SADC - Trade and Market Integration

The SADC Regional Indicative Strategic Development Plan (RISDP) was first developed and approved in 2003 for a 15-year period, but its implementation became effective as from 2005, thus giving an implementation time-frame of 2005-2020. The RISDP is the main blueprint for the SADC, providing a clear direction for SADC policies and programmes over the long term.[1]  Nevertheless, even before the RISDP, SADC had trade protocols in place. The Protocol on Trade was adopted in 1996 followed by a Protocol on Finance and Investment in 2006 and the draft Protocol on Trade in Services in 2012. The RISDP outlines a series of milestones to be achieved in the context of the SADC Common Agenda for 2005–2020. Its objectives include, the formation of a free trade area (FTA) by 2008; the establishment of a Customs Union with common external tariffs by 2010; the achievement of a Common Market by 2015; the creation of a Monetary Union by 2016, and finally forming a single currency and an Economic Union by 2018. In this regard, the Protocol on Trade was amended in 2010 and is, together with the Protocol on Trade in Services, the most important legal instruments guiding SADC’s work on trade.[2]  

The SADC FTA was launched in August 2008, following a tariff reduction programme that had started in 2001. In practice, 85 per cent of intra-regional trade among the member States attained zero duty[3]. The minimum conditions for the programme were shortly met, however, the maximum tariff liberalization were only achieved in January 2012, when the tariff phase-down process for sensitive products was completed. For countries that fall under the Southern African Customs Union the process was completed in 2007, as five of the SADC member States already belong to a Customs Union. At present, 13 out of 15 SADC member States are part of FTA, while Angola and the Democratic Republic of the Congo remain outside.

Implementation of the integration milestones have, however, been delayed because of capacity constraints in the SADC Secretariat, resulting in postponements of the Customs Union, the Common Market and the Monetary Union. Other challenges are linked to the multiple memberships of some SADC member States to other regional integration arrangements and the subsequent challenge of having to meet multiple obligations simultaneously. Moreover, SADC’s complex and divergent trade policies as well as its revenue constraints, have also hindered progress of creating an integrated market. Integration has also been delayed by differences in the levels of development of member States. In addition, attainment of increased intra-regional trade in SADC has been made more difficult by poor infrastructure and inadequate trade facilitation systems.

SADC has taken various measures to address these challenges. In August 2012, the SADC Summit endorsed a report on the Framework for the SADC Customs Union. In particular, the sequencing of activities towards the establishment of the proposed Customs Union, namely, the consolidation of the SADC FTA, with focus on the review of rules of origin; the completion of tariff phase downs; the removal of non-tariff barriers to trade; and the development of mechanisms to assist member States that are not yet apart of the FTA to participate therein. Moreover, in July 2013, the SADC Ministers responsible for regional economic integration approved timelines for the Customs Union and to evaluate the progress made towards the SADC Customs Union. The outcome of the evaluation will determine SADC’s next steps on the issue.

In October 2008, SADC signed the Tripartite Free Trade Area (TFTA) Agreement together with the Common Market for Eastern and Southern Africa (COMESA) and the East African Development Community (EAC). After lengthy negotiations, the tripartite FTA was officially launched in June 2015. However, TFTA has not yet entered in to force due to outstanding technical work on tariff liberalization, rules of origin, trade remedies as well as the harmonization of trade related policies. To address issues with non-tariff barriers to trade, the regional economic communities have established a common reporting, monitoring and eliminating mechanism that has been operational since 2009.[4]