| The trade protocol, which seeks to establish a free
trade area over a period of eight years for goods produced within the SADC region, has now
reached its implementation stage. In this regard, it is important to note that the main
principles of “fairness and equitability” enshrined in the SADC Treaty and the
dynamic principles of market competitiveness which take into account the comparative
advantages of the member states’ economies, are fully recognised and these constitute
the basis on which the main issues of the trade protocol were negotiated. |
SADC
will result in lower consumer prices to the public for the member states. This will happen
on the assumption that the businessmen i.e. the importers will pass on the lower
costs/prices to the consumers.
On the other hand, the impact of the removal of |
The protocol is essentially about the
creation of a free trade zone for goods produced in SADC and for this to happen there
ought to be an agreement among the member states on how to achieve this. This means
therefore that the Trade Protocol signed in 1996 was a framework agreement which left the
key elements for the free trade area (FTA) to be negotiated.
The implementation of the Trade Protocol has already been
inaugurated by the SADC Summit effective 1 September 2000. The understanding is that the
implementation will be applicable only to those aspects of the Trade Protocol where
agreement has been secured. Negotiations on the remaining areas will continue. The
outstanding issues include: Although rules of origin have been negotiated and agreed for
nearly all the traded products, a few group of products remain.
Textiles and Clothing: At
issue is the need for the least developed countries i.e. Malawi, Mozambique, Tanzania and
Zambia (MMTZ) to be granted derogation on the rules of origin for some textiles and
clothing products in order to facilitate access into the SACU market.
These countries are of the view that they cannot meet the
current stringent rules of origin on the textiles products and would therefore prefer what
is normally called “single transformation” which is much simpler than the
stringent rules which are normally referred to as “double transformation” rules
of origin.
Agreement has already been secured between Southern African
Customs Union (SACU) and the less developed countries on the derogation of using the
single transformation rules of origin for the MMTZ textile exports to the SACU market.
What has not been agreed include the administration and
regulations which will govern the derogation agreement for |
the
initial period of 5 years. At the same time Mauritius and Zimbabwe feel strongly that they
are facing a similar problem of stringent rules of origin for a number of synthetic and
man-made textile products whose inputs are not available in the SADC region at competitive
prices. These countries therefore are of the view that they should be incorporated into
the derogation arrangement. The issue is thus unresolved and remains outstanding for
future negotiations.
Motor vehicles: The main issue
is that the member states are of the view that the motor vehicle sector should be dealt
with in a special agreement to address both the market access and the
View on Trade
A.T. Pallangyo
developmental aspects of the sector. For this to happen, it is also necessary to negotiate
appropriate rules of origin which will address the concerns of the motor vehicle sector.
Member states have so far agreed in principle that in order
to address these concerns the matter will now be dealt with by a technical committee of
the sector which will consist of all the member states. The work of the committee is yet
another outstanding issue to be addressed in future.
The implementation of trade protocol will no doubt result
in varying impact on each of the member states and the magnitude will correspond to the
current and immediate future trade balances among the member states. In general terms,
reduced or zero import duties for products now being imported from within |
import duties to the governments, as a result of the creation of the FTA, could
immediately mean a fall in the tax revenue. For SACU countries as a group this loss will
be insignificant and accounts for less than one percent of the total revenue on import
duties collected by SACU mainly because of the equally small proportion of the share of
SACU imports from the rest of SADC.
For the non-SACU member states the impact of the full
removal of import duties for SADC imports is also small but of a higher proportion than in
the case of SACU. On average these countries will, in the short term, lose five per-cent
of their total import duty revenue as a result of the creation of the SADC FTA.
The loss of the import duty revenue however can only be
true in the short term, since on long term basis the dynamic impact of a larger SADC
market will attract new investments in the region which should be capable of raising more
revenue to governments to outweigh
the short-term revenue losses.
The impact of the elimination of import duties may also
affect negatively those manufacturers in SADC countries who are currently protected by the
proportionately high import duties.
The products which feature prominently in nearly all the
member states and which will thus be less protected because of the FTA include motor
vehicles, petroleum oils, food and beverages, textile products, tyres, furniture, paper
and paper products. The details on the exact list of products will vary from country to
country.
The author, A.T. Pallangyo, is an advisor to the
SADC Industry and Trade Coordination Division (SITCD) in Dar es Salaam, Tanzania. |
