Global Geopolitics Net
Monday, August 25, 2008

All rights reserved, IPS – Inter Press Service, 2008.

Stanley Kwenda

JOHANNESBURG, Aug 25 (IPS) – The Free Trade Agreement (FTA) that Southern African Development Community (SADC) governments agreed to will boost large South African companies’ reach in the region at the expense of small-scale producers and shops.

This is according to civil society organisations belonging to the Southern African People’s Solidarity Network (SAPSN).

SAPSN contends that the signing of the FTA in the current regional environment will not lead to fair trade. The network adopted a resolution to this effect at its summit which ran parallel to the SADC summit of heads of state last weekend (Aug 16-17). SAPSN represents several non-governmental organisations from across the region.

‘‘We must recognize that such a SADC free trade area will serve the expansionist aims and interests of South African companies, not the equitable and more balanced trade development that enables cross-border trade, especially by small women traders,” read a draft of the resolution.

A delegate from Zimbabwe asked, ‘‘where is the fair trade when cross-border female traders are forced to spend hours waiting at the border?”

Jubilee South Africa’s message was more strident, urging civil society groupings to rally populations in their home countries against the SADC FTA. Jubilee is a non-governmental organisation calling for the cancellation of poor countries’ debt.

The organisation’s chairperson, Mallet Pumelele Giyose, said the FTAs will only benefit corporations from South Africa and, in some cases, their parent companies based in the North.

The SADC FTA ‘‘is a deal for South African businesses. There is nothing in it for SADC. All it will do is to choke the life out of small businesses in the region,” Giyose told IPS.

He cited examples of how South African big business is spreading its influence across the continent, muscling small businesses out of trade in their home countries.

Giyose lamented the case of Zambia where shopping malls have been taken over by South Africa-based corporations, leading to loss of livelihoods for local producers whose products can’t compete with imported products. He added that FTAs are bankrolled by corporate interests that put profit before people.

Thomas Deve, United Nations’ Millennium Campaign policy analyst for Africa based in Nairobi, Kenya, gave a slightly different interpretation: ‘‘The SADC FTA is a welcome development but in the region’s current state, it is just an elite deal which does not take small business and ordinary people into account. We will not stop campaigning against the FTA, whether it is signed or not.”

The Millennium Campaign promotes the participation of people in the achievement of the United Nations’ Millennium Development Goals.

A delegate from Zambia at the SAPSN meeting deplored SADC for ‘‘killing” markets for small farmers in Zambia. He called on SADC to represent the people’s interests and not to parrot the ‘‘gentlemen’s club” of the North which has nothing to do with concern over average people’s lives.

‘‘Cabbages and vegetables are now cheaper in the supermarkets as all farmers are forced to sell their products in the supermarkets,” said the delegate.

SAPSN contends that the FTA will not benefit SADC states until the region is fully integrated. This integration process is being undermined by the economic partnership agreements (EPAs) with the European Union (EU) which have been entered into on a bilateral basis, fragmenting the region.

‘‘SADC must reunite as a region and, together, firmly resist the EU’s re-colonisation through the EPAs, instead of manoeuvring separately to get EU trade and aid support which is splitting SADC,” SAPSN resolved at its meeting.

These views echoed to some extent SADC Executive Secretary General Augusto Tomaz Salamao’s remarks that the region will not fully achieve its aspirations if it is not united.

SAPSN also argued that the SADC FTA will further serve to create an open integrated market for EU importers, investors and service corporations.

Meanwhile, the cash strapped Zimbabwean government has suspended exports of basic commodities in a desperate bid to try and replenish empty supermarket shelves. The suspension of exports will last for the next two months. The goods covered under the ban include sugar, cooking oil, salt, soap, candles, rice and sanitary pads.

Basic foods such as sugar, bread, the national staple food maize meal, and cooking oil are often in short supply in Zimbabwe, which was once the regional breadbasket.

The suspension comes amid a political crisis in Zimbabwe that intensified after President Robert Mugabe’s re-election in June in a one-person poll widely condemned as a sham. The just-ended SADC summit failed to find a solution to the Zimbabwe crisis while the two main contenders for political power, ZANU PF and MDC, are still at loggerheads in their talks over a deal.

The country’s inflation rate has been officially put at 2.2 million percent and at least 80 percent of the population live below the poverty threshold.

Global Geopolitics Net
Monday, August 25, 2008

All rights reserved, IPS – Inter Press Service, 2008.

Stephanie Nieuwoudt

CAPE TOWN, Aug 25 (IPS) – The launch of a free trade area (FTA) within the Southern Africa Development Community (SADC) has brought the region one step closer to a regional customs union by 2010. But the launch of the FTA at the recent SADC heads of state summit was met with mixed reaction.

According to Taku Fundira, an analyst at the Trade Law Centre of Southern Africa (TRALAC), the FTA is ‘‘intended to act as a catalyst for increased regional integration and to facilitate trade and investment flows within the region.” TRALAC is a think tank based in Stellenbosch near Cape Town.

‘‘Some of the countries in the SADC are being prevented from fully benefiting from the gains of trade because of the size and nature of their economies. By integrating, countries are able to exploit scale economies while at the same time restructuring the regional economy in ways that benefit the production base of the region.”

However, one of the critics, trade specialist Dot Keet, told IPS that trade in the region is skewed in favour of South Africa — the strongest economy. ‘‘The trade deficits in the region are in South Africa’s favour. Mostly South African companies are moving into and benefiting û in all sectors including communication, tourism, retail, trade, mining, airlines, banking, et cetera.”

Keet is with the Alternative Information Development Centre (AIDC), a Cape Town-based non-governmental organisation focussing on development research from a critical standpoint.

She warned that many SADC countries are negotiating economic partnership agreements (EPAs) with European Union (EU) countries. ‘‘If there is a free trade area in the SADC region and the EPAs with its most favoured nation clauses are signed, it will open the doors to European imports,” Keet told IPS.

The ‘‘most favoured nation” clause in the EPAs requires African signatories to give the EU the same treatment as in future agreements with other countries signed subsequent to the EPAs.

‘‘It will be extremely difficult to monitor trade across porous borders û whether it is goods from SADC or Europe. Many of the SADC countries are willing to sign agreements which will undermine their own economic advancement. The EU is insisting on the liberalisation of finances, health and a number of services,” Keet explained.

‘‘Most of the limited export sector of SADC countries is heavily biased towards the European markets. EU countries threaten African countries with tariff raises on imported goods if the EPAs are not signed.”

She added that, although South Africa is in a better position than the rest of the region as it has diversified its exports to South America, China and India, it is also reliant on Europe.

According to Keet, SADC countries are further compromised as they are heavily reliant on foreign aid. They fear that the millions of dollars that are annually poured into these countries will be withdrawn if they do not sign EPAs.

Nkululeko Khumalo, a researcher at the South African Institute of International Affairs (SAIIA) attached to the University of the Witwatersrand in Johannesburg, differed from Keet: ‘‘It is simply not true that the FTA will lead to European goods flooding the SADC markets. The FTA is about intra-SADC trade and outsiders are precluded from benefiting from it through rules of origin.”

These rules translate into tariff duties for goods produced outside the region.

He added: ‘‘Since 2000, SADC countries have been implementing the provisions of the SADC Trade Protocol. They achieved the goal of liberalising 85 percent of goods within eight years. The establishment of the FTA is one of the targets set by the SADC countries before the establishment of the Customs Union by 2010.

‘‘Whether the Customs Union will become a reality within the next 18 months remains to be seen.
There is too little time left.”

According to Fundira of TRALAC, the FTA will aid increased intra-regional trade along with inflows of foreign capital — mainly from South Africa. ‘‘This will help to boost industrial development and the
diversification of the export base. The FTA may also help to reduce uncertainty and improve the financial credibility of countries in the region. In turn this could boost private sector investment.”

Before the SADC summit, South African finance minister Trevor Manuel in a speech to the National Assembly in Cape Town warned that the fact that several SADC members were members of other regional groups could become problematic, as each group had its own way of negotiating
with EU members.

Manuel advised the different member states to decide on which regional grouping they wanted to be members of.

Khumalo also believes that membership of different bodies pose some challenges. Tanzania, for example, belongs to more than one grouping. He has suggested as a way forward that SADC and the Common Market for Eastern and Southern Africa (COMESA) create a mutual free trade agreement. This will assist countries that do not want to pick one membership and leave behind another.

In the end, it could help with trade integration across the African continent, Khumalo argued.