Presidents Thabo Mbeki of South Africa and Robert Mugabe of Zimbabwe
Originally uploaded by Pan-African News Wire Photo File.
The last Ordinary Summit Meeting of the Southern African Development Community (SADC) held in Maseru in August resolved that our region was moving too slowly with regard to the objective of regional economic integration.
It therefore asked a Task Team made up of the SADC Trade, Industry, Planning and Finance Ministers to meet as a matter of urgency to make proposals in this regard, for consideration by an Extraordinary Summit Meeting of SADC. This Extraordinary Meeting took place at Gallagher Estate, Midrand, a few days ago, on 23 October.
After detailed discussions, the Summit confirmed previous SADC decisions that we should still aim to transform the SADC region into a Free Trade Area (FTA) by 2008. This means that products and services originating from within the region would be traded among the SADC Member States free of tariffs.
The Summit also agreed that we should still aim to create a SADC Customs Union (CU) by 2010. This would mean that in addition to the duty free tariff regime within the FTA, the SADC region would maintain a common external tariff with regard to goods and services originating from the rest of the world. This means that the customs revenues collected by the Member States would be put into a common pool and then shared out according to an agreed formula.
It is obvious that these developments, the FTA and the CU, would represent major steps forward towards the economic integration of the SADC region. Of course, we must make the point that this integration is not an end in itself.
It is an important part of the objective shared by the SADC Member States, as rapidly as possible to reduce poverty and underdevelopment, improve the lives of all our people and achieve balanced and shared growth and development for the countries of our region.
It therefore follows that the steps we must take along the path to integration cannot be measured just against technical indicators but by the extent to which they contribute to our shared developmental goals.
Regional integration is rightly being pursued not just in our own region, but across our Continent, as a critical instrument to boost economic growth and raise living standards. But we need to recognise that regional integration in the developing world has all too often been a graveyard of failed expectations. It is therefore important that our region carefully prepares the ground to make any integration steps it takes sustainable.
Currently available figures indicate that in the six or so years up to 2003, intra-regional SADC trade increased from 20% to 25% of total regional trade. Undoubtedly, this represents progress. But a critical question we must answer is - what is the pattern of this trade?
All indications suggest that much of it continues to be made up of exports of manufactured goods from South Africa to the rest of the region, with a much smaller volume of imports into our country from the rest of the region. In reality, the trade imbalance in our region remains virtually unchanged, despite the measures that have been taken to implement the 1996 SADC Trade Protocol that directed that we should create the FTA.
Why is this so? It cannot be fundamentally because of tariffs. This is because our country has, as a result of the implementation of our obligations under the SADC Trade Protocol, already removed duties on over 90% of goods originating from SADC countries.
Unquestionably, the fundamental reason for this imbalance is due to underdeveloped production capacity and inadequate infrastructure in the sister SADC Member States - in other words, the historically evolved supply side capacity constraints. (This underlines the importance of ensuring that as we work to promote the economic integration of our region, the obviously dominant position of the South African economy does not serve further to entrench the underdevelopment of the other SADC Member States.)
What this highlights is that any programme to promote greater trade integration in a region such as ours must be complemented by programmes of sectoral cooperation focused on the creation of the conditions that will enable producers to emerge in the SADC countries who would be able to take advantage of the additional market access opportunities that regional integration would create.
Practically, this means that we need to give clear guidelines for an FTA Work Programme to identify and implement a range of complementary programmes that are necessary to make a SADC FTA function effectively as a tool to promote equitable and mutually beneficial developmental economic relations among us.
Among other things we need to ensure that:
we are on track to promote macro-economic convergence around agreed indicators;
our infrastructure development cooperation programmes, Spatial Development Initiatives and sectoral programmes make the necessary progress;
we begin to achieve some level of harmonisation of industrial development strategies and competition policies, as called for in the 1996 SADC Trade Protocol; and,
in general, we carefully elaborate a detailed and realistic but muscular Activity Matrix necessary actually to create the FTA, with the processes in place to achieve the objective of balanced, mutually beneficial regional economic integration.
Everything we know from global experience, our actual regional reality, as well as general economic postulates, has convinced us that only by laying a solid basis for a properly functioning FTA will we be in a position to advance towards a Customs Union (CU).
Without establishing a proper basis for duty free trade within the SADC region, and putting in place programmes that will boost the capacity of our partner SADC countries to produce tradable goods, resulting in better trade balances within our region, a common Customs Union external tariff would be meaningless.
The Summit agreed to authorise a study to identify an "appropriate model" for a SADC Customs Union. Necessarily, the study will have to canvass thoroughly all issues and options. Obviously, afterwards, we will have to allow time and space for all our countries to participate in the elaboration of a practical programme of action for the creation of a SADC Customs Union, based on the necessary analytical rigour to ensure that we do not make a false start.
Inevitably, among others, these negotiations will have to answer such questions as:
how do all of us disengage from all regional economic structures outside SADC;
how do we relate to all other extra-SADC trade and economic agreements into which we might have entered; and,
how do we ensure that the Economic Partnership Agreements currently being negotiated with the European Union (EU) by all SADC Member States except South Africa, do not serve as an obstacle to the envisaged SADC Customs Union?
Once again, a series of complementary measures in areas of sectoral cooperation and macro-economic convergence would need to be identified and implemented to achieve the developmental objectives of a SADC Customs Union.
The timeframes we set ourselves earlier, relating to the FTA and the CU, were based on our estimation of the time it would take us, based on perceived objective reality, to achieve these outcomes. It is only logical that our experience, or dynamic objective reality mediated by practice, will serve as our teacher, telling us whether the circumstances necessitate any changes in our target dates.
With regard to the CU, because of our commitment to balanced and shared economic development in our region, our government acknowledges and accepts the need for an asymmetrical distribution of the common customs revenues that would accrue to the Customs Union, using, inter alia, such new institutions as a development fund to enhance the trade capacity of all our Member States, especially the most disadvantaged.
To avoid unnecessary tension and conflict among ourselves in future about such compensation for various Member States as may be necessary as a result of the establishment of the SADC CU, it would be important that the Member States agree upfront that these costs would be shared among the Member States on an agreed basis, and strictly defined in terms both of timeframes and relative dimension, taking into account the interests of all Member States.
Fundamental to our approach with regard to all the issues we have discussed, we must also emphasise that we would prefer options that would allow us to maintain the unity of SADC. In this regard, we can never forget that SADC was forged in struggle for freedom from colonial and apartheid rule, among a group of countries that have been part of one region that has had meaning in more than a mere geographic sense since, at least, the third quarter of the 19th Century.
It is clear that we have major tasks ahead of us, to elaborate and implement the organically related measures that will enable us to achieve the critically important, balanced and equitable regional integration that is a fundamental condition for:
the sustained and sustainable development of the SADC region;
our shared success in freeing the ordinary working people of our region from the scourges of unemployment, poverty and underdevelopment;
creating a firm basis for our region successfully to respond to the challenges of globalisation, including strengthening South-South relations of equitable and mutually beneficial cooperation;
the creation of the possibility for us to make our necessary contribution as a region to the vitally important project of African integration and unity; and, our related capacity to contribute to the emergence of a new world order that would fully restore Africa and the African Diaspora to their rightful place among the world community of nations.
Our regional organisation, SADC, faces the critically important task to respond to these historic challenges. I am certain that our regional leadership will not fail our peoples and the peoples of our Continent and the African Diaspora in this regard, as it did not fail them in the difficult struggle to defeat colonialism and apartheid.
Centrally, success in this regard must also include the development of our own indigenous regional capacity, including in the SADC Secretariat and other structures of the Community, actually to help us design and implement correct and realistic programmes, setting ourselves realistic timeframes, determined as we have always been, to achieve regional and continental integration and unity as speedily as possible.
There is a well-known and apparently contradictory Latin saying - festina lente! - make haste slowly! With regard to the strategically and historically important matter of the economic and other integration of the SADC region of Africa we must, wisely, consciously, and on a sustained basis, make haste slowly, consistent with our firm determination to realise the objective of regional unity.
After a fruitful and focused discussion, informed by this perspective, the SADC Extraordinary Summit Meeting directed that the Ministerial Task Team should continue its work and prepare the necessary and realistic work programmes to advance both the FTA and the CU, as well as the related areas, making certain that our region carefully prepares the ground to make any integration steps it takes sustainable.
Undoubtedly, all participants at the Summit Meeting will always remember it for the important contribution it has made to respond to the shared desire to accelerate the process of regional integration, and thus put in place one of the critical building blocks we need to achieve the historic objective of African unity.