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Submission on the need to activate the dispute settlement provisions of the SADC free trade area

07 December 2014

In the run-up to the SADC Summit in August 2014, Tralac – the South Africa-based Trade Law Centre – prepared a submission on the need for an effective dispute settlement mechanism for the SADC free trade area (FTA). The submission was prepared following a regional workshop on dispute settlement involving officials from SADC member states, the SADC Secretariat, academics and private sector representatives.

The submission noted that “a special arrangement for the settlement of trade disputes (Annex VI to the SADC Protocol on Trade) was developed as part of the process of concluding the SADC Protocol on Trade,” but that these provisions have never been implemented. The non-application of these trade dispute provisions arose as a result of the suspension of SADC’s wider dispute settlement mechanism (the SADC Tribunal) following appeals to the regional mechanism over Zimbabwe’s land reform programme. The analysis describes the non-application of Annex VI “points to a serious systemic flaw in the structure of the SADC FTA”. While efforts to revive the broader SADC dispute settlement mechanism are underway, current proposals do not take account of “the specific needs of trade governance”.

This is seen as unfortunate, since effective trade dispute settlement arrangements could provide “predictability and certainty for traders and firms”, by ensuring better implementation of agreed commitments. Currently Article 3 of the SADC Protocol on Trade provides for relatively easy unilateral derogations from agreed trade policy commitments, with no scope for appeals by regional trade partners to these unilateral decisions.

The Tralac submission proposed a distinct arrangement for the settlement of trade disputes that is separate from the more politicised work of the SADC Tribunal. It calls for the establishment of a regional trade dispute settlement mechanism along the lines of current WTO practice. This would consist of an initial “panel procedure”, with an “ad hoc appeals tribunal”, quite separate and distinct from the broader, revised SADC Tribunal. This, it is maintained, would provide a low-cost trade remedy mechanism, since “no permanent judges need to be appointed,” and trade experts are identified to act as members of the ad hoc appeals tribunal.

In August 2014 the SADC Summit took a decision on the revitalisation of the SADC Tribunal. However, this saw a narrowing of the scope of the Tribunal. According to further Tralac analysis published in late August, the revitalised SADC Tribunal did not address the specific needs of a regional trade dispute mechanism and is thus unlikely to provide the “certainty and predictability” required to support “the region’s expanding trans-boundary commerce” and the development of cross-border supply chains.

The Tralac analysis reports that “the right of individual standing will be abolished and, unless a special arrangement is adopted, private parties will not be able to bring claims against governments which infringe their rights.” Since the Trade Protocol and annexes “deal with many individual rights”, this development potentially poses serious challenges for the establishment of effective dispute settlement arrangements within the SADC FTA. 

Editorial comment

As tariffs are being dismantled in the SADC region, so the use of non-tariff measures is growing in frequency and importance. These range from import bans and quantitative restrictions to the restrictive use of sanitary and phytosanitary (SPS), food safety and quality standards. Establishing transparent and predictable rules for the use of non-tariff measures – including the establishment of an effective dispute settlement mechanism – would appear to be essential to the further development of not only intra-regional trade, but also trans-regional investment in production to serve the enlarged regional markets nominally created through an FTA.

In some parts of the SADC region (notably within the SACU), the absence of formal dispute settlement mechanisms is leading private companies to use national law courts to challenge the application of particular non-tariff measures adopted by individual governments. This is seeing a situation emerge where general jurisprudence is determining the modalities for the application of non-tariff trade policy measures, rather than commonly agreed national and regional agro-food sector trade policies.

This could lead to unforeseen trade policy outcomes – such as the overturning of new SPS regulations or the undermining of a key element of national sector development strategies (see Agritrade articles ‘ Livestock trade between Namibia and South Africa reopened by Court ruling’, 12 October 2014, and ‘ Namibian dairy sector measures questioned by South African dairy company’, 11 April 2014). 


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