FTA launch boost for regional integration
Business Reporter
THE launch of the Sadc Free Trade Area is a momentous occasion for the region as it makes further strides towards regional integration. The Sadc FTA further buttresses the Trade Protocol, which entered into force in January 2000 after the adoption of the Maseru Trade Protocol in 1996. Since 2000 a lot of progress has been made in the area of promoting free trade within the region.
Eight years on the region has every reason to celebrate as 85 percent of all its intra-regional trade is duty-free while the remaining 15 percent is still to be liberalised fully by 2012.
A major step in achieving this goal is expected to take place in 2010 with the establishment of the Customs Union.
While the launch is a milestone for the whole region, a lot still rests on the regional members, who need to shape up to ensure that the process is carried through to fruition.
For Zimbabwe the coming into force of the free trade area brings with it both positives and negatives.
On the positive side, the free trade area is likely to bring relief to the ordinary Zimbabweans as it would ensure the smooth flow of goods into Zimbabwe from neighbouring countries.
This is most important at this time when the country is faced with shortages of basic foodstuffs. A lot of Zimbabweans have been going across the country’s borders to Mozambique, Zambia, South Africa and Botswana to buy various commodities.
With the coming into force of the FTA barriers to trade are removed and where processing of imports at the country’s border posts used to be a hassle for many importers, the FTA brings with it more relief as duties are removed.
This is likely to result in the flooding of goods on the local market and in turn prices are expected to stabilise.
The FTA is also going to assist in ensuring that the goods being brought into the country are quality goods as companies will need to focus more on quality and competitiveness in terms of pricing.
An independent economist Mr Emmanuel Chinyaukira said the Free Trade Area is a welcome move considering the immense potential and optimism for the country’s economic turnaround.
"On the supply side the industry is not producing enough, so we are going to see an improvement of goods in the market," said Mr Chinyaukira.
However, Mr Chinyaukira said we have the industry to protect which is currently struggling and as a country, we should not be a market for other countries goods.
"We should also export thereby earning the country the much needed foreign currency. If our industry were operating at a full scale, then we might have a greater market share," he added.
Mr Innocent Zimuto an economist with the local company said that the FTA is what makes the European economy tick.
"The FTA is the only solution to the revival of our economy as Africans and it is a historic step toward the vision of a fully integrated economic region," said Mr Zimuto.
He noted that the issue of using the single currency by 2018 is a welcome development since it will lure more investors by having a stable currency.
For local companies that are into exports, the widening of tariff reduction should present further opportunities to expand market share as well as increase production, which in turn will promote job creation and foreign currency inflows.
This is more important in terms of value-addition, a practice that has been discussed at length but has not been fully explored by local companies.
On the downside however the coming into force of the FTA has come a little too soon especially for local businesses as the country continues to de-industrialise due to a challenging economic environment.
Lack of credit lines, a hyperinflationary environment, foreign currency shortages and price controls have been some of the challenges that businesses have had to grapple with.
Labels: REGIONAL INTEGRATION, SADC FREE TRADE AREA
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SADC now a free trade area
Itayi GARANDE
Tue, 19 Aug 2008 05:25:00 +0000
A map of the Free Trade Area (FAT) is shown on the screen during the 28th summit of the Southern African Development Community (SADC), in Johannesburg, South Africa, Aug. 17, 2008. The SADC officially launched the Free Trade Area (FTA) under the theme of "SADC Free Trade Area for Growth, Development and Wealth Creation" on Sunday.(Xinhua Photo/Xu Suhui)
THE Southern African Development Community (Sadc) which boasts 15 members including Zimbabwe, is now a Free Trade Area (FTA) as leaders attending the just ended summit of heads of states and government have signed the related agreement.
Following along the lines of the European Union and other regional free trade zones the region has made a historic step toward the vision of a fully integrated economic region.
This means most goods produced in the region can now enter member countries free of custom duties. As for January next year, 85 per cent of goods will be exempted from tax in the SADC area aiming to fully liberalize by 2012. This will help to facilitate smooth operation of business among SADC member states and reach out to 230 million consumers in the sub-region.
The memorandum establishing the FTA – an idea first mooted (and adopted) in Maseru, Lesotho after it gained independence from Britain in 1966 – says it is expected to enhance economic growth, create jobs and fight poverty in the region.
The current SADC Chair President Thabo Mbeki launched the trade protocol, and praised the region's joint effort. He warned against taking the agreement for granted as it was a major step in the development of the region.
“I raised this because we need to resuscitate the shared vision and commitment, the unity and cohesion that has characterized Sadc from its inception”, said President Mbeki.
In line with this vision, the South African president pledged the Sadc troika's total commitment to resolving the Zimbabwe crisis, stressing that only Zimbabweans will be able to truly find a solution to the crisis in the country.
Eleven of the 14 countries that are part of the Southern African Development Community (SADC) will participate in the Free Trade Area. These are Botswana, Lesotho, Madagascar, Mauritius, Mozambique, Namibia, Swaziland, Tanzania, South Africa, Zambia and Zimbabwe
Three SADC countries - Angola, the Democratic Republic of Congo and Malawi - plan to join at a later date due to weak economies.
The Free Trade Area precedes a Customs Union planned by 2010, a Common Market by 2015, Monetary Union by 2016, and a single currency by 2018.
The agreement is inspired by the classic principles of comparative advantages, which in this case advocate that member countries should produce and export goods with a comparative advantage, importing good from the region’s countries that they are unable to efficiently produce themselves.
The two-day summit was also marked by the return of the Seychelles, a small archipelago in the Indian Ocean which decided to move out of the Sadc immediately after it joined in 2000 for economic reasons. It is yet to join the FTA.
Labels: FREE TRADE AREA, SADC, SADC FREE TRADE AREA
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President Mbeki briefs the press on SADC summit
Mon, 18 Aug 2008 18:35:00 +0000
REMARKS by South African President Thabo Mbeki on the conclusion of the 28th SADC Heads of State and Government Summit, Sandton, August 17 2008.
Ladies and gentlemen of the media, good evening. I am sure that all of you have received a copy of the communiqué that was approved by the SADC Summit earlier today which contains the principle decisions that were taken by the SADC Summit. In that context, I must repeat the strong view of the Summit, all of us wish the President of Zambia Levy Mwanawasa a speedy recovery, our outgoing Chair.
We discussed off course as is normal at a SADC Summit political and socio-economic issues and on the political front, noted the efforts being made in the region to address issues in that areas - that include the Democratic Republic of Congo, Lesotho, Malawi and off course, Zimbabwe, I will return to this just now.
It is our belief that all these situations in the DRC, the resolution of the electoral dispute in Lesotho, and the constitutional dispute in Malawi, that progress is being made towards the resolution of the challenges in that regard.
As we indicated earlier, the Organ on Politics, Defence and Security Co-operation chaired by Angolan President Dos Santos and later by the new Chairperson of the Organ, His Majesty King Mswati III, met on Friday, Saturday and today to discuss the situation in Zimbabwe. In that context, the SADC Organ has issued a communiqué that you will receive shortly which among other things, expresses firm opinion that documents that are contained in the Facilitator's Report reflect that framework, spirit and purpose of the SADC and African Union decisions and in view of that, that they are a good basis for a global agreement among the Zimbabwe parties and in that context, therefore, we appeal to the Zimbabwe parties to sign any outstanding agreements and to conclude the negotiations in Zimbabwe and said recognizing that while negotiations are continuing it may be necessary to convene parliament to give effect to the will of the people as expressed in the Parliamentary elections in March this year and off course, encouraged the Facilitator to continue the mediation efforts which means that the negotiations will continue and the Facilitation will continue to do its work in this regard in trying to implement this decision of SADC and encourage the parties to conclude these outstanding agreements on the basis, that in fact, the documents that have been agreed to, provide this good basis for the conclusion of the negotiations.
In that context, I must mention that the report of the Facilitator that is referred to in the communiqué of the Extraordinary Summit of the Organ is a comprehensive report which contains all of the documents that have been negotiated and agreed to in the negotiations that started last year and that would include the Draft Constitution that was agreed to in September last year and a whole range of other documents. It is a comprehensive report of the negotiations as they have been going on now for at least 15 months. That is the report to which the resolution refers.
Off course, the outstanding result of the conference with regard to economic matters is the formal launch of the SADC Free Trade Area (FTA) and the critical challenge with regard to that is that we implement everything that is contained in this FTA to accelerate the process of economic integration of the region.
The Summit also then said, that given that we have launched the FTA we must continue the work that would lead to the formation of the SADC Customs Union that would be the next step in that regard.
It also paid attention to two important matters related: the implementation of the decisions that came out of the conference held in Mauritius to address poverty in the region and again, you would see that reflected in the communiqué that was issued earlier and a related matter about food security and again took decisions about what we should do in this regard to act within the region to address food shortages that some countries in the region are experiencing but otherwise to deal with this matter of ensuring that the region is self-sufficient in food production and what specific steps need to be taken in that regard.
Off course naturally, we addressed the matter of energy and what could be done in the region to address this.
As you know, we also signed a number of legal instruments which included the Protocol on Gender and Agreements in Science and Technology, Trade and so on. So, these are some of the principle outcomes and as I had indicated, they would be included in the SADC communiqué as well as the communiqué of the Extraordinary Summit of the SADC Organ on Politics, Defence and Security Co-operation.
It is our view that certainly the Conference completed its agenda and it is our view that it was indeed an excellent Summit that took decisions which are of importance to the political and economic structure of the region and in amending various provisions to the SADC Secretariat which also meant amending the Treaty of SADC also emphasized the point that SADC Summit is very keen that we should indeed have the capacity to implement the decisions that have been taken so that we do indeed accelerate our forward movement with regard to all of these matters that relate to political stability and so on in the region as well as the process of economic integration and the socio-economic upliftment of all the people in our region so, we believe that this was indeed a very successful Summit and I must conclude by saying that we are very pleased that Seychelles came back into SADC and that in itself was confirmation of the relevance of SADC in terms of the future of our countries in the region and that is indeed why Seychelles thought it was important that it should come back into the Community and we are very pleased by this.
Let me then finally thank all of you for your co-operation in covering the Summit and the SADC region in particular and I would hope that we would continue to co-operate in the manner in which we have because we are very interested indeed that our people in the region, in particular, should be familiar with the decisions we are taking and the work that the Community is doing.
Thank you.
Questions and answers
Question: Mr President I would like to know if you have any sense of when we can expect to see a final agreement signed by the negotiating parties in Zimbabwe? Can you also give us a sense of the concerns around the outstanding agreements?
Mbeki: It is clearly not possible to say when the negotiations would be concluded. It is a matter of the negotiating parties convening to look at whatever matter might be outstanding. One cannot allocate a date to this and the SADC Organ did not indicate a date by which this matter should be concluded with regard to the completion of this process, except to indicate the urgency of the matter. So, it is not possible to say when the negotiations would be concluded.
Question: Mr President you said that the Organ agreed that the documents provided form a good basis on which to conclude the negotiations. Does that mean that you
feel that there is no need to negotiate over the documents?
Mbeki: I am not aware if this communiqué has been distributed. You will see that that particular paragraph expresses the strong opinion of the Extraordinary Summit of the SADC Organ having studied the documents to which I referred earlier, came that conclusion looking at those documents relative to the decisions/resolutions of SADC and the African Union on the matter, expressed that opinion but said that negotiations should continue and that would include concluding negotiations and signing any outstanding agreements as a matter of urgency.
So essentially, what the Extraordinary Summit was saying was that negotiations should continue but of course, having had the possibility for the first time of looking at the entirety of the documentation, the Organ felt it should express its own view about this because bearing in mind, these two resolutions - SADC and the African Union - so, it says that negotiations need to continue but it is off that view with regard to the quality and extent of the work that has already been done by the Zimbabwean negotiators that they have produced a set of documents that in the view of the Organ do indeed address the issues that were raised in these two resolutions and to that extent, they believe form a good basis for a speedy resolution of outstanding matters but that the negotiations must off course, continue.
Question: Mr President what are the outstanding issues in the agreement?
Mbeki: Let me explain something before we get more questions - I am speaking here not as the Facilitator but as the Chair of SADC. Now you are asking me to get involved in a discussion that deals with the Facilitation and I must say that I cannot answer questions posed to the Facilitator - I can answer questions posed to the Chair of SADC but bear in mind that there is an agreement in the Facilitation process arrived at by all the parties and the Facilitation that we would not handle the process of negotiations through the media and indeed I am sure you will remember this because it is also included in the Memorandum of Understanding so to that extent, there is a limitation that is imposed with regard to how much detail we can express but that is a matter that belongs to the Facilitation process.
But with regard to what the Organ discussed I think it is properly and fully reflected in the communiqué of the Extraordinary Summit of the Organ.
Question: Mr President yesterday, when you were speaking as the Chair of SADC, you said that the negotiations needed to be concluded to extricate the Zimbabwean people from the dire situation in which they find themselves. Could you give us an impression of what you see as the humanitarian urgency for a deal?
Mbeki: What drove SADC in the first place, to last year convene an extraordinary Summit of the Organ in Dar-es-Salaam in March last year to discuss Zimbabwe - there were other matters on the agenda like the DRC and so on - was driven by very serious concerns about the matter you have referred to, the humanitarian situation in Zimbabwe.
And the discussions that have taken place over the last three days focused us on really trying to assist to speed up the process of the conclusion of the negotiations and the implementation of the agreements that would come from these negotiations.
It is driven precisely by these very deep seated concerns in the region that the political concerns must be created so that with the greatest urgency this humanitarian, economic and social condition in Zimbabwe can be addressed as a matter of urgency by an inclusive government. So it is matter of fundamental concern to the region - this socio-economic and humanitarian condition of the people of Zimbabwe.
But believe that we need this inclusive government to drive this process of addressing these challenges but this consideration of the humanitarian situation of the people of Zimbabwe is fundamental to all of the statements that are made and this decision of SADC emphasizing the urgency of this matter. It is not just to address the political stability but also to create the conditions so that you have an inclusive government that would then address these other urgent issues.
Question: Mr President as the Chair of SADC, do you believe that any deal that leaves President Mugabe with any power is going to be acceptable to the international donor community and is it going to be a long term solution to the crisis in Zimbabwe?
Mbeki: The two resolutions that bind the Facilitation - the first one said specifically that could the Facilitator please get the ruling party and the opposition to meet and discuss in order to resolve the political challenges facing Zimbabwe.
The African Union resolution said the same thing. And so, we have indeed been working over this period with the ruling party and the MDC lead by Mr Tsvangirai and the MDC lead by Professor Mutambara and the decision that will be reached about what needs to happen will come from the Zimbabwean parties.
It certainly would not be correct for the Facilitator to hand down any prescriptions to say that the person or group that should be part of the inclusive government to which these parties have agreed so it would be a matter really that the Zimbabwean parties would agree to - who is in that inclusive government and the role that they would play in that inclusive government.
That must truly come from the Zimbabwe parties because I think of all of us, they know best what is good for Zimbabwe and the thing is that everybody - the Facilitator, SADC, the international community - would have to respect what the Zimbabwe political leadership says about Zimbabwe and I am quite certain that the Zimbabwe political parties would answer the question you have posed on the basis of what they think is right for Zimbabwe, what they think is required in Zimbabwe.
It is not any determination that can, nor indeed should, be made by anybody. Let's really allow the people of Zimbabwe to determine their future. This is critically important because any solution that is imposed from outside will not last, it will not last, unless it is a common product that is owned by this entire collective of the leadership of Zimbabwe. I think if the Facilitation tried to impose any solution we would be creating a situation that actually would amount to creating conditions for the failure of whatever might be incorrectly described as a solution.
Transcript issued by the Department of Foreign Affairs, Pretoria, August 18 2008
Labels: FREE TRADE AREA, SADC, SADC FREE TRADE AREA, THABO MBEKI, ZIMBABWE
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