by Virginia Kapembeza
The debate on trade in southern Africa has become heated, a fact reflected by the tension in related discussions at the recently ended SADC Annual Consultative Conference in Midrand, South Africa.
Some Southern Africa Development Community (SADC) member states accused South Africa of flooding their markets with its goods while escaping tariff barriers to imports. This, according to ZimTrade chief executive, Morrison Sifelani, has resulted in de-industrialisation in Zimbabwe, Zambia, Botswana, Mozambique and Tanzania.
The countries affected have called for fair trading practices within the region so that some member states do not experience unemployment problems as a result of de-industrialisation while others thrive.
The SADC Trade Protocol, still under negotiation, is seen as the blueprint for ensuring that fair trade practices prevail. Zambia, for example, is desperate to have the protocol signed as soon as possible so that its battling economy can be revived and with time, even thrive.
The Trade and Manufacturing working committee, comprising government ministers from the region and private sector, agreed that the playing field was not level because some countries have reduced and liberalised tariffs considerably but some still have very high protective tariffs; non-tariff barriers exist in all SADC member states and; export subsidies apply differentially therefore distorting fair trade.
Recommendations for redress include urgent negotiation and conclusion of interim measures by the member states seriously affected by the trade imbalance and bilateral trade agreements with the South African Customs Union (SACU) member states. The finalisation of the Trade Protocol is set for August when it is hoped the protocol would be ratified at the SADC Heads of State Summit in Maseru, Lesotho.
Another important issue to the ACC was the partnership of the private skate holders with l., government in policy formulation and implementation. Private sector representatives also suggested a revisit to the Terms of Reference of the proposed Trade Protocol in view of the fact that at the time these were established, it was at government level. Although it is a valid suggestion, those waiting out the signing of the protocol took this to mean further delay at their expense, particularly an outraged Zambia affected most by the lack of a Protocol.
Regional trade has also dominated other fora. An extraordinary meeting of SADC ministers of industry, trade and finance in Lusaka, Zambia late last year, heard that bilateral agreements between various countries were not equitable as they do not all provide equal access to the same market.
The issue of the Zimbabwe-South Africa textiles debate is yet another example of unfair advantage that the latter is enjoying regionally. Zimbabwe has no bilateral agreements with South Africa, since this was suspended three years ago, and faces difficulties in exporting its textiles down south due to high tariff barriers. As a result of lack of market for its textiles and high tariffs imposed by South Africa, the Zimbabwean textile industry is being deindustrialised.
Prof. Gavin Maasdorp of the Economic Research Unit at the University of Natal attributed trade imbalances to the World Trade Organisation (WTO) regulation which stipulates that “developed countries may enter into trade agreements with developing countries on the basis of non-reciprocity but would also have to open up to all developing countries, not just a sub-group.”
As a way of sidestepping these WTO pitfalls, trade experts have recommended to get to South African markets through a multilateral agreement as the latter is not subject to the WTO regulation SADC will be approaching the who as a regional grouping at its next major meeting.
In his paper prepared for a conference on regional integration held in Victoria Falls. Zimbabwe in February. Maasdorp says that South African exports have been assisted by its General Export Incentive Scheme (GElS) but he admits that under the wrong this is illegal and is being phased out, a move which will reduce the trade imbalance.
However, South Africa is being protectionist while drooping goods in neighbouring countries using subsidised incentives through GElS. say observers. This has led to the fear that many more industries in SADC counties will collapse due to the artificially low prices driven by massive export incentives.
Of particular concern is the 50 percent export incentive on vehicles and vehicle components provided by the Motor Industry Development Programmes, which seems set to continue for another seven years. There have been suggestions to persuade South Africa to remove regional exports from all export promotion and incentive schemes.
The SACU arrangement is such that currently no southern African country can enter into a free agreement with South Africa unless they go through SACU. Some analysts point out however, that the provisions of SACU could be changed since they were enacted during the era of apartheid.
Namibia, one of the countries in SACU is unhappy over the SACU arrangement. South Africa, as the dominant country, currently reaps most of the benefits of the union and the other countries are eager to have this changed.
The Namibian Trade and Industry deputy minister, Wilfred Emvula says lack of business will in South Africa is protracting regional integration efforts. Emvula said his country may consider pulling out of SACU if efforts at trade harmonisation failed.
In response to the recommendation for interim measures, the Lusaka meeting ministers late last year agreed to set up a regional negotiation forum where member states would make submissions of their requirements.
Any arising trade disputes would be referred to this forum. says the Executive Secretary of SADC, Dr. Kaire Mbuende. Another interim measure would be in the form of a financial facility to promote industrial trade in the less developed areas of the community. A study on the likely effects of the removal of tariff and non-tariff barriers is underway as a step towards the signing of the Trade Protocol.
Also speaking at the Victoria Falls conference. Dr. Simba Makoni, the Chief-Executive of Zimpapers and former SADC Executive Secretary said the community intends “to weave a fabric of relations that will enable the peoples. societies, economies and politics of our region, to function as one entity bound by the same values, governed by the same standards and managed by similar or compatible systems and institutions.”
At the same conference major constraints to increased intra-regional trade were attributed to foreign currency shortages, non-convertible currencies, poor payments and clearance systems. low product quality and standards, lack of incentives for exports, traditional external trading patterns and relationships, Prejudices against regional goods and unreliable supplies.
Dr. Makoni also questions why South Africans cannot buy Zimbabwean textiles, Mozambicans buy Botswana beef. Zambians import Malawi tea and Swazis buy oil from Angola. He, however, underlined the need for improved infrastructure to ensure trade grows.
“Although a lot has been done at the political level, there is still a lot of work to be done at the business level,” says an economic analyst. He also says that there is need to develop infrastructure, an important component of which is information, to bring institutions closer together. “Europe is no longer looking for partners at political level but are looking for business entities and South Africa alone cannot constitute a business partner,” noted the analyst.
President Nelson Mandela has also reiterated his country’s commitment to regional integration and economic development. He says there is need to capitalise on mutually beneficial possibilities and harmonise strategies on matters of common interest.
Opening the Third Session of Parliament in Cape Town on 9 February this year, Mande1a also said: “We should not tire of contributing our fair share to the building of a better world, if only because such an outcome is in the best interests of South Africa as well.”
Observers however, believe that South Africa is playing for time through rhetoric. Other SADC member states have bitterly condemned the country’s “failure to take the raising of tariff barriers to it’s neighbours seriously” and choosing instead to concentrate on its own national interests. Perhaps reflective of the inner turmoil facing his country, however, Mandela cautions that South Africa should be mindful of the limitations the country has as a nation and also the constraints they have to deal with.
Despite this, it is to be hoped that the words of Mandela will translate into positive action and Zambia, Zimbabwe, and other neighbouring states will be able to see clear benefits. Recently, South Africa imposed a customs duty deposit of 125 percent on all goods in transit, a move which is seen as further proof that the country has turned a deaf ear to the concerns of neighbouring states.
According to a source at the South African High Commission in Zimbabwe, the deposit has been imposed to guard against smuggling of cheap imports into the country. This was decided as a safeguard to local businesses because there have been cases where goods come into South Africa and are said to be destined for other countries but would disappear into the country. !
Steven Hwindingwi, Zimtrade Director 01Services says that while South Africa needs to protect its own businesses, the deposit increases costs of transporting goods through South Africa considerably and more so since it has to be paid in foreign currency.
Alternative routes, such as the Mozambican port of Beira, are currently inadequate because they do not have capacity to deal with increased tonnages. Beiraport, for example cannot handle more than 7 800 tonnes of goods. Namibia, however, has offered its ports which it says, has the Capacity to handle the goods at less cost than South Africa. .
The current situation in the region is one where there is need to balance regional interests with national ones and it can only be hoped that the Trade Protocol will reflect the requirements of all SADC countries.(SARDC)
