GTZ Seminar on Strategies towards an enabling BIC Magaliesburg 22-25 May 2006

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Regional Integration and the BIC Paper only or
practical implications for businesses? Regine
Qualmann GFA Group Adviser to SADC Secretariat
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I. Structure of Presentation

• The policy framework for investment at the
  regional level International trends and
  practices
• SADC policy instruments for an improved BIC The
  Trade and the Finance and Investment Protocols
  Progress and limitations
• Practical experiences and challenges of advising
  on regional policy instruments

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II. Policy framework at the regional level
International trends and practices

• Regional preferential trade and investment
  agreements are proliferating throughout the world
  
• African countries are all members of one or more
  regional PTA
• Increasingly, African countries also have
  bilateral investment and/ or double taxation
  agreements
• While the majority of bilateral investment or
  double taxation agreements are of a North-South
  type, PTIAs are increasingly South-South (73 in
  2004)

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II. Policy framework at the regional level
(cont.)

• Regional preferential trade and investment
  agreements (PTIAs) aim at facilitating trade and
  investment through (usually non-binding)
  commitments to liberalize, promote and/ or
  protect investment
• PTAIs in Latin America are most far-reaching in
  scope covering national and MFN treatment as well
  as expropriation and dispute settlement
  provisions
• ECOWAS and COMESA are currently embarking on
  defining a more substantive set of policy measures

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SADC Objectives
REGIONAL COMMON MARKET Free movement of
capital, labour, goods and services
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III. SADC Policy Instruments for an improved BIC

• (1) The SADC Protocol on Trade
• Provides for the creation of an FTA by 2008 85
  of trade in goods to be duty free
• Individual tariff phase-downs are slipping in
  several cases
• Rules of Origin remain a problem, especially
  regarding access to the SA/ SACU market
• A mechanism to monitor and eliminate NTBs yet to
  be established
• Liberalization of trade in services Work in
  progress
• Progress in goods and services market integration
  has been very limited in SADC

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III. SADC Policy Instruments for an improved BIC
(cont.)

• (2) The SADC Protocol on Finance and Investment
• To be signed and ratified in 2006 with several
  MoUs under implementation not investment
• Covers a broad number of areas, including
• - co-operation on investment and on taxation
• - macro-economic convergence
• - regional capital and financial market
  development and co-operation
• - co-operation among SADC Central Banks

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III. SADC Policy Instruments for an improved BIC
(cont.)

• (2) The SADC Protocol on Finance and Investment
  (cont.)
• Development of the FIP through a bottom-up
  approach (MoUs) to avoid mistakes of the Trade
  Protocol
• MoUs being implemented voluntarily but FIP
  implementation will need to be preceded by
  translation into national laws
• More institutions and sub-structures involved
  than in trade but again little direct
  involvement of private sector
• Necessary to complement trade liberalization

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IV. Practical experience and challenges

• Trend is towards higher commitment of policy on
  trade and investment related measures but African
  RECs are lacking both in scope and depth
• SADC Member States particularly reluctant to
  commit themselves and follow-up implementation at
  regional level
• Example Ongoing EPA negotiations are unlikely to
  cover New Generation Issues investment,
  competition, public procurement, etc.
• SA pursues a national (and a multilateral)
  strategy which are not always compatible with the
  region

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V. Some conclusions and implications for GTZ
work

• Regional Organisations in Africa have embarked on
  a much larger integration agenda than just trade
  but
• most are too weak to live up to their
  co-coordinating and facilitating role
• Policy making at regional level is an important
  entry point for both Governance Reform and
  Economic Liberalization and Development Programs
• Role of advisers mainly of an OD plus type
• Exchange of experience across RO advisory
  programs needs strengthening but they currently
  lack scale!
• High potential for development of tools to
  monitor implementation and impact of integration

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• Thank you for your attention!
• Regine Qualmann
• RQualmann_at_sadc.int