Bande spells out customs union hurdles

Malawi’s Minister of Industry and Trade John Bande says unless the rules of origin are agreed upon for tradable goods within the Southern Africa Development Community (Sadc) region, a customs union will remain a far-fetched dream.

Some of the tradable goods, according Bande, include garments, textiles, blended teas, coffee and spices, among others.

“Rules of origin still remain an unresolved issue among Sadc member states. As Sadc, rules of origin are different from those applicable in the Common Market for Eastern and Southern Africa (Comesa) and East African Community (EAC), their negotiations in the context of the tripartite Free Trade Area (FTA) is likely to pose a formidable challenge,” said Bande.

Apart from the failure to agree on rules of origin, progression towards trade liberalisation is being bogged down by tariff liberalisation and non-tariff barriers, which governments continuously impose on each other despite publicly acknowledging the gains of trade liberalisation.

All member states have signed the trade protocol, which requires them to adopt and implement policies to eliminate existing non-tariff barriers (NTBs) and to refrain from imposing and introducing new barriers in intra-Sadc trade.

However, Bande observed that the imposition and introduction of new barriers by most member states negatively impacts intra-Sadc trade.

“Barriers such as quantitative restrictions on imports and exports, export duties and restrictions, import and export bans, seasonal import bans, arbitrary road charges and fees greatly reduce the benefits of regional integration and slow down the pace of moving to a customs union for Sadc in particular,” he said.

Bande said for Malawi and seven other Sadc member states, overlapping membership is one of the technical problems which may hinder them from belonging to the envisaged Sadc Customs Union.

Malawi already belongs to the Comesa Customs Union after participating in its launch and is expected to apply a Common External Tariff (CET) to all non-members.

As such, Bande said technically, the country cannot have another CET under Sadc and the establishment of the Sadc customs union may be affected by such a scenario.

With these fundamental and key policy issues, it is difficult to have Sadc customs union at the meantime.

According to the Sadc Regional Indicative Strategic Development Plan (RISDP), the region could have attained customs union status this year.

In the area of trade and economic liberalisation, the RISDP articulates the roadmap for Sadc integration through the establishment of a free trade area by 2008, a common market in 2015, a monetary union in 2016, and an economic union with a single currency in 2018.

For Malawi, the tariff phase down is now on course after the incorporation (in the 2012/13 National budget) of further reduction of import duties on 100 percent of goods imported from the Sadc region with the exception of South Africa.