Southern African Development Community SADC Free Trade Area

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Southern African Development CommunitySADC
Free Trade Area
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Outline

• SADC Protocol on Trade
• Objective of the Protocol on Trade
• Implementation of the Protocol on Trade
• Reduction of Tariffs
• Status of Implementation
• Rules of Origin
• Launch of the SADC FTA
• Benefits of the SADC FTA
• Outstanding Work
• SADC Customs Union

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SADC Protocol on Trade

• Legal instrument for achieving the SADC FTA
• Signed in 1996, entered into force in January
  2000
• Negotiations focused on
• Tariff liberalisations
• Rules of origin
• Dispute Settlement Mechanism
• Special Arrangement on Trade in Sugar
• Harmosation of customs,trade documentation and
  clearance procedures

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SADC Protocol on Trade

• Calls for
• Attainment of internationally acceptable
  standards, quality, accreditation and metrology
• Harmonisation of sanitary and phyto-sanitary
  measures

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Objectives of the Protocol

• To liberalise intra regional trade in goods
• To ensure efficient production within SADC
  reflecting the current dynamic and comparative
  advantages of its members
• To enhance the economic development,
  diversification and industrialization of the
  region
• To establish a free trade area in the SADC region
  in 2008

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Implementation of the Protocol on Trade

• All member states implementing the Protocol
  follow their individual tariff-phase down
  schedules- applying the asymmetry principle
• Developed countries (mainly South Africa but
  defecto, SACU) front loaded their tariff
  reductions
• Developing Countries- mid-loaded their tariff
  reductions
• LDCs back loaded their tariff reductions to
  beyond the 8- year threshold but not exceed 12
  years

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Reduction of Tariffs

• Carried out on the basis of 4 categories
• Category A Required immediate reduction of duty
  to zero at the beginning of the implementation
  period, by 2000. These were the commodities that
  already attracted low or zero tariffs.
• Category B Dealt with goods that constituted
  significant sources of customs revenue, whose
  tariff were to be removed over 8 years, by 2008.
• Category C Deals with sensitive products
  (sensitive to domestic industrial and
  agricultural activities) whose tariff are to be
  eliminated between 2008 and 2012. E.g clothing,
  fish, daily products, fruits and canned
  vegetables. Vehicles parts and accessories for
  South Africa.
• Category E Deals with goods that are exempted
  from preferential treatment such as firearms and
  munitions and in the case of SACU , used
  clothing.

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Status of implementation

• 12 out of 15 members are implementing the
  Protocol
• Botswana
• Lesotho
• Madagascar
• Malawi
• Mauritius
• Mocambiaque
• Namibia
• South Africa
• Swaziland
• Tanzania
• Zambia
• Zimbabwe

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Status of Implementation

• 3 members not part to the FTA
• Angola
• Democratic Republic of Congo
• Seychelles

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Rules of Origin

• Goods shall be accepted as originating in a SADC
  country if they have been wholly produced in a
  member State. Alternatively, goods must have been
  produced in the Member State partially from
  materials imported from outside the member States
  or of undetermined origin by a process of
  production which effects a substantial
  transformation of those materials.
• Documentary Evidence
• For goods to be accepted as originating from a
  Member State, they have to be accompanied by a
  certificate of origin.

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Launch of the SADC FTA

• SADC was technically declared an FTA in January
  2008
• Achieved the 85 substantially all trade
• Officially launched on 17 August 2008

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Benefits of the SADC FTA

• Expanded Market
• To attract foreign investment
• To increase customs co-operation
• Reduce costs by introducing a single
  administrative document for customs clearance
  throughout the region
• make transshipment easy by enabling a single
  bond to be used when transporting goods across
  several borders within the community/region
• Establish one - stop border post. Three
  pilots projects at the border of Mozambique and
  Zimbabwe( Forbes-Machipanda), South Africa and
  Mozambique(Lebombo- Ressano Garcia) and Zimbabwe
  and Zambia( Chirundu)

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Outstanding work

• Non-Tariff Barriers An institutional mechanism
  for monitoring, reporting and eliminating NTBs
  is being developed
• Rules of Origin A few tariff lines in the area
  of textiles, clothing and motor vehicles are
  outstanding
• Competition policy A Declaration on regional
  Cooperation and consumer Law and Policies has
  been developed. Through the Declaration, Member
  states will cooperate to address unfair business
  practices and to promote competition in the
  region
• Industrial Policy Draft Regional Industrial
  Development Protocol. Programme on
  Industrialisation and Modernisation
• Protocol on Trade in Services
• Protocol on Finance and Investment

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SADC Customs Union

• Envisaged by 2010
• Two studies conducted on the appropriate model of
  the SADC Customs Union
• 4 Technical Working Groups were established
• Common external tariff
• Revenue sharing
• Customs Union, legal administration and
  institutional
• Harmonization of Customs Union and related
  Policies
• Challenge, overlapping of memberships
• Tripartite Summit COMESA-EAC-SADC pan regional
  free trade area

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Thank You