POLITICAL leaders of the Southern African Development Community (Sadc) have tacitly acknowledged that the aim to create a customs union by next year was too ambitious.
While Sadc ministers agreed at a meeting last week that regional integration should be prioritised, it was now recognised that the timeframe for integration needed to be rethought and that alternative models for integration should be considered, Department of Trade and Industry deputy director-general Xavier Carim said yesterday. He was speaking at the sixth southern African forum on trade in Pretoria, organised by the Institute for Global Dialogue.
Technocrats have been cautioning for some time that the ambition to form a customs union in Sadc was unrealistic given the asymmetry in development levels in the region.
“There is now recognition that you cannot talk about a common external tariff if you have no common policies. Members would never be able to agree on the setting of tariffs if some only see themselves as consumers and others see themselves as producers,” Carim said.
While forming a customs union has been a longstanding political ideal, it may also have unpalatable economic consequences. To establish a customs union, member states would have to adopt a common external tariff. But diverse interests could cause clashes over trade policy objectives.
Citing the need to rather boost intra-regional trade, trade analysts favour an approach that would prioritise trade facilitation, capacity building and infrastructure development to optimise market access in the region.
According to an example by Mark Pearson, programme director of the Regional Trade Facilitation Programme, transport costs in sub-Saharan Africa, was 136% more than in other regions, compromising firms’ competitiveness.
Sadc last year formally launched a free trade area as the second phase of a comprehensive regional integration agenda that includes forming a customs union by 2010, a common market by 2015 and achieving monetary union by 2016. While 85% of intra- Sadc trade has been opened and 99% of tariffs are to be dismantled by 2012, Carim said there was still a large unfinished agenda, with a number of members still to make offers, while others are behind on the implementation of liberalisation schedules.
Indications are that Sadc leaders now favour the consolidation of the free trade area and greater integration with other regional economic communities. Plans are afoot to create a free trade area that would include Sadc, the Common Market of Eastern and Southern Africa and East African Community. Carim said these objectives were much more manageable and could achieve more.
“It appears the policy makers have started to realise that the customs union approach is not the correct model for the region. The focus should be on trade facilitation — easing the cost of trade and eliminating nontariff barriers,” said Paul Kalenga, a trade policy analyst with the Sadc secretariat.
lerouxm@bdfm.co.za