South Africa Trade Strategy: Rearranging the Deck Chairs? How do Southern and Eastern Africa feature in SA’s Trade Policy? SAIIA, Johannesburg 2nd August 2006 Mark Pearson

SADC Trade: Overview Bulk of imports of SADC countries from OECD. SACU countries source <2% of imports from rest of SADC and 17% from within SACU. Zambia and Malawi source 57% and 54% resp of imports from SADC (about 40% from SA). Generally, rest of SADC exports commodities to, and imports manufactured goods from, SA. About 19% of SA’s exports go to Southern Africa region, with 13% going to other SACU members. About 70% of intra-SADC trade comes under existing RTAs – SACU accounts for almost all but the COMESA FTA important for some countries. Overlapping RTAs and 19 bilaterals in SADC.

SADC Trade Protocol: Who needs it? South Africa joined SADC in 1994 – main interest has been in trade, finance and investment. Debate was whether to be a member of SADC or PTA/ COMESA. SADC favoured – propinquity factor? But South Africa has shown it does not need a RTA to expand trade in most SSA countries - led by an aggressive offensive by Shoprite/Checkers, Illovo, La Farge, etc. The companies are big enough to negotiate their own concessions and investment requirements. To expand trade, RSA does not need the SADC Trade Protocol, but it does need to open up its markets to the rest of Africa to build the AEC.

ESA RTAs SADC TP signed 1996, implemented 2000 – FTA by 2008 – target is 85% of trade zero-rated – remaining sensitive products zero-rated by 2012. Product-specific rules of origin – restrict trade. RISDP sets 2010 as goal for Customs Union and Common Market by 2015. COMESA FTA launched in 2000 – 11 countries implementing – liberal rules of origin but most disputes under FTA on origin. Customs Union by 2008, following a roadmap. EAC FTA and Customs Union by 2004. Derogation for COMESA/SADC now to 2010.

ESA RTAs – Achievable or Pipe Dream? SADC Customs Union – will it be an expansion of SACU? If not will SACU be disbanded or will there be two CUs? Will the two customs unions be linked? If SADC CU = SACU will the revenue sharing formula continue? What is SA’s position? Is a SADC CU practical or feasible? 5 countries in SACU. Six countries negotiating the COMESA CU – progress being made in implementing roadmap so on-target for 2008. Tanzania in EAC CU. 2 SADC countries not in, or not negotiating, a CU. Option – strengthen SACU and COMESA/EAC and agree on trade protocol between these? Will SA take account of developments in rest of Africa?

WTO and the ESA Region Countries in the Eastern and Southern African region have different interests at the multilateral level, reflected in memberships to different bodies. SA has offensive interests in Agriculture (G20) and defensive interests in NAMA (NAMA11). Most other countries in ESA region are LDCs - different interests to protect – e.g. preferential market access to EU and US (subject to origin being conformed) so if tariffs reduced for non-LDCs, preference margins are reduced. LDCs cannot take advantage of improvements in market access unless supply-side constraints removed – AfT and EIF. Also important – Food Aid, SPs, etc.

Effects of DDA breakdown on LDCs DDA a “round for free” for LDCs? Not really. Successful Doha outcome will “cost” all members but should cost LDCs less so they can migrate. LDCs have the most to lose from a failed round and from maintaining the status quo. Bilaterals favour the strongest partner. No development component so no improvement in SDT. Can the DFQM market access and liberalised Rules of Origin be salvaged? What happens to AfT and EIF?