Making or breaking SADC

South Africa has significant interests in the region and in regional integration.

SADC has an export market for South Africa’s internationally uncompetitive products.
According to Alde and Pere, South Africa’s biggest export market is SADC.
This is often overlooked when surveying South Africa’s trade figures, the reason being that a great portion of South Africa’s exports to other countries are hidden within SACU.
Consequently the importance of the SADC market to South Africa should not be underestimated.
Since 1994 the South African government has regarded the Southern African region as the most important priority of its foreign relations.
To illustrate the importance attached to this region, the first foreign policy document adopted by its democratic government was a “Framework for Co-operation in Southern Africa” approved by cabinet in August 1996.
In terms of this framework, the vision for the Southern African region is one of the highest possible degree of economic cooperation, mutual assistance where necessary and joint planning of regional development initiatives, leading to integration consistent with socio-economic, environmental and political realities.
South Africa has taken a leading role in the region to address such issues as closer collaboration and economic integration.
These include the establishment of a free trade area in the region, the development of basic infrastructure, the development of human resources and the creation of the necessary capacity to drive this complicated process forward, as well as the urgent need for peace, democracy and good governance to be established throughout the region.
However, in many other instances South Africa bullies its regional partners.
South Africa attempts to wield its economic power when negotiating with partners in both SACU and SADC.
This plays itself out in how some South African government officials view their regional partners, for example in response to questions about the consequences of the negative impact that an EU/SA FTA would have on its SACU members.
Former Director of Regional Economic Organisations within the South African Ministry of Foreign Affairs, Willem Bosman, noted that there is need for a shock treatment that is necessary to fellow SACU members.
He said “now you are on your own, South Africa cannot any longer provide for you 50 percent of your budget … Now you have to tax your own people; you have to work according to the structures of a free independent country”.
The irony of this statement is that even with the new SACU agreement, SACU remains an apartheid-created relic, designed to ensure that South Africa would have a captive market for its agricultural and non-internationally competitive manufactured products.
This economic dependence of the SACU states on South Africa was part of a strategy to ensure South Africa’s economic hegemony.
In the negotiations on the SADC FTA, South Africa negotiated on behalf of SACU, largely without any discussion with the other SACU members.
This was due to capacity reasons for the SACU members but there can be little doubt that South Africa primarily pursued its own interests and the SADC FTA agreement was in large parts tailored to suite the perceived interests of its business community.
Furthermore, in the negotiations on the SADC FTA, South Africa’s strategy was essentially aimed at opening up regional markets for its products, while protecting its domestic agricultural and manufacturing sectors as much as possible.
Despite the reservations against South Africa, the countries in the region hope to benefit from improved access to South Africa’s market and to attract FDI from its business community.
Yet, there are occasionally mixed feelings about FDI as some fear a South African “take over” of the domestic economies.
This is a sentiment prevalent in countries where South African businesses, like the Shoprite chain of supermarkets, have been built in countries like Angola, Malawi, Mozambique, Tanzania, Zambia and Zimbabwe.
Products sold in these stores are exclusively South African. Perishables like fruits are still imported from South Africa while the same can be sourced from local suppliers. Surely these South African companies investing in SADC countries should do their part to promote products from those countries.
Since joining SADC, South Africa has become very involved in the activities of the community.
Interests in access to economically strategic resources may be of even greater importance than free trade.
These interests relate to mining, water and energy.
Both South Africa’s agricultural and industrial sectors are dependent on regional water resources, particularly for their future development.
Future water imports are expected to come from countries further north. It is argued that the military intervention of South Africa in 1998 on a purported SADC mandate was motivated by the objective of avoiding a disruption in the Lesotho Highland Water Project to the industrial hub of Johannesburg.
There are also ways in which South Africa has tried to integrate its economy in the world economy at the expense of its regional integration partners.
It is important to mention here that this was inevitable in the long run.
The EU/SA free trade talks reflect this phenomenon.
South Africa signed the agreement knowing that it would have a devastating impact on both the members of SACU and SADC.
With respect to SACU, the agreement was reached without consulting Botswana, Lesotho, Namibia and South Africa (BLNS).
This was a clear disregard of the SACU Treaty that stipulates that such agreements must be approved by all SACU members.
By acting independently, South Africa is trying to maximize benefits for itself at the expense of the other members.
With respect to SADC, there is a fear of EU goods flooding the regional market.
Once EU goods have entered the South African Market, controlling their movement into SADC and SACU is clearly impossible.
This could undermine the agricultural and industrial sectors.
Some SADC member states complained that South Africa only became serious about completing the negotiations for the SADC FTA when it had completed negotiations with the EU.
Some South African trade officials feel that the EU/SA FTA agreement will allow them to become more integrated into the world economy, notwithstanding the fact that the consequences could also be quite severe for South Africa’s own economy.
The agreement provides for the liberalisation of 95 percent of the EU's imports from South Africa within ten years, and 86 percent of South Africa's imports from the EU in twelve years.
In order to protect the vulnerable sectors of both parties, certain products are excluded from the FTA and others have been only partially liberalised.
For the EU, these are mainly agricultural products, while for South Africa; they are certain industrial products.
The agreement sets out detailed rules of origin in order to ensure that products benefiting from the preferential arrangements come only from South Africa, effectively blocking SADC products.
South Africa can safeguard SADC’s interests in its trade relations with the EU. South Africa has to strike a balance between its interests and those of SADC. Individually almost every SADC member state has bilateral agreements with South Africa operating independent of the SADC Treaty.
Since South Africa has interests in the region as shown in these bilateral agreements, seeking a better deal in the interest of the region will be crucial.
SADC members will not need to look far.
The fact that South Africa is very particular when signing its own agreements with the EU, US and others can be used as a model by the neighbours.
SADC should insist on South Africa upholding the SADC Treaty in all its trade agreements.
South Africa's participation in SADC, allows access to a market of approximately 140 million, which is expected to grow at an annual rate of around three percent. This means that SADC can also compel South Africa into regional integration relationships that are mutually beneficial.
• This article has been excerpted from the original that was published by the Journal of International Commercial Law and Technology, under the heading “The role of South Africa in SADC regional integration: the making or breaking of the organization”.

 

March 2013
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