual Summit of the Southern Africa Development Community (SADC) with special emphasis on the importance of beneficiation of exports.
The Summit was held under the theme: “SADC Strategy for Economic Transformation: Leveraging the Region’s Diverse Resources for Sustainable Economic and Social Development through Value Addition and Beneficiation.”
An extract from the Summit Communiqué reads: “Summit directed that industrialization should take centre stage in SADC’s regional integration agenda. To this end, Summit mandated the Ministerial Task Force on Regional Economic Integration to develop a strategy and roadmap for industrialization in the region”.
A lot of policy questions arise from this strong emphasis on industrialisation. What is the relationship between the region’s trade and industrial policies? What are the resource endowments of SADC member states, labour policies, investment regimes, and size of economies? How feasible is it to structurally transform the SADC economies? What is the role of the revised Regional Indicative Strategic Development Programme in championing the new mandate?
Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.
Trade Reports
Legal and institutional aspects of the SADC Economic Partnership Agreement
It has taken ten years to negotiate the SADC Economic Partnership Agreement (SADC EPA). Negotiators of the Southern African Development Community (SADC) parties initialled the text of the Agreement with the European Union (EU) during a joint negotiation session in Pretoria, South Africa on 15 July 2014. These were protracted negotiations which required answers to several technical and political problems. Export taxes, the regional MFN clause and special agricultural safeguards were particularly contentious issues.
This paper discusses the legal and institutional aspects of the SADC EPA. This is a rules-based arrangement of a particular kind and its legal and institutional features are therefore important. Implementation has, for example, to be married to obligations in other regional trade arrangements to which the parties belong.
The scope and architecture of the Agreement, the identity of the parties, the implementation of obligations, trade remedies, settlement of disputes, the entry into force, as well as the final provisions will be examined. This is done through an analysis of the provisions contained in the consolidated text which became available after the initialling. Once the scrubbing of the text has been completed, it still has to be signed and ratified in order to enter into force.
Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.
Trade Reports
Nigeria: trade and trade-related issues
The objective of this paper is to provide information on Nigeria and its merchandise trading profile and regime. Nigeria is a middle-income country with a Gross Domestic Product (GDP) of around $265 billion, a figure the same as Egypt’s but below South Africa’s $385 billion.
However, in early 2014 Nigeria rebased its GDP calculations for new estimates that put Nigeria’s GDP in 2013 at $510 billion, an 89% increase on the estimates at that time. The revision means Nigeria leapfrogs South Africa to be Africa’s largest economy. It rises to 24th in the list of the world’s big economies, behind Poland and Norway and ahead of Belgium and Taiwan.
Oil-rich Nigeria has been hobbled by political instability, corruption, inadequate infrastructure, and poor macroeconomic management, but in 2008 it began pursuing economic reforms. Nigeria’s former military rulers failed to diversify the economy away from its over-dependence on the capital-intensive oil sector, which provides 95% of foreign exchange earnings and about 80% of budgetary revenues.
However, since 2008 the government has begun to show the political will to implement the market-oriented reforms urged by the International Monetary Fund (IMF), such as modernising the banking system, removing subsidies, and resolving regional disputes over the distribution of earnings from the oil industry. GDP rose strongly in 2007-12 because of growth in non-oil sectors and robust global crude oil prices. Nigeria ranks tenth in the world for oil production and eighth as an oil exporter, leading Africa in both production and exports.
The 2012 World Trade Organisation (WTO) trade data shows that during 2012 exports were valued at $115,000 million while imports were a much lower $51 000 million. Exports increased by 12% during the 2005-2012 period while imports increased by a slightly higher 14%. In 2012 the annual changes were reversed and exports had a 1% increase while imports decreased by 9%. Oil products completely dominate exports while manufacturing products equally dominate the imports.
Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.
Trade Briefs
Shaping a 21st Century Trade Integration Agenda for Africa
The SADC Summit of Heads of State and Government takes place this week (17-18 August 2014). This occasion presents an important opportunity for decisive deliberations on an integration agenda that reflects and addresses the challenges of the 21st century.
This tralac Trade Brief outlines some of these challenges and identifies priorities for an integration agenda to deliver the development aspirations of the SADC Treaty. We urge SADC to prioritise the following complementary and mutual reinforcing areas:
(a) Making rules of origin more flexible and less restrictive
(b) Advancing a ‘services regulatory reform’ agenda
(c) Supporting interventions on trade facilitation
(d) Implementing the infrastructure development master plan
(e) Embracing a ‘deep integration’ agenda through a comprehensive FTA
(f) Fostering a ‘rules-based trade governance’ agenda with an effective dispute settlement mechanism
Two tralac submissions were made during the preparatory process leading to the 2014 SADC Summit covering trade issues in the review of the RISDP and the dispute settlement mechanism, including views on the architecture of the revised SADC Tribunal. Click here to download the submissions.
Trade Reports
The SADC Protocol on Trade in Services: What is necessary to support the establishment of an integrated market?
In August 2012, the Members States (MS) of the Southern African Development Community (SADC) adopted the Protocol on Trade in Services. The preamble to the Protocol provides for the establishment of “an integrated regional market for services”, to unlock the potential of the region’s services market so that businesses and consumers may take full advantage of the opportunities that this Protocol presents.
The establishment of an integrated market involves a complex collection of issues – from setting minimum regional standards and prescribing national administrative procedures to creating regional and national institutional settings so as to ensure and maintain regulatory cooperation and to address potential disputes. Many different procedures should be undertaken simultaneously. SADC MS have adopted various other protocols on specific services sectors.
This sectoral approach of SADC dates back to the days of its predecessor, the Southern African Development Coordination Conference. The challenge now created by the Protocol on Trade in Services is to find synergy between different policy and regulatory streams (i.e. the SADC Protocol on Trade in Services and other SADC Protocols on specific services sectors) to provide a coherent framework for an integrated market for different services sectors. The interface between services sector regulation and other regulatory areas such as competition policy is extremely important in this context.
This paper outlines the rationale for services sector regulation at the national level. It then considers the objectives, scope and application of the Protocol on Trade in Services and the implications it may have for trade negotiations with third parties. The relationship between the Protocol on Trade in Services and other SADC Protocols on specific services sectors is discussed with specific focus on infrastructure services sectors.
A key consideration in the context of this discussion is to what extent the services sector protocols have been implemented, because they all include provisions that relate directly to issues covered in the Protocol on Trade in Services. The important question is how will this be dealt with in the current negotiation process? Finally, the paper considers the requirements for the implementation of the Protocol on Trade in Services.
Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.
Trade Reports
Ghana – trade and trade related issues
The World Bank reports that Ghana is a medium sized country in west Africa, with a land area of around the same size as the United Kingdom or Uganda. The reported population in 2012 was around 25 million (the same as Mozambique and a bit more than Australia), giving the country a population density of 109 inhabitants/km². This density is very similar to Hungary and Cuba. The Bank also reports Ghana as being a lower middle income country with a GDP of around $40 billion, a figure sandwiched between Kenya and Ethiopia. This leads into a Gross National Income (GNI) average of $1,550 per capita, similar to that in India, Vietnam and Lesotho.
The Food and Agricultural Organisation (FAO) reports that some 68% and 32% living in the rural and urban areas respectively. About 52% of the labour force is engaged in agriculture, 29% in services and 19% in industry. Approximately 39% of farm labour force is women. Agriculture contributes 54% of Ghana’s GDP and accounts for over 40% of export earnings while at the same time providing over 90% of the food needs of the country. Ghana’s agriculture is predominantly smallholder, traditional and rain-fed.
Farming systems vary with agro-ecological zones, although staple crops are often mixed-cropped while cash crops are usually monocropped. In the forest zone the tree crops of cocoa, oil palm, coffee and rubber are importance, along with the food crops of maize, plantain, cocoyam and cassava. The middle belt is mainly maize, legumes, cocoyam or yam, with tobacco and cotton being the main cash crops. Cotton and tobacco are also important in the northern sector, where the food crops are mainly sorghum, maize, millet, cowpeas, groundnuts and yam. Rice is important in all the zones. Livestock farming is associated with crop farming, with poultry in the south, cattle production in the Savannah zones and sheep and goat production widespread.
Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.