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Full FTA on the horizon

New Era, Namibia

Full FTA on the horizon

By Desie Heita

12 August 2010

WINDHOEK - Even though the implementation of the Southern African Development Community (SADC) free trade area is yet to take place, there are notable areas of progress indicating that the activation of the free trade area is not far off.

Bureaucrats have to meet first “somewhere in the future” to review and reflect on some of the targets that SADC has set itself.

For now, SADC takes solace from the fact that the intra-trade volume in the region is not stagnating – even in the absence of up-to-date, reliable trade figures.
Since 2007, intra-regional trade is valued at US$27,5 million compared to the US$201,3 million worth of trade between SADC and the rest of the world.

The crux of the matter, though, is for SADC to implement the free trade areas, as this would pave the way for liberalisation of markets and services.

Ultimately, this would allow trading between countries to be free of tariffs, eliminate any other trade barriers and harmonise crucial quality standards.

But there is still work to do, and the SADC Director for Trade, Industry, Finance and Investment, Boitumelo Gofhamodimo, assures that “we are at work to make sure free trade areas work”.

When launched in 2008, all SADC member states, with the exception of Seychelles, Angola and DRC, achieved the target of removing tariffs on 85 percent of their products and the world economic crisis of the past two years has presented new challenges. Some of the countries say they are now unable to phase down tariffs on sensitive products by the target date of 2012, because the world economic crisis has had negative effects on their economies.

“They want to defer the phasing down of the sensitive products. The SADC ministers have not [yet] reached a decision on how such deferral would take place,” said Gofhamodimo on the sidelines of the SADC Summit taking place in Windhoek.

Such delays in remo-ving duties on the remaining 15 percent also mean that the accompanying targets of establishing a customs union by 2010 and common markets by 2015 must moved forward.

But the SADC secretariat has already confirmed that the customs union is no longer feasible this year, and that leaves the 2015 target for the common market.

Gofhamodimo says what is left is for SADC “in the near future to review and reflect on some of these milestones we have set ourselves, [to see] if they are attainable”.

Eventually, the road would take the region towards a complete macro-economic policy convergence on certain aspects of inflation, public debt and fiscal accounts. Some countries shave already achieved a level of convergence.

In the meantime, SADC is pursuing its new agenda of a tripartite relationship with the Common Market for Eastern and Southern Africa (COMESA) and the East African Community (EAC).

Such relationship, says Gofhamodimo, would help ease the issue of overlapping memberships, something that adds to the slow implementation of free trade areas.