Trade policy formulation and Regional Integration initiatives in Southern Africa

1. Richard Kamidza Regional Trade Policy Advisor Hub & Spokes Project SADC Secretariat Private Bag 0095 Gaborone Botswana rkamidza@sadc.int or richard.kamidza@gmail.com +67 74 337 037 or +267 3951077 Trade policy formulation and Regional Integration initiatives in Southern Africa

2. Introduction • Trade Development Challenges • Context in trade policy formulation • Formulating national trade policies • Implications of weak trade policy formulation • What should Members of Parliament do? • Conclusion Structure of my Presentation

3. The dilemma facing developing countries including Namibia! Falling Export Receipts Introduction (Contd.) External Debt; Balance of Payment challenges Development Aid

4. Though global trade is recognised as a powerful engine of economic growth & poverty reduction, many developing countries including Namibia: • find it difficult to maximise benefits from trade; • still lack a cohesive national trade policy or trade development strategy; • experience high staff turnover in trade related ministries thereby making it difficult to build an experienced & knowledgeable trade policy machinery; • have incomplete trade statistics & industry data which impedes the ability to make informed decisions in formulating trade policies, conducting trade negotiations & assessing trade development progress; • have existing trade consultative networks to inform policy making that are over-represented by government officials at the expense of the private sector & civil society; Trade Development Challenges

5. ……… many developing countries including Namibia lack: • sound analysis of trade opportunities; strategic & targeted interventions; & inclusive stakeholder engagement & coordinated action; • coordination mechanism to enhance effective trade policy formulation & trade negotiations partnership between governments, regional organisations, the private sector, civil society & development partners; • the ability to harness trust & accountability while addressing trade capacity development needs; • substantial resources targeting long-term solutions (human and institutional trade capacities) and short term capacity gaps (backstopping support and trade analysis); Trade Development Challenges (Contd.)

6. ……… many developing countries including Namibia: • Have exports that are under threats from regional competitors (South Africa), the global financial crisis & the Eurozone debt crisis resulting in: • balance of payment difficulties; • Reduced national budgets; • Retrenchment of civil service personnel including trade related ministries; • For example, the Eurozone crisis has directly reduced South Africa’s manufactured exports to that region (Europe is accounts for a third of South Africa’s manufactured exports) (Business Day, 11/5/2012); • According to Statistics South Africa on 10/5/2012, in March: • manufacturing factory production fell by 2,7% year on year; • output across a broad range of industries declined by 4,3%; • mining production dropped by 9,8% year on year; • Production of motor vehicles, food a& beverages, basic iron & steel, petroleum & chemical products, & furniture all fell; Trade Development Challenges (Contd.)

7. Institutional challenges (Is this the case with Namibia?) • Some developing countries have significantly weak: • institutional capacity, structures & systems in: • trade policy formulation; & • trade negotiations; • civil service capacity to generate & implement evidence-based trade policies, resulting in the adoption of ad-hoc measures as instituted by ruling political elites & other vested interest groups with strong political ties; • platforms for consultations & dialogue on trade issues between government officials & Non-State-Actors (business sector, civil society, labour, media) & parliamentarians; Context in trade policy formulation

8. Stakeholder relationships (Is this the case with Namibia?) • Some developing countries have: • contested trade policy formulation environment in which political agents, private sector lobbies, civil society institutions, donor agencies & researchers want to influence the process & outcome; • strong organized private sector (Manufacturers Association; National Association of Chambers of Commerce; National Association of Small Scale Industrialists; Association of Exporters; banking institutions and other professional associations) that is: • capable of influencing the formulation & implementation of trade policies, trade negotiations & regional trade agenda; • vocal, often interested in defending commercial interests of its constituents by extensive lobbying of various government offices & the Presidency for extended protective periods of high tariffs; Context in trade policy formulation (Contd.)

9. Stakeholder relationships (Contd.) (Is this the case with Namibia?) • Some developing countries have: • been experiencing increasing participation of civil society institutions (NGOs, faith-based institutions, consumer advocacy groups & labour): • In trade policy formulation & trade negotiations; • In advocatingfor the interest of ordinary citizens, particularly the vulnerable groups in society (women, youths & physically challenged) in both urban & rural areas; • been experiencing limited presence of academic & research institutions in trade policy formulation & trade negotiations; Context in trade policy formulation (Contd.)

10. Why trade policy formulation? • This is central to the overall goal of achieving sustainable social-economic development; • This requires patience, tenacity & flexibility; • This is not a finite process or event, but a continuous cycle; • For instance: • Finance – overseas the setting & administration of taxes and duties; • National Planning Commission – ensures compatibility of new trade treaties with existing national development plans; • Trade & Industry – ensures coherence with regional trade agenda; Formulating national trade policies

11. Formulating national trade policies (Contd.) President / Prime Minister National Assembly … the process Legislative Proposals Cabinet National Focal Point on Trade National Legislation Other fiscal policy goals Trade Policy Goals Non State Actors Trade Policy Proposals Tariff Technical Committee Inter-Ministerial Forum on Trade • Implementation Institutions (some examples) • Ministry of Trade & Industry; • Ministry of Fisheries & Marine Resources; • Department of Customs, etc.

12. Formulating national trade policies (Contd.) Coordination & Communication Strategy Information Trade Policy or Trade Negotiations Discussion Participation

13. Formulating national trade policies (Contd.) • However, the above requires effective: • coordination of various trade-related agencies within government; • Strengthening of private sector engagement by:- • avoiding ad-hoc approach to the sector; • mainstreaming consultative network with balanced cross-sectoral representation; • encouraging the sector to build technical skills in order to provide quality advice and input; • encouraging the sector to participate in specialised trade policy training programmes; • dialogue facilitation with other stakeholders such as: • NSAs – business sector; civil society groups & labour;& • MPs;

14. Formulating national trade policies (Contd.) • BUT in some regional countries there is:(Which is true for Namibia?) • lack of reliable network of public-private sector trade policy practitioners that is trusted by government; • no reliable trade statistics & industry data to assist in making informed decisions as well as assess trade development progress; • weak synergies & coalitions between & among various key constituencies, resulting in lack of collective ownership of the trade regime; • weak institutional & structural capacity in trade policy formulation & trade negotiations at all levels; • no regulatory frameworks resulting in fluctuating exchange rates, high inflation rates & poor fiscal measures amid widespread corruptions; • low industrial capacities & competitiveness;

15. BUT in some regional countries:(Is this the case with Namibia?) • developing national trade policy takes up-to 5 years; • trade agreements continue to be negotiated without a guiding national trade policy strategy; • Lessons from other regional countries on national trade policy formulation & trade negotiations; • Mauritius • Has a fairly resourced trade negotiation structure (a political directive); • Botswana • More often, government & NSAs meet under platform; • Zimbabwe • Has a loose, non-binding structure; • South Africa: • Has National Economic Development and Labour Council (NEDLAC), a vehicle in which representatives of government, labour, business & community organisations seek common ground on socio-economic development including trade policy formulation; trade negotiations; & regional integration processes; Formulating national trade policies (Contd.)

16. Trade policy & regional integration initiatives Namibian trade policy & its linkage with regional integration initiatives; • SACU Agenda: • Common Monetary Area (monetary policy); • Revenue sharing arrangement; • Share of that market; • How strategic is Namibia in SACU? • SADC Agenda • Consolidation ofSADC FTA following its launch in 20008; • Focuses on: • Reducing trade protection; • Spurring competitive liberalization; • Enhancing economic efficiency; • Improving investment prospects for the region; • Fostering complementarities in regional industrial policy; • Improving cross-border infrastructure development;

17. Trade policy & regional integration initiatives (Contd.) • the Tripartite FTA involving COMESA, EAC & SADC; • comprises 26 countries (half of AU) with a combined population of 527 million people; • is based on three Pillars: • Industrial development • Infrastructure Development • Market integration • The processes: • 1st phase of negotiations focuses on tariff liberalization; rules of origin; customs cooperation & customs related matters; Non-Trade-Barriers; Technical Barriers in Trade; etc. • 2nd phase of negotiations will focus on trade in services; trade related issues, trade development & competitiveness; • How is Namibia positioning itself to exploit this market? • Is Namibia domesticating regional development plans, programmes, policies & decisions?;

18. Implications of weak trade policy formulation Does Namibia’s trade policy generates enough revenue to support Socio-economic development challenges including transport networks?

19. Implications of weak trade policy formulation (Contd.) Does Namibia’s trade policy implementation capable of supporting health & poverty alleviation? Part of MY community or family tree

20. Does Namibia’s trade policy implementation supporting education or information technology expansion? My grandmother follows national development issues & events on facebook & twitter; Implications of weak trade policy formulation (Contd.)

21. Implications of weak trade policy formulation (Contd.) USA: US$342 = R2,538 Germany: € 375 = R3712 Compare weekly food expenditure from our trading partner Member States and YOUR constituent household!

22. Stakeholders must: • Strategically link with: • national & regional trade negotiators; • national & regional trade focused institutions; • development partners working on trade issues; • Monitor: • The design &/or implementation of your trade policy; • how government officials share trade negotiated outcomes & agreed regional trade schedules & commitments with other stakeholders & citizens; • how negotiators to package national interests, positions & offers during regional, bilateral and multilateral trade negotiations; • Support for the setting up of national & regional institutions that develop knowledge, skills & capacities to simultaneous deal with regional, bilateral & multilateral trade negotiations; • Form or build synergies, coalitions & partnerships with other stakeholders in order to ensure fair scrutiny of the process & outcomes by all stakeholders, media & citizens; What must Members of Parliament do?

23. Conclusion • As MPs when interacting with government negotiators & officials on trade policy or trade negotiations, always seek answers on the following questions: • What gains are possible? What gains are likely? For whom? • What losses are possible? What losses are likely? For whom? • What is the cost of not engaging in trade policy formulation? • What is the cost implications of blame shifting in trade policy design? • How to develop collective multi-stakeholder leadership , skills & strategies that generate benefits from trade related policies? • How to link trade related processes and outcomes with poverty alleviation & sustainable socio-economic development?

24. Thank you