A regional trade policy think tank has warned the Southern African Development Community (SADC) block to rethink the ways of promoting trade as in the long run they could be detrimental to growth.
The South Africa based tralac or Trade Law Centre said in a paper following the SADC’s Extra-Ordinary Summit of Heads of State and Government that was held on April 29 in Zimbabwe that new ways including supporting value chains offer opportunities for late industrialisation.
Trade Law Centre, however warned that the use of conventional policy instruments such as import tariff, export restrictions, export taxes, restrictive rules of origin governing preferential trade agreements as well as the pervasiveness other non-tariff barriers to trade can hinder efforts to develop and promote value chains.
“Market integration remains necessary as one of the effective and efficient strategies to promote value chains and production network linkages across the region. However, this has to go beyond the traditional approach on the trade liberalisation that focuses on tariffs, rules of origin and other border measures,” it said.
According to the organisation that builds trade-related capacity in east and southern Africa, SADC members should find a strategy that also has a legal certainty.
“A strategy that addresses regulatory barriers to the flow of economic activities across the region and enhances transparency, predictability and legal certainty for operations will best suit policy aspirations towards the development of value chains and business linkages across the region,” it added.
“Furthermore, regional value chains mean intensified interdependency in production relationships and not simply a series of across-the-border transactions, implying greater policy dependency in multiple areas. Therefore, policy coordination and public-private dialogue are essential.”
Trade Law Centre also highlighted that the essential challenge is to enhace the region’s capacity to produce tradeable competitively.
“The region, being resource rich has the potential to achieve structural transformation by supporting efficiency gains in the primary sectors (mining and agricultrure), as well as processing natural resources into intermediate and finished products, particularly for export.
There has been suggestions that the current SADC Free Trade Area (FTA) be transformed from a shallow ‘to a deep integration one’ that encompasses disciplines on investment, competition, trade facilitation and others.
Equally, there is a call for new approach to preferential rules of origion in SADC, which would make them more flexible and in line with the nature and scope of 21st century glocal production and trade.
There is also a need for a co-operative approach which would entail specific interventions on regional collaboration in industrial ugrading through innovation, technology transfer and research and development.