Ã¢â‚¬ËœFree Trade Area will boost SADC industrialisationÃ¢â‚¬â„¢
A SADC Secretariat expert on customs union and trade facilitation, Happias Kuzvinzwa, said that the tariff phase down by member states will boost intra-regional trade and present an advantage to member countries to diversify their economies.
Kuzvinzwa told The Southern Times in an interview that there had been a steady increase in intra-regional trade adding that the process, which kicked off in January this year, would boost industrialisation efforts by SADC member states.
The FTA came into force in January and allows for duty fee transactions of goods between the bloc’s 14 member states.
The FTA protocol, signed in 2000, specifically mandates SADC governments to adopt policies and implement measures to eliminate tariffs.
Currently, 85 percent of goods traded in the SADC region are at zero tariffs and by 2012, goods traded in SADC would be duty free.
The immediate challenge confronting regional integration was also the European partnership agreements, which were causing fragmentation.
Under these agreements, SADC had at least five sets of separate trade relations and regimes with the EU, each very different.
Kuzvinzwa said that the FTA will bring mutual benefits to member economies.
“We are pursuing a process of regional integration which is meant to benefit the region and its people in terms of industrialisation, employment creation and economic development,” Kuzvinzwa said.
He added that SADC considers the FTA as a cornerstone in improving the economic environment as well as the attractiveness of the region as an investment destination.
It would promote the region as a single investment area rather than a collection of individual countries and as such there is also need to come up with standard investment policies.
The FTA is going to be followed by the establishment of a Customs Union by 2010, a Common Market by 2015 and Economic Monetary Union by 2018.
“This is an opportunity for member states to expand and diversify their economies…we are no longer talking of our market as a country but regional market…let us look at the opportunities which have been presented,” Kuzvinzwa said.
Trade analysts say that the long term challenge for southern Africa’s industrial policies had been to expand the range of products which could be exported and increase the value added component of those exports.
“We have reached a stage where we would need to export value added products — there has to be a policy shift from what we export in the region. Shall we continue to export raw materials and take the old line where we expect economies to grow by opening of new mines and exporting raw materials,” Kuzvinzwa said.
He said that Angola, DRC and Malawi were still working out the modalities on tariff phase down. Angola and Malawi were expected to give a report at the summit on progress made in tariff phase down.
“For Malawi the challenge might have been to do with balancing their budget…and for Angola and DRC we are aware of their historical background – it takes time to settle down,” Kuzvinzwa said.
“We are launching the FTA with 14 countries but so far only 11 have met the required tariff threshold,” he added.