OUTCOMES OF THE EXTRAORDINARY SADC SUMMIT ON REGIONAL ECONOMIC INTEGRATION

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OUTCOMES OF THE EXTRAORDINARY SADC SUMMIT ON
REGIONAL ECONOMIC INTEGRATION BRIEFING TO THE
SELECT COMMITTEE ON ECONOMIC AND FOREIGN
AFFAIRS 30 MAY 2007
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SCOPE

• Background
• Extraordinary SADC Summit Outcomes
• Progress since Midrand
• Progress within SACU
• South Africas role

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BACKGROUND

• The 2006 SADC Summit in Maseru brainstormed on
  the need to scale up implementation of the SADC
  integration agenda, due to lack of progress
  towards full integration in the region.
• The Summit reaffirmed that the Regional
  Indicative Strategic Development Plan (RISDP) and
  the Strategic Indicative Plan for the Organ
  (SIPO) are the main instruments for scaling up
  regional integration in both the economic and
  political spheres.
• The RISDP indicates the stages of the integration
  process
• Free Trade Area by 2008
• Customs Union by 2010
• Common Market by 2015
• Monetary Union by 2016 and
• Single Currency by 2018.
• The Maseru Summit reiterated the importance of
  achieving these milestones to comply with
  continental integration and ensure meaningful
  participation in the world economy.

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• In addition, the following areas were endorsed as
  the main priorities of SADCs integration
  process
• Politics, Defence, Peace and Security
• Trade and Economic Liberalisation
• Regional Infrastructure and Services and
• Special Programmes with regional dimensions such
  as food security, HIV and AIDS and gender
  equality.
• In order to expedite the integration process, a
  Task Force was established comprising of
  Ministers of Finance, Investment, Economic
  Development and Trade and Industry, together with
  the SADC Secretariat.
• The Task Force was further mandated to spearhead
  the SADC Customs Union preparations and report to
  an Extraordinary Summit to be held no later than
  October 2006.

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EXTRAORDINARY SADC SUMMIT ON REGIONAL ECONOMIC
INTEGRATION

• The Extraordinary SADC Summit held in Midrand on
  23 October 2006 was convened for the specific
  purpose of
• reviewing the status of regional economic
  integration in Southern Africa, and
• to propose measures to accelerate the
  implementation of the SADC economic integration
  agenda. 
• The Summit reaffirmed its commitment to regional
  economic development and underlined the need to
  mobilise resources in order to address issues of
  infrastructure, food security and other supply
  side challenges within the Southern African
  region.
• The Extraordinary Summit considered the report
  and recommendations of the Ministerial Task
  Force, particularly the following
• Free Trade Area by 2008
• Customs Cooperation and Trade Facilitation
• Preparations for a Customs Union by 2010
• Implementation of the Protocol on Finance and
  Investment

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• Macroeconomic Convergence
• SADC Development Fund and
• Institutional framework to accelerate
  implementation of the integration agenda
• It was noted that it is through the development
  of supportive infrastructure that the regional
  trade potential can be harnessed to the benefit
  of the people of the region
• The Summit also noted that SADCs trade patterns
  consisted mainly of commodities, hence the need
  to diversify the economies of SADC member states
  and increase intra-regional trade and growth.
• To this end, the Heads of State and Government
  reiterated their commitment and underscored the
  need for SADC to complete its Free Trade Area by
  2008 and to achieve a Customs Union by 2010, as
  planned for in RISDP.

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• Of particular significance, the Summit concluded
  that the SADC Free Trade Area programme was on
  course and that it will be launched, as planned,
  by 2008.  
• It was noted that the Ministerial Task Force and
  the Secretariat would undertake and finalise, by
  March 2007, a study that will evaluate an
  appropriate model for the SADC Customs Union, as
  well as a road map towards the SADC customs
  union.

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RESOLUTIONS OF THE EXTRAORDINARY SUMMIT

• Heads of State and Government
• directed the Ministerial Task Force on Regional
  Economic Integration to fast track adoption and
  implementation of custom instruments (common
  customs documentation, common tariff
  nomenclature, SADC Transit Management Scheme,
  Common customs training modules etc) by member
  states
• directed the Ministerial Task Force to finalise
  the road map of the SADC Customs Union, to
  undertake and finalise a study evaluating an
  appropriate model for such a Customs Union and
  submit both to Summit at its next meeting in
  August 2007
• directed the Ministerial Task Force and the
  Secretariat to speed up the establishment of the
  Macroeconomic Surveillance and Performance Unit
  by June 2007 and to ensure that macroeconomic
  reports are presented to Summit annually
• re-affirmed its decision on the establishment of
  the SADC Development Fund and directed the
  Ministerial Task Force and Secretariat to
  accelerate the feasibility studies and modalities
  for establishing this Fund

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• Mandated the Ministerial Troika to consider a
  temporary waiver of the quota system in the
  recruitment of positions that require highly
  specialised competencies and qualifications. This
  would enable the Executive Secretary to
  expeditiously recruit experts for positions of
  particular importance to regional economic
  integration and
• Urged Member States to strengthen their capacity
  at national level including the SADC National
  Committees to implement the Regional Economic
  Integration agenda
• During the Summit 3 member states signed the
  Finance and Investment Protocol, namely Botswana,
  Swaziland and Zimbabwe.
• Other issues discussed included SADC position on
  an African Union Government, elections in the
  Democratic Republic of Congo (DRC) and East
  African Submarine Cable System (Eassy) plan.

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• Following the Extraordinary Summit, President
  Mbeki suggested that, within SADC, any programme
  to promote greater trade integration in Southern
  Africa must be complemented by programmes of
  sectoral cooperation focused on the creation of
  conditions that will enable producers to emerge
  in member states.  This will enable member states
  to take advantage of the additional market access
  opportunities that regional integration would
  create.  To this end, President Mbeki articulated
  the priority areas within SADC as follows
• Promotion of macro-economic convergence around
  agreed indicators
• Progress in terms of infrastructure development
  cooperation programmes, Spatial Development
  Initiatives and sectoral programmes
• Achievement of some level of harmonisation of
  industrial development strategies and competition
  policies, as called for in the SADC Trade
  Protocol and,
• Elaboration of a detailed and realistic Activity
  Matrix necessary to create the SADC Free Trade
  Area, to include processes to achieve balanced,
  mutually beneficial regional economic integration.

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PROGRESS SINCE MIDRAND

• SADC Free Trade Area by 2008
• The region is on track towards the achievement of
  the FTA since only the DRC has to accede to the
  Protocol on Trade and Angola has to submit a
  tariff offer. Madagascars tariff offer has been
  accepted pending the positive outcome of
  consultations with Namibia.
• Audit of Member States gazetted tariff reduction
  schedules which commenced in February 2007 and
  will be completed by the end June 2007
• The customs instruments will be discussed by the
  SADC Customs Cooperation Sub-Committee scheduled
  to meet in April 2007 in Angola
• The study on the impact of FTA on trade patterns
  in SADC Member States is expected to be completed
  in July 2007
• The experts group meeting on the revised and
  more flexible rules of origin will submit final
  recommendations to the next TNF scheduled for end
  June 2007and there after to the Ministers of
  Trade for adoption at their next meeting in July
  2007

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• With respect to the SADC Monitoring Mechanism,
  assistance has been secured from the Southern
  African Global Competitiveness Hub and the Trade
  Hub to set up a SADC Monitoring and Information
  unit at the Secretariat. Consultancies studies on
  details of mechanism are underway following the
  signing of the MOU with the Secretariat
• The exercise to develop an action plan for
  monitoring and elimination of Non Tariff Barriers
  (NTBs) is funded by the Regional Trade
  Facilitation Programme (RTFP) and commenced on
  1st February 2007 to update the 2004 Inventory
  Reports on NTBs in SADC
• Custom Union Progress The studies on the customs
  union and compatibility of national trade
  policies as well as the customs union roadmap
  will all be finalised at the end of June 2007.

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• Other developments
• the establishment, by June 2007, of the
  Monitoring, Surveillance and Performance Unit
  (MSPU) to monitor macroeconomic convergence in
  the region.
• the development of terms of reference for the
  SADC Development Fund.
• The Ministerial Task Force will present a
  comprehensive report on the entire regional
  economic integration process to Summit at its
  next meeting in August 2007 in Lusaka. South
  Africa is represented on the Ministerial Task
  Force by Minister Mandisi Mpahlwa, Minister of
  Trade and Industry, and Minister Trevor Manuel,
  Minister of Finance.

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DEVELOPMENTS IN SACU

• SACU also established its own Task Team to
  develop a SACU position on the SADC customs
  union.
• SACU is also addressing the issue of its
  consolidation, by completing the institutional
  makeup of SACU necessary to enable it to function
  and deliver the required outcomes assigned by the
  SACU Agreement.
• Under the SACU revenue sharing arrangements, the
  BLNS members have received a significant
  proportion of total government revenue from the
  revenue sharing mechanism.
• South Africa, which accounts for over 90 percent
  of SACU GDP, receives only slightly more than
  half of the total revenue pool, whereas the
  revenue shares of the BLNS far exceed their
  shares of SACU economic activity.
• The review of this mechanism is thus needed,
  particularly within the context of a future SADC
  customs union.

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SOUTH AFRICAS ROLE

• As a key stakeholder in the process of economic
  development and integration, South Africa has a
  responsibility to drive economic integration in
  Southern Africa and to this end has taken the
  initiative to put together a national Regional
  Economic Integration Task Team comprising of the
  Department of Trade and Industry, Department of
  Foreign Affairs, National Treasury, South African
  Revenue Service (SARS) and the Department of
  Agriculture.
• The work of the national task team will feed into
  the SACU task team and then into the SADC Task
  Force which will make recommendations to the SADC
  Ministerial Task Force. This exercise is meant to
  give impetus and leadership to the work of the
  SADC Task Force and endeavours related to the
  SACU and the AU regional integration processes.
  The Southern African regional integration process
  will be aligned to the continental integration
  process of establishing an African Economic
  Community. The framework for this process is
  contained in the Abuja Treaty which states that
  the process of regional integration will take
  place in six stages over a period of 34 years