Regional integration is rightly being pursued in the Southern African Development Community (SADC) as it is a critical instrument to boost economic growth and raise living standards — but it has to be sustainable, says South African President Thabo Mbeki.
In his regular Friday internet column, ANC Today, the president said regional integration in the developing world “has all too often been a graveyard of failed expectations”.
While intra-regional SADC trade rose from 20% to 25% in the six or so years up to 2003 — as a percentage of total regional trade and, he argued, this represented progress — there was a trade imbalance in South Africa’s favour.
Much of this was made up of manufactured goods exported by South Africa and the attraction of smaller volumes of imports from the rest of the region.
Noting that an SADC task team, including finance ministers, had met this week at Midrand — in the context of the establishment of a free trade area (FTA) by 2008, which would mean that regional products and services would be free of tariffs — he said that the current trade imbalance could not have been caused by tariff barriers. This was because South Africa had, in terms of an SADC trade protocol, already removed duties on over 90% of goods from its SADC partners.
“Unquestionably, the fundamental reason for this imbalance is due to underdeveloped production capacity and inadequate infrastructure in the sister SADC states — in other words, the historically evolved supply side capacity constraints.”
Mbeki said: “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 … 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.”
He argued that without establishing a proper basis for duty free trade within the SADC region, and putting in place programmes that would boost the capacity of South Africa’s partner SADC countries to produce tradable goods, resulting in better trade balances within our region, a common customs union external tariff would be rendered meaningless.
The aim is to have a customs union by 2010. He explained that 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.” — I-Net Bridge