The NEPAD Business Foundation (NBF) says the South African Development Community (SADC) Free Trade Area (FTA) that came into effect on 17 August will boost economic growth, trade and job creation in the region.
Analysts say the new FTA that includes most SADC members will help reduce several long-standing threats to human and civil security in the region.
The NBF says the SADC region will benefit from increased domestic production, greater business opportunities, higher regional imports and exports, access to cheaper inputs and consumer goods, greater employment, increased Foreign Direct Investment (FDI) and the creation of regional value chains.
“This agreement will enhance the region by encouraging dramatic growth in the trade and investment flow into SADC. The SADC FTA is either already facilitating the movement of goods or shortly going to do so through, harmonising customs procedures and customs classifications, increased custom co-operation, reducing costs by introducing a single, standardised document (Single Administrative Document) for customs clearance throughout the region, establishing “one stop” border posts which cut the time spent at the border in half.
“Currently three are pilots at the border of Mozambique and Zimbabwe (Forbes – Machipanda), South Africa and Mozambique (Lebombo Ressano Garcia) and Zimbabwe and Zambia (Chirundu); and making transhipment easier by enabling a single form be used when transporting goods across several borders with the Community.
SADC Secretariat Regional Trade Directorate Programme Officer Mupelwa Sichilima says further objectives expected from the initiative are “to promote a common political value from the countries within the SADC region, to consolidate, defend and promote democracy, peace and security and to ensure poverty eradication.”
The NBF says the SADC FTA “is the culmination of years of work”, which started when SADC members signed the SADC Trade Protocol in 1996.
The protocol came into effect in 2000 and is designed to remove customs tariffs on goods, particularly food products. Eleven of the 14 member countries now comply with the FTA agreement, including Botswana, Lesotho, Malawi, Mauritius, Mozambique, Namibia, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe.
“The two countries that have not begun to reduce their trade tariffs are Angola and the Democratic Republic of Congo, but it is anticipated that they will join the FTA in the future, boosting trade by about R559-billion ($71-billion) and adding 77-million people to the SADC market.
“Madagascar and Seychelles have submitted proposals to reduce their tariff barriers over a period of time, and have acceded to the FTA.
The NBF adds the FTA aims to eliminate import tariffs with plans for a customs union by 2010, a common market by 2015, monetary union by 2016 and a single currency by 2018.
The FTA agreement states that SADC member states need to comply with certain criteria for trading across borders. In order for a product to qualify as originating member of state, the product is required to meet one of three criteria. The wholly produced/obtained rule requires goods to be produced or manufactured in a member state using materials from within the region count as originating from within the SADC region.
The sufficiently worked or processed rule involves the working of a product into a new product that is significantly different. In order to establish whether a product has been sufficiently worked or processed, it will undergo a limited import test. A product which is simply repacked will not qualify as originating in the member state. Documentary evidence is required at the customs border for a product to be allowed duty fee access into a member state. Furthermore, all producers who wish to export goods are required to register with the relevant designated authority.
A further development as a result of the FTA is that SADC member states have agreed to eliminate all Non Tariff Barriers (NTB) and not to impose any new ones, except where necessary on the grounds of health and safety, public morals and national security.