Lynda Loxton
AFTER months of exhaustive negotiations, three important South African trade agreements are firming up and could be concluded in the first half of 1997.
Although separate, the three are also closely linked and will affect each other in vital ways which will, hopefully, benefit not only South Africa but the region as a whole.
Minister of Trade and Industry Alec Erwin told a media briefing at Parliament this week that “exciting progress” had been made in the negotiation of the Southern African Development Community (SADC) and South African Customs Union (SACU) trade agreements.
At the same time, the government had “finished our homework on the European Union mandate” and would be discussing it with the parliamentary trade and industry committee and other interested parties over the next few weeks.
The SADC free trade agreement protocol, which he hoped would be in place in six months, “will be an interesting one because it will be the first regional agreement since the Uruguay Round”, Erwin said.
“To the best of our knowledge it is the first substantial agreement between developing countries and less developed countries and that makes it an unusual agreement.”
But it would have to be closely linked to the EU negotiations.
“It would make no sense whatsoever to improve EU access to our markets at a rate more rapid than the improved SADC access,” he said. “That would be detrimental to the regional development of this area.
“On SACU we have now essentially reached agreement. We just have to tie the bows and ring the bells on the revenue sharing formula. The basis of that agreement is that South Africa does not seek to gain further revenue from the formula but it is prepared to give stability to the SACU partners on their revenue share.”
But he warned that a problem “looms” for Botswana, Lesotho, Namibia and Swaziland because a free trade agreement in SADC and a probable reduction in tariffs for the EU would affect the revenue base. “That is a matter that we will be talking to the EU about.”
Erwin said South Africa’s drive to improve trade and investment links with its neighbours was vital to future regional stability.
“The reason why we have moved so rapidly to try and establish better links on an investment and trade basis with Zimbabwe and Zambia is not just to be nice guys,” he said. “It fundamentally affects future stability of the area.”
For example, he said, the rapid increase in Zimbabwe’s trade surplus in South Africa’s favour “cannot be accounted for by the Zimbabwean growth rate, even though it is quite healthy.
“It is not possible for the Zimbabwean growth rate to bring about the shift of 70 to 80%.”
What was probably happening was that South African exporters were taking trade away from Zimbabwe’s other trading partners, possibly in the EU.
“It is one thing having a trade deficit with a whole lot of different countries, it is another having a trade deficit with your neighbour,” Erwin said.
This was why South Africa had upgraded its bilateral agreement with Zimbabwe and SACU members were negotiating assistance for Zambia.
The agreement with Zambia would be “structurally more complex … than the one with Zimbabwe because it will be new”, Erwin said. “None of us … want to open up a whole lot of bilateral trade agreements.”
But Zambia “stood out like a sore thumb” in the region because it had no preferential access to the South African market and the negotiations would be a precursor to the SADC free trade agreement.
“We have agreed … that we are prepared to make a special dispensation for Zambia and get it in line with the other major trading partners,” he said.
Attention would also have to be paid to providing some assistance to Mauritius, who also did not have preferential access. One of the tricky issues to be tackled in the finalisation of the SADC free trade agreement is some agreement on controversial rules of origin specifics. “If you have free trade between Malawi and South Africa and the product actually comes from China then you effectively have free trade between South Africa and China and that is a major problem … so you have to devise rules,” Erwin said.