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TRALAC reports uneven progress in SADC trade integration

August 14, 2013

According to analysis published by the South Africa-based Trade Law Centre (TRALAC), the SADC Free Trade Area (FTA) agreement shows wide variations in implementation. Imports from SADC Trade Protocol signatories into the Southern African Customs Union (SACU) are largely tariff free, while Angola, the Democratic Republic of Congo (DRC) and Seychelles remain outside of the agreement. Other members largely honour the agreement, with several notable and sometimes important exceptions.

While a nominal FTA was held to be in existence since 2008, SADC considers that the maximum tariff liberalisation was only attained in January 2012, when the tariff phase-down process for sensitive products was completed. However, for Mozambique the phasing-out of tariffs on sensitive products will only be completed in 2015, while Malawi, Zimbabwe and Tanzania have derogations, particularly for sugar, where regional trade liberalisation remains problematical (e.g., under the SADC Trade Protocol, quota restrictions are placed on access for sugar exports from SADC countries to the SACU markets, while no SADC member state grants tariff concessions to sugar imports from SACU members). There are also product exclusions from tariff elimination commitments, for example, for prepared foodstuffs and animal products.

At the country level, the report notes that Tanzania seems to be far from offering duty-free access to South Africa, with extreme tariffs reported for rice, sugar, milk products and cereals in particular, while in 2012 in Mozambique, there seemed to be tariffs on all agricultural imports from South Africa. Madagascar, for its part, charges a 20% duty on live animals, meat, fish and fruit and vegetable products from South Africa.

Nevertheless, South Africa plays a dominant role in trade flows (68.1% of intra-SADC exports), being the main export destination for 3 of the 15 SADC countries and the main source of imports for 8 of the 15 SADC countries. Analysts suggest that the share of SADC in South Africas exports has risen from 8.2% in 2007 to 11.9% in 2011, with the total value increasing from US$7,735 million to US$10,398 million.

Analysts note that since the launch of the SADC FTA in 2000, intra-SADC trade nearly doubled from US$5.02 billion in 2000 to US$10 billion in 2010, but that, as a share of total exports, trade has remained fairly constant, despite the lowering of tariffs that has taken place. It is maintained that data shortcomings and problems of interpretation make it difficult to draw firm conclusions.

Overall, the SADC FTA is seen as making solid progress on the implementation of tariff elimination commitments, although there remains quite some distance to travel. However, the review of trade data for SADC countries shows that intra-SADC trade is low and not necessarily increasing.