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Southern Africa: SADC hopeful of India, China trade negotiations

Southern Africa: SADC Hopeful of India, China Trade Negotiations

Mmegi/The Reporter (Gaborone)

March 15, 2006

Joel Konopo

Southern African Development Community (SADC) hopes to start trade talks with China and India at the forthcoming SADC Council of Ministers Consultative Conference in Windhoek, Namibia next month.

This is an endeavour to improve regional trade with the rest of the world. Botswana Finance Minister and Chairman of SADC council of ministers, Baledzi Gaolathe said SADC has an ambitious programme to extend its negotiation with Asian economies on a number of strategic areas such as on ICT and Agriculture. Botswana is expected to benefit from these negotiations. As a member of the Southern Africa Customs Union (SACU) and SADC, Botswana’s trade policy is regionally determined. Its tariff bindings cover 96.5 percent of its tariff lines.

According to the Commonwealth Year book of 2005, in Botswana, average applied tariff rates stood at 5.8 percent in 2002, with the average for agricultural goods being 9.1 percent and non-agricultural goods being 5.3 percent. A key issue for SACU is the structure of the external tariff, which is determined by South Africa and often reflects South Africa’s policy priorities and industrial structure.

Approximately 45 percent of tariff lines are dut y free on Most Favoured Nation (MFN) basis and non-ad valorem rates apply to approximately 14 percent of tariff lines. In accordance with the revised provisions of the 2002 SACU Agreement, the joint SACU Tariff Board will, in future, determine duty rates, including anti-dumping and countervailing duties. SACU member countries are: Botswana, South Africa, Namibia, Swaziland and Lesotho, while SADC members include: Angola, Botswana, DRC, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Tanzania, Swaziland, South Africa, Zambia and Zimbabwe. Meanwhile, a statement from the Ministry of Trade and Industry indicated that much like SADC, SACU has ambitions to extend its negotiations with China and India. Currently, there are several ongoing trade negotiations such as WTO Doha Development Round, SACU/USA, SACU/EFTA and the SADC/EU Economic Partnership Agreement, reads the statement in part.

Both SADC and SACU intend to negotiate with Asian economies on issues that includ e: Agricultural goods, Industrial products, trade facilitation, trade and environment; development issues and implementation issues The current trade flows between Botswana, India and China is impressive particularly in the areas of mining. With impressive diamond deposits recorded late last year, Botswana produces 26 percent of the world’s diamonds. On the other hand, Asian economies have a large and modernised working class with an impressive purchasing power.

This insatiable appetite for diamonds from India and China proved that the trade flow between China, India and Botswana was promising. The mining sector contributes about 36 percent of the GDP. Botswana also exports copper to China and imports textiles from China and India. Spokesperson for Botswana Confederation of Commerce, Industry and Manpower (BOCCIM), Tebogo Rapitsenyane said yesterday that SACU should take advantage of trade negotiations between SADC and Asia’s two emerging economies.

However, Rapitsenyane was concerned about the negotiations between SADC/SACU and the two emerging Asian economies. He lamented that trade negotiations with big powers usually get clouded by the fact that SADC economies do not have the capacity to produce many commodities. "We only benefit in terms of cheap produce. Asian countries have economies of scale, hence they can produce in large quantities," said Rapitsenyane.

Ministry of Trade and Industry’s deputy permanent secretary Martha Masisi was recorded as saying that through the proposed preferential treatment trade agreement between SACU and India, Batswana entrepreneurs would be able to export to India at reduced tariffs or even at zero rates depending on India’s offers to the SACU countries. India has a competitive textile industry, which Botswana can explore and learn a lot from. "Again Batswana entrepreneurs will benefit from transfer of technology that is affordable to developing countries and other skills required especially by small medium and micro enterprises," added Masisi.

According to Masisi, Botswana currently has a bilateral agreement with India that does not offer preferential treatment to goods originating from either country. Since India and China are classified as developing countries, Masisi said trade between India, China and SACU would be South-South oriented.

 source: The Reporter