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Sub-Regional Conference on Improving Industrial Performance and Promoting Employment in SADC Improving Regional Integration and Co-operation to Facilitate Trade Gallagher Estates, Mid-Rand 6-8 December 2006 Mark Pearson. Economic Reasons : Larger Markets

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slide1

Sub-Regional Conference on

Improving Industrial Performance and Promoting Employment in SADC

Improving Regional Integration and Co-operation to Facilitate Trade

Gallagher Estates, Mid-Rand

6-8 December 2006

Mark Pearson

slide2

Economic Reasons:

  • Larger Markets
  • Cross-border activities – goods and services
  • More attractive investment opportunities
  • Regional solutions to supply side constraints
  • Security Reasons:
  • Structures to resolve potential conflict and post conflict situations
  • Socio-Cultural Reasons:
  • Common histories and traditions

Why Regional Integration?

slide3

PTA/COMESA – Lagos Plan of Action and closely aligned to UNECA regional structures (MULPOC) – reason for technical nature?

  • SADCC/SADC – political cooperation of FLS to address economic position vis-à-vis RSA, apartheid and independence of Zim/Namibia.
  • EAC – long history of economic cooperation – revival of EAC which collapsed in 1977.
  • SACU – CU since early 1900’s – revenue sharing main BLNS benefit?

The Story so Far:

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Different focus of different RECs: ECOWAS and PTA, had a strong focus on economic integration; IGADD and SADCC, had more a focus on functional cooperation. Countries becoming members of more than one REC not a major policy coherence problem until Member States expanded the mandates – overlapping mandates lead to what the World Bank refers to as the "Spaghetti Bowl" and what the AU refers to as "institutional cacophony".

The Story so Far:

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2006 - Assembly of African Union, Banjul, Gambia, suspended recognition of new RECs other than 8 recognised (ECOWAS, COMESA, ECCAS, SADC, IGAD, UMA, CEN-SAD and EAC). Urged RECs to co-ordinate and harmonise policies and programmes and with the AU Commission to accelerating Africa’s integration process.

  • RECs fall away with creation of the AEC - harmonisation of RECs important for AEC.
  • Is multiple membership illogical?

Addressing Overlapping Membership

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Not added IGAD, or ECCAS

Rwanda

Burundi

SADC

Djibouti

Eritrea

Ethiopia

Sudan

COMESA

Uganda

Kenya

Tanzania

EAC

Mozambique

Malawi

Zambia

Zimbabwe

Angola

IOC

SACU (TDCA)

Swaziland

Mauritius

Madagascar

Comoros

Seychelles

Reunion

Botswana

Lesotho

Namibia

South Africa

SADC

EPA group

Eastern & Southern Africa

EPA group

Egypt

Libya

D.R. Congo

CEMAC

Euro Med

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SADC Trade Protocol – implemented in September 2000. Target to have a partial FTA by 2008 (85% product coverage), Customs Union by 2010 and a full FTA by 2012.

  • The 5 SACU MSs have fully liberalised their non-sensitive trade with all other SADC members as per the agreed asymmetry principle. 11 of SADC’s 14 Member States are implementing the Trade Protocol. Madagascar submitted tariff phase own offer in October which is being considered by SADC MSs.

SADC Trade Protocol

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TP MTR – problems with implementation - delays in gazetting the annual reductions; discrepancies with original negotiated offers; suspension of tariff reductions due to economic constraints. Audit due in early 2007.

  • MTR showed that complex product specific rules of origin prevents region from fully utilising its trade potential. MSs committed to revise and simplify rules of origin.

SADC Trade Protocol MTR

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Free Trade Area: negotiation and implementation and increased intra-regional trade.

  • Air Traffic Liberalisation: COMESA, SADC and EAC cooperated to implement Yamoussoukro Agreement.
  • COMESA/SADC/EAC Task Force: Establishment of Task Force to harmonise implementation.
  • Conflict Resolution: RECs have played a lead role in arbitration of conflicts and post-conflict resolution.
  • SADC Power-pool: Protocol on sharing of electrical power.
  • Yellow Card: Regional 3rd party vehicle insurance run by the insurance companies.
  • Trans-frontier Parks: Mz/SA/Zim and Zim/Bot/Zm

Success Stories:

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Customs Union

  • Trade Facilitation Instruments:
    • Carriers license, vehicle dimensions and axle-load limits, customs bond guarantee system, vehicle insurance.
    • One-stop-border posts (single-window systems).
    • Harmonised customs procedures – integrated cross-border systems.
  • Regional competition policy.
  • Finance and Investment Protocol - harmonised regional tax incentives and investment policies and harmonisation of monetary policies.

Potential Success Stories:

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Regional integration not regional rivalry:

    • Need to cooperate in the real sense – joint policy making and joint implementation so that the AEC goal is met.
    • Conflict between countries.
    • Change in mindset – walk the talk – no policy reversals and implement what has been agreed.
  • Failure to capitalise on opportunities:
    • History of bad governance – corruption and a lack of transparency and accountability.
    • Poor policies coupled with bad timing and sequencing.

Experiences not to repeat:

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Thank You

Mark Pearson

Regional Trade Facilitation Programme

PO Box 317

Persequor Park

Pretoria 0020

Phone: +27 12 349 1197

[email protected]

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