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12 August 2008

One of the key milestones for the 2008 SADC Summit is the launch of SADC Free Trade Area. The adoption of the 1996 Maseru Trade Protocol, which entered into force in January 2000, paved a way for the launch of the FTA. SADC member states commenced with implementation of the Trade Protocol in September 2000. One of the objectives was to establish a Free Trade Area over a period of eight years.

The SADC Free Trade Area has been notified to the World Trade Organisation (WTO) and examination was done during the meeting of the WTO Committee on Regional Trade Agreements held in May 2007 in Geneva. A factual presentation on the protocol prepared by the WTO Secretariat was considered by the Committee Regional Trade Agreements after which the committee expressed satisfaction with the presentation and the Chairman declared that consideration of the protocol was duly finalised and therefore completing the completing the notification process.

An Audit Study conducted in 2007/08 on the implementation of the Trade Protocol concluded that although some countries are experiencing problems in implementing their tariff phase down commitments, the region as a whole has nevertheless achieved liberalisation of 85% of intra-SADC trade as of January 2008 and therefore meeting the WTO requirements that substantially all trade among countries in a trade block be duty free. SADC is therefore on target to achieving the overall objectives of 85% of intra-SADC trade at zero tariffs by 2008 and the remaining 15% to be liberalised fully by 2012.

However, we need to recognise that regional economic integration is not only about the removal of tariff barriers in our region. The launch of the FTA is not an end in itself but a beginning of a process we need to embark on to build both our productive and trade capacity, improve competitiveness of our industries and address the supply –side constraints that inhibits us from benefiting to better terms of trade in the region. We need to focus on expanding our agriculture and industrial base to promote intra-regional trade. A strong industrial drive is essential in promoting structural diversification of our economies.

More work first needs to be done to consolidate the FTA and make it work by addressing non tariff barriers, including trade facilitation measures, harmonising industrial and competition policies and liberalise trade in services. The focus going forward should be on addressing the real economic constraints that hinder deeper integration in our region.

Infrastructure development is also an essential element for creating conditions that would advance the integration agenda and would have to be prioritised. It is my strong belief that the private sector has a key role to play, especially in the area of regional infrastructure. This is an area that needs attention to ensure that we expand markets, improve market access and integrate national and regional markets. The lack of regional infrastructure is a major barrier to region al integration and development.

However, the concern remains about the potential impact of the outcomes of the Economic Partnership Agreements (EPAs) with the European Union which is likely to derail our integration efforts. All SADC countries are participating in EPAs with the European Union (EU), but in four separate configurations. All these EPAs differ in terms of having daggered tariff liberalisation obligations to the EU. This will complicate the process of establishing a SADC Customs Union, especially agreeing on a Common External Tariff. We therefore need to re-evaluate our priorities given the challenges and endeavour to find practical solutions to deepen SADC integration.

The Summit will discuss, among other issues, the Regional Poverty Reduction Framework, an implementation plan that has been developed and emanates from the SADC International Conference on Poverty and Development.

The Ministers responsible for energy have adopted the Power Sector Investment roadmap with the aim of overcoming the diminished power surplus capacity in the Region. The Heads of State will thus consider the roadmap.

Food security is also among the critical challenges facing not only the region but is a global phenomenon. The Summit will reflect on the food security situation in the region.

The following draft protocols will be considered: draft protocol on gender and development, and the draft protocol on science and technology and innovation, among others.

As the incoming Chair of SADC, South Africa's strategy will rest on three pillars, namely:

* deepening regional economic integration
* intensifying regional infrastructure development
* restoring and strengthening the political unity and cohesion.

Issued by: Department of Trade and Industry
12 August 2008