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Regional Integration and the BIC: Paper only or practical implications for businesses?

Regional Integration and the BIC: Paper only or practical implications for businesses? Regine Qualmann GFA Group Adviser to SADC Secretariat. I. Structure of Presentation. The policy framework for investment at the regional level: International trends and practices

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Regional Integration and the BIC: Paper only or practical implications for businesses?

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  1. Regional Integration and the BIC: Paper only or practical implications for businesses? Regine Qualmann GFA Group Adviser to SADC Secretariat

  2. I. Structure of Presentation • The policy framework for investment at the regional level: International trends and practices • SADC policy instruments for an improved BIC: The Trade and the Finance and Investment Protocols – Progress and limitations • Practical experiences and challenges of advising on regional policy instruments

  3. II. Policy framework at the regional level: International trends and practices • Regional preferential trade and investment agreements are proliferating throughout the world • African countries are all members of one or more regional PTA • Increasingly, African countries also have bilateral investment and/ or double taxation agreements • While the majority of bilateral investment or double taxation agreements are of a North-South type, PTIAs are increasingly South-South (73 in 2004)

  4. II. Policy framework at the regional level (cont.) • Regional preferential trade and investment agreements (PTIAs) aim at facilitating trade and investment through (usually non-binding) commitments to liberalize, promote and/ or protect investment • PTAIs in Latin America are most far-reaching in scope covering national and MFN treatment as well as expropriation and dispute settlement provisions • ECOWAS and COMESA are currently embarking on defining a more substantive set of policy measures

  5. r Common* Market Customs Union SADC Central Bank Regional Currency Monetary Union FTA 2008 2010 2015 2016 2016 2018 SADC Objectives *REGIONAL COMMON MARKET = Free movement of capital, labour, goods and services

  6. III. SADC Policy Instruments for an improved BIC • (1) The SADC Protocol on Trade • Provides for the creation of an FTA by 2008 – 85% of trade in goods to be duty free • Individual tariff phase-downs are slipping in several cases • Rules of Origin remain a problem, especially regarding access to the SA/ SACU market • A mechanism to monitor and eliminate NTBs yet to be established • Liberalization of trade in services: Work in progress • Progress in goods and services market integration has been very limited in SADC

  7. III. SADC Policy Instruments for an improved BIC (cont.) • (2) The SADC Protocol on Finance and Investment • To be signed and ratified in 2006 with several MoUs under implementation – not investment • Covers a broad number of areas, including: • - co-operation on investment and on taxation • - macro-economic convergence • - regional capital and financial market development and co-operation • - co-operation among SADC Central Banks

  8. III. SADC Policy Instruments for an improved BIC (cont.) • (2) The SADC Protocol on Finance and Investment (cont.) • Development of the FIP through a bottom-up approach (MoUs) to avoid mistakes of the Trade Protocol • MoUs being implemented voluntarily but FIP implementation will need to be preceded by translation into national laws • More institutions and sub-structures involved than in trade – but again little direct involvement of private sector • Necessary to complement trade liberalization

  9. IV. Practical experience and challenges • Trend is towards higher commitment of policy on trade and investment related measures but African RECs are lacking both in scope and depth • SADC Member States particularly reluctant to commit themselves and follow-up implementation at regional level • Example: Ongoing EPA negotiations are unlikely to cover New Generation Issues – investment, competition, public procurement, etc. • SA pursues a national (and a multilateral) strategy which are not always compatible with the region

  10. V. Some conclusions and implications for GTZ work • Regional Organisations in Africa have embarked on a much larger integration agenda than just trade but … • most are too weak to live up to their co-coordinating and facilitating role • Policy making at regional level is an important entry point for both Governance Reform and Economic Liberalization and Development Programs • Role of advisers mainly of an OD plus type • Exchange of experience across RO advisory programs needs strengthening – but they currently lack scale! • High potential for development of tools to monitor implementation and impact of integration

  11. Thank you for your attention! Regine Qualmann RQualmann@sadc.int

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