Trade Liberalization

The Southern African Development Community (SADC) Protocol on Trade that established the SADC Free Trade Area (FTA) entered into force in 2000 upon ratification by two-thirds of Member States. The Protocol included, among other provisions, tariff phase-down schedules for each Member State. Implementation of tariff phase-downs commenced in 2001 and was expected to be completed by 2012, with the exception of Mozambique's offer to South Africa that will be completed by 2015. According to the tariff phase-down schedules, Member States were expected to liberalize 85% of tariff lines by 2008 and reach 100% coverage by 2012.

This study is a part of the wider consultative process of Southern African Development Community (SADC) Protocol on Trade which has commenced with 2004 Mid-Term Review of the Protocol. In August 2010, the SADC Ministerial Task Force on Regional Economic Integration meeting noted that the review of Rules of Origin (ROO) for textiles and clothing was still outstanding and that it was important for the matter be resolved expeditiously. The importance of the textiles and clothing industry covering items Harmonized System (HS) Chapters 50 to 63 to the economies of the region was also noted and it was agreed to address the problems arising out of application of existing rules, as they seem to struggle to promote intra-regional trade.

The WBDB ranking assesses country performance across nine indicators related to the Ease of Doing Business, focusing on regulatory issues. One of the concerns about Botswana's 2011 result is that the country ranking deteriorated on seven of the nine indicators (it was unchanged on one and improved on one). The deterioration was particularly marked on "Starting a Business", where Botswana's ranking dropped by seven places.

The issue of business regulations (and deregulation) and their impact on economic development and growth has taken an increasingly high profile in development discussions in recent years. This reflects the success of high profile and data-rich exercises such as the World Bank's annual Doing Business assessment, as well as research and analysis that clearly demonstrates the impact of regulation on growth. Hence the need for regulation to become "smart", so that it brings about genuine public interest benefits without unduly restricting business development.

The Southern African Development Community (SADC) rules of origin in the textiles and garments sector have been a source of considerable controversy and conflict within SADC. Provisional agreement was reached on a highly restrictive rule of origin that made separate and more lenient provisions for a number of the poorer Member States. However, the recent expiry of this provision, together with differences arising within the 'SADC group' in the recent Economic Partnership Agreements (EPAs) negotiations and major differences between the Common Market for Eastern and Southern Africa (COMESA) and SADC rules in this sector that would have to be resolved as part of any move towards a Tripartite Free Trade Area (FTA) have brought the issues to the forefront once again. This briefing note summarizes and explains some of the main issues, and possible ways to deal with them. It points out the critical role of SADC Member State tariff structures as an underlying source of continuing conflicts.

Trade policy is one of many tools for improving productivity, increasing competitiveness and promoting long-term economic development. It is about far more than tariff negotiations. Similarly, SADC is about much more than implementing and extending the Trade Protocol. Great progress has been made; but much more could be done, in a much broader range of areas, to achieve more meaningful and productive economic integration—globally and in the region. Despite substantial reform at the Member State and SADC-wide levels, trade remains costly and continues to be hampered by well-intended initiatives whose unintended negative consequences for the region's development are insufficiently appreciated.

This paper seeks to provide an overview of the South African private sector’s perspectives on priorities to be discussed under the TIDCA. The paper begins by giving an analysis of the TIDCA and then considers South African private sector perspectives of the nature and usefulness of the TIDCA in the second section. It also highlights some of the key regulatory challenges South African private sector faces in conducting business with the US and what the South African government could do to mitigate these challenges.

This guide is intended to cover all aspects of the SADC Protocol on Trade that businesses must understand in order to trade better with each other under the terms of the agreement.