The Minister of Trade and Industry, Calle Schlettwein, is not confident that the Southern African Development Community (Sadc) can take part in the Tripartite Free Trade Area (TFTA) launch in Egypt next month, saying that the community is not ready.
Speaking to The Villager this week, less than two months before the launch of the Tripartite FTA, which is a combination of three economic regions, Common Market for Eastern and Southern Africa (Comesa), the East African Community (EAC) and Southern Africa Development Community (Sadc), of which Namibia is a member, Schlettwein said “It’s important to note that as Sadc, we are not yet ready to launch because we have not reached consensus on the tariff offers nor the rules of origin”.
This is going to cause a setback in the plans to the tripartite’s aim to market integration, infrastructure development, and industrialization, which are its three pillars.
Schlettwein pointed out that Namibia was eager to grow the market into East Africa and would want to take advantage of the market access opportunities.
“To do that, we would need to improve our production capacity and trade more in finished goods,” he said, adding that despite the risks that may place the country on the defensive, owing to the potential influx of imports, Namibia was very open to trade.
“We need to explore more opportunities as we negotiated this arrangement as part of the SADC group,” he said.
Rules of origin are instruments used to determine the actual source and economic origin of traded products and most countries with an interest in protecting their industries usually use these as a non-tariff barrier to stem the influx of imports.
Chairperson of the Comesa-EAC-Sadc Tripartite Task force, Sindiso Ngwenya, had earlier announced that the majority of TFTA member states had made ambitious tariff offers and were generally in agreement on Rules of Origin to be applied temporarily.
Traders and business persons importing or exporting products from one country to another within Sadc are required to present a different set of documents from those with certain exemptions recognized under Comesa.
This raises questions around the clarity of customs regulations and capacity to come up with a unanimous tariff regime within the much broader TFTA involving 26 member states.
Questions would also arise as to how feasible it would be to structurally transform the combined economies of TFTA member states.
Proponents of the TFTA suggest that the new wider economic grouping offers significant opportunities for business and investment within the tripartite and will act as a magnet for attracting foreign direct investment into the tripartite region.
Increased intra-regional trade fostered by an improved and harmonised trade regime is expected to significantly reduce the cost of doing business, with the inception of the TFTA.
The launch of the TFTA is the first phase of implementing a developmental regional integration strategy that places high priority on infrastructure development, industrialization and free movement of business persons.
The TFTA chair said that in order for the tripartite TFTA to realize inclusive and equitable growth, the meeting agreed on the need for expeditious formulation and implementation of a regional industrial programme.
A number of countries within the Sadc region, without a well-developed industrial sector, stand to benefit substantially from the forward linkages that would be created under such a setup.
Countries like Botswana and Zambia which are both landlocked will have the chance to rent out land at Walvis Bay for their own dry-port facilities, a scenario which would allow for efficiencies in cargo transportation.
Zambia and Botswana have already seen the value of trans-shipment from Namibia as lead-time in business processes is substantially reduced.
Under such an arrangement, the principles of a common market and free trade area would be increasingly fulfilled.
The creation of an enlarged market is expected to promote the movement of goods and services across borders, while also permitting member countries to synchronize regional trade policies to promote equal competition.
The elimination of trade barriers such as enormous export and import fees would enable countries to increase their earnings, enter new markets and contribute towards their own national development agendas.
However, the adherence of the various regional blocs to implementation of agreements has been marred by an unimpressive record over the years.