adminThe Sadc Common Market is part of the region’s broader integration programme that was premised on the establishment of a Free Trade Area, a customs union, a common market, a monetary union and a single currency in stages but by no later than 2018.
The Macroeconomic and Financial Management Institute of Eastern and Southern Africa in its latest issue has, however, noted that there are still challenges in respect of effective implementation of the region’s FTA.
“The benefits of free trade, however, depend on the extent of economic integration between the member states. In Sadc, membership ranges from poor-low income countries to upper middle-income countries.
“Wide differences in economic and population sizes are also evident while some countries are landlocked and others are island states. Countries such as Malawi,
Mozambique and Zimbabwe depend largely on Sadc for imports.
“The rest of the countries maintain such stronger trade relationships with the rest of the world. South Africa is by far the largest supplier of exports to and demander of imports from the region, accounting for more than 70 percent of total intra Sadc exports.”
It follows then for countries, such as Zimbabwe, that a part of the agenda should necessarily increase the liberalisation of their trade regimes.
But what does this mean for these countries?
MEFMI said trade liberalisation will help boost both intra-Sadc and inter-regional trade.
“The formation of an FTA laid a solid foundation upon which, the establishment of a customs union will be anchored.
“The Sadc Customs Union will build upon the FTA with a view to establish a zone with a common external tariff on imports from non-members and no import tariffs on trade among members. Countries in a trading bloc have the economic clout to enhance trade with other countries or trading blocks,” said MEFMI.
But what is free trade?
Free trade is international trade free of government interference such as import quotas, export subsidies and protective tariffs. Free trade occurs when goods and services can be bought and sold between countries or sub-national regions without tariffs, quotas or other restrictions being applied. On the other hand, a Free Trade Area is created when a group of countries eliminate tariffs and non-tariff barriers on all trade amongst them.
Sadc attained the status of a Free Trade Area in 2008 and ever since, producers and consumers do not pay import tariffs on an estimated 85 percent of all trade in the community.
Countries in the Sadc which have signed a free trade pact are Botswana, Lesotho, Madagascar, Mauritius, Mozambique, Namibia, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe.
The purpose of free trade agreements is to allow faster and more business among the countries, which should benefit both.
With the goal of eliminating tariffs and trade barriers among countries, the Free Trade Area agreement is part of the Sadc’s ongoing efforts to deepen long-term regional integration in order to accelerate economic growth and reduce poverty for millions of people living on the continent.
The benefits of free trade from the member states include free movement of goods, elimination of custom duties and non-tariff barriers on agricultural goods and industrial goods, free movement of services, harmonised customs legislation, harmonised customs procedures, anti-dumping measures and other countervailing
levies, intellectual property rights.
MEFMI, however, contends that countries in the Sadc region should meet certain preconditions. These include: macroeconomic stability, trade liberalisation,
competition policy, signing of trade facilitation agreements, private sector participation, addressing of cross-cutting regional challenges, convergence of production structures, strengthening centralised data centre at the regional Secretariat, and development capital markets.
Online Reporter