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Development integration concept to be applied as a priority to regional agricultural sector development

04 January 2013

Dr Rob Davies, South Africa’s Minister of Trade and Industry delivered the opening remarks at a USAID/World Customs Organization (WCO) Trade Facilitation Conference held in Johannesburg from 10–11 September 2012. In his presentation, Dr Davies set out the South African government’s vision of ‘regional development integration’ under the proposed Trilateral FTA (T-FTA). The approach to development integration ‘combines market integration, cross-border infrastructure development through the Spatial Development Initiatives, and policy coordination to advance regional industrial value-chains’. He maintained that this approach had been pursued ‘with a good degree of success in SACU and SADC contexts’. He also described the efforts under way in SACU, including:

  • ‘promoting regional industrialisation through the establishment of cross border value chains’;
  • ‘reviewing the revenue-sharing formula to more directly support infrastructure development and industrialisation’;
  •  ‘advancing trade facilitation initiatives’;
  •  ‘promoting unified [regional] engagement in trade negotiations with third parties’.

A common SACU industrial policy is also being developed ‘to build cross-border value-chains, with agro-processing as the pilot project’.

The Minister reiterated the South African government’s commitment to consolidating the SADC FTA by assisting members to ‘implement their obligations, and focusing on sectoral cooperation, promoting regional productive capacity and infrastructure, addressing non-tariff barriers and simplifying rules of origin, harmonising standards, and advancing the work on trade facilitation’.

Dr Davies noted that work continues in the T-FTA context to meet the ambitious aim of concluding the trade negotiations by April 2014 and commencing implementation in 2015. Given the high priority accorded to trade facilitation, he highlighted the two distinct dimensions of infrastructure development (both ‘soft infrastructure’ and ‘hard infrastructure’ improvements) and rule making, with the latter falling within the scope of the T-FTA negotiations (e.g. on rules of origin, and customs administration and cooperation). The extensive programme of inter-connecting the information systems of national customs and revenues services was highlighted as an important aspect of trade facilitation, with the current SACU experience, implemented in association with the WCO, potentially offering important lessons for the wider Southern and Eastern African region. Delays in cross-border movements of goods are seen as inhibiting the development of regional value chains and undermining investment in competitive regional industries.

Non-tariff barriers (NTBs) to regional trade are seen as particularly important in the agricultural sector, as noted in a press report in Zimbabwe’s Standard. The publication gives examples of NTBs arising in the SADC context, including:

  • ‘protection of member states’ dairy sectors through banning imports from neighbouring countries’;
  • ‘imposition of minimum tonnage requirements for the export of fresh strawberries from Zambia to Zimbabwe’;
  • ‘vitamin-A fortification requirements for sugar imports into Zambia’.

The Zimbabwean economist David Mupamhadzi has highlighted how, to deal with NTBs, ‘there is need to strike a balance between regional commitments and national priorities in terms of how to re-position individual member states’ own industries’. 

Editorial comment

The need to balance regional commitments and national priorities is particularly difficult in the food and agricultural sector, given the political sensitivity of food security issues. It provides a background to the interpretation and implementation of commitments on the elimination of NTBs in the food and agricultural sector in the various regional frameworks in existence across Southern and Eastern Africa.

A critical first step would appear to be the need to ensure the transparent and accountable use of agreed agricultural trade policy tools that are used to promote national development priorities (e.g. infant industry protection tools in the context of the SACU, such as those recently invoked by Namibia in the poultry sector).

A second priority would appear to relate to strengthening the capacities of both national customs services and intra-regional institutional collaboration, so that revenue-sharing arrangements are put in place that ensure the revenue neutrality among member states of trade facilitation measures. In October 2012, governments of landlocked EAC customs union countries expressed fears over the fiscal consequences of the adoption of ‘a destination model of clearance of goods where assessment and collection of revenue is to be done at the first point of entry’. While it was acknowledged that such a step would greatly facilitate the free circulation of goods within the EAC, it was felt that it would ‘considerably complicate collection of domestic taxes on cross-border trade since it will require better exchange of information between the exporting and importing partner states in order to follow up on the traders’ tax obligations’. This provides a vivid example of the challenges faced in this regard. 

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