FREE TRADE IN AFRICA: THE SADC SUMMIT - Spetember 6, 2008

A free trade agreement between African states not an image one associates with that poverty-stricken continent.  But the talks on a South African free trade zone that took place between the 15 countries of the South African Development Community mid-August yielded just that.  This was the culmination of some two decades of staggered negotiations.

South Africa remains at the forefront of trade liberalization in the region, so it would be unsurprising to find its leader Thabo Mbeki inaugurating an agreement to that effect.  Something in the order of 85 percent of goods traded among the members will be free of tariffs.  But this is a mere flag post towards greater regional goals: a United States of Africa, a customs union and market with ultimately, a central bank and common currency.

The gathering of the SADC summit had its own eccentric trimmings, much which underscore the various problems of the continent.  King Mswati of Swaziland, on entering the hall where the final briefing of the summit was given, was welcomed by a suitably well-dressed praise singer. Few words were said, excepting poems of praise.  This says more about the countries involved than anything else. 

Insatiable elites continue to run many of the member states who will participate in this free trade zone.  Their only consistent policy has been one of colossal self-enrichment. The Democratic Republic of Congo remains silent on the issue of renegotiating mining contracts made during the civil war.  Oil-rich Angola is producing receipts that vanish as soon as they arrive.  Neither country has felt enough enthusiasm to append signatures to the free trade agreement, an absence as glaring as it is crippling.

Little wonder then that Mbeki’s announcement was marked by a degree of pessimism. ‘Part of our assessment is to consider whether the region’s trade performance has shifted in any discernible manner.  The assessment is not particularly positive.’  In order to have such trading arrangements, it’s best to have something to trade with, along with an infrastructure to facilitate it.  Flagging economies marred by poor financial credentials help little in that regard.  For Mbeki then, ‘the countries in the SADC region have not been able to take advantage of an increasingly-open regional trading environment.’

In the background of these negotiations is the commercial interest in Africa shown by countries outside the continent.  Accusations that such interest merely reflect the standard, resource-based obsessions of pseudo-colonialists are never far away.  Brazil, China, India, a host of other Asian countries, and the EU comprise the major players.  Earlier this year, South Korea made its interest known in forming a free trade pact with the Southern African Customs Union (SACU).

Opposition against such measures has been forthcoming. Trade officials and civil society organizations in South Africa have made no secret of their resentment towards the free trade agreements stemming from the European Union.  These primarily concern Economic Partnership Agreements (EPAs) between the EU and African, Pacific and Caribbean countries.  Critics see such agreements as instruments as enriching to the EU as they are impoverishing to the African states.  The EU’s bargaining chip is considerable: a threat to impose higher tariffs on countries that won’t sign such agreements.  The conclusion drawn by many African states is that the trade-off is poor: European states can safeguard their economies, while African states must forcibly liberalize. 

At a meeting in Cape Town at the end of February this year, opposition by various officials and NGOs was registered against the EPAs.  Some 35 countries had, by that time, signed interim arrangements.  In the words of Rob Davies, South Africa’s Deputy Minister of Trade and Industry, ‘Most people are not aware of the EPAs or their negative impact.  Civil society needs to strengthen its forces.  The stronger the voice, the better.’ EPAs risk dividing the SADC bloc, with some countries keen on keeping them.  For Mbeki, such arrangements would have the impact of limiting regional integration.

But what will the shape of this regional free trade forum look like?  Many developing countries have been following a paradoxical approach to trade liberalization.  Observers note that there has been a ‘re-regulation’ of trade policy amongst developing economies – tariff rates have decreased but the provision of trade protection has been forthcoming through nontariff barriers (NTBs). South Africa, through its Board on Tariffs and Trade, facilitates these arrangements.

One example of this paradoxical ‘re-regulation’ is the extensive use of anti-dumping measures, where exports are made at a price lower than the price normally charged in the domestic market.  The GATT agreements (Article 6) make a provision for countries to counter such measures by increasing the import duty on a ‘dumped’ product to better reflect the ‘normal value’ of the good.  Given the relative dominance of the South African economy in the region, smaller states may not abandon such instruments.  Such details are far from being ironed out.

This free-trade agreement will have little immediate effect.  Market reforms are all to the good in a regional sense, but they pre-suppose stable regimes with developed institutions that can conserve the gains of private enterprise.  Creating infrastructure is one thing – preserving it quite another.  The old problems that have haunted African promise and stability may end up unraveling what seems, on paper, an appropriate alignment of interests.  And that, sadly, will surprise no one.

Binoy Kampmark

------------------------

Author of the article holds L.L.B., B.A and M. Phil. from the University of Queensland in Australia and Ph.D. degree from the University of Cambridge. Mr. Kampmark was a Commonwealth Scholar at Selwyn College, University of Cambridge. He is a member of the Australian Institute for International Affairs and the Royal Institute of International Affairs.

------------------------