Next week’s summit will have to negotiate=20 several tricky issues, writes Lynda Loxton
National sensitivities continue to dog the=20 delicate negotiations in the Southern=20 African Development Community (SADC) as it=20 moves towards a free trade area and tries=20 to update its institutions and programmes=20 of action.
Top of the list is the accusation by other=20 states that South Africa is being=20 protectionist and trying to dominate the=20 region by placing high tariffs on its=20 imports, making SADC exports uncompetitive.
To disprove this theory, the Department of=20 Trade and Industry (DTI) has undertaken an=20 extensive review of regional tariffs and=20 has found that Mauritius and Zimbabwe, and=20 not South Africa, are the most highly=20 protected economies in Southern Africa.
“What it boils down to is that South Africa=20 has one of the lowest tariff dispensations=20 in the region,” DTI Africa trade relations=20 director Mfundo Nkuhlu told a joint sitting=20 of the trade, agriculture and foreign=20 affairs committees this week.
“It debunks much of the myth that has=20 constituted the public debate. We would=20 probably concede that we carry relatively=20 higher duties in some segments,=20 particularly in the textiles, clothing and=20 apparel, as well as footwear sectors.”
He said South Africa’s tariffs for=20 agricultural products averaged 8%, mining=20 equipment 1,4%, manufacturing 17%,=20 consumption goods 28%, intermediary goods=20 6,4% and capital goods 5%.
“We compare favourably to most other SADC=20 countries,” he said.
Total tariffs in South Africa averaged=20 16,5% against 13,5% in Zambia, 16,7% in=20 Angola and 15,5% in Mozambique. The other=20 community countries had much higher average=20 rates, with Mauritius and Zimbabwe being=20 the most protected, followed by Tanzania.
Nkuhlu said South Africa was now finalising=20 its offer to the other community states,=20 whereby it would reduce its tariffs on=20 trade to zero, except in sensitive cases=20 that were important to revenue collection=20 or involved vulnerable industries.=20
Rules of origin would have to be carefully=20 detailed to prevent goods made elsewhere=20 benefiting from the free trade agreement.=20 Nkuhlu admitted that although member states=20 had agreed to harmonise customs=20 documentation and procedures, “it is=20 something of an Achilles’ heel in our trade=20 policy in that whatever we do could easily=20 be undercut by perceived or real=20 inefficiencies in customs administration”.
He said tariffs with South African Customs=20 Union (SACU) members would be phased down=20 over five years and those with other SADC=20 states over eight years. South Africa would=20 propose that other SADC states also phase=20 down their tariffs to SACU states=20 (Botswana, Lesotho, Swaziland and Namibia)=20 and that all tariffs be rounded off to=20 eliminate decimal points.
But several tricky areas still had to be=20 negotiated – trade in sugar, for example.=20 This is produced by South Africa,=20 Swaziland, Mozambique, Mauritius, Zimbabwe=20 and Zambia. Nkuhlu said international trade=20 in sugar was not free but regulated by=20 protocols and market access arrangements.=20
As a result, if sugar were to be traded=20 “freely” in the region, quotas had to be=20 set and agreements reached on plans to=20 expand production. Then there was the=20 tricky area of individual countries raising=20 rather than lowering tariffs for domestic=20 reasons. Industries in other SADC countries=20 would have adjusted to tariff cuts and=20 would be much more competitive.
This highlighted the dangers of a free=20 trade agreement for all members and Nkuhlu=20 said that although South Africa was in a=20 stronger position than most other community=20 countries, it was also vulnerable to more=20 competitive goods and services from outside=20 the region. What this will mean for the=20 vision of a free trade area by 2006 remains=20 to be seen.