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I. The problem in context back to top
Participation in the WTO
Botswana is a founding member of the WTO; it
joined the General Agreement on Tariffs and Trade (GATT) in 1987 and
opened its mission in Geneva in 2001. The mission also serves other
Geneva-based UN and specialized agencies. The Ministry of Trade and
Industry is responsible for foreign trade policy formulation and
implementation, negotiations on bilateral agreements, licensing and
regulation of domestic trade and regulation, and monitoring of domestic
consumer issues. Within the Ministry, the Department of International
Trade is responsible for foreign trade policy, including co-ordination
of WTO negotiations.
Botswana’s new foreign trade policy is aimed
at achieving free and dependable access for its exports and lowering the
cost of importing goods by reducing tariffs and trade barriers.
Reduction of tariffs on imported inputs is aimed at promoting
manufacturing for export and domestic consumption.
Botswana’s foreign trade policy has been
influenced by the concentration of the direction of its exports (to
Europe and South Africa). Diamonds, the main export commodity, are
exported to the United Kingdom under a special arrangement with De
Beers, while beef enters the European Union (EU) market under
preferential access under the Cotonou Agreement (formerly the Lomé
Agreement). The little that Botswana manufactures is exported mainly to
South Africa duty free under the Southern African Customs Union (SACU)
Agreement. The bulk of Botswana’s imports (almost 80%) come from South
Africa.
The advisor in the Ministry of Trade indicated
that
For a long time, because the market for the main
export commodity [diamonds] trades as a monopoly through De Beers and
the other significant export product [beef] receives preferential market
access, Botswana did not see the need to actively participate in WTO
negotiations. South Africa was setting external tariffs for all of the
SACU member states and to a large extent negotiating in the WTO on their
behalf. For a long time, because of the SACU set-up, the Ministry of
Trade and Industry was not considered important. SACU issues were
handled by the Ministry of Finance.
Botswana’s own domestic market has been
under threat since South Africa emerged from the apartheid era and has
gradually opened up its market to foreign competition. The first real
test was when South Africa negotiated a free trade agreement with the EU;
this agreement was a de facto free trade agreement with all the SACU
member states. The second eye-opener was the challenge faced by the EU
in the WTO on its discriminatory preferential market access (under the
Lomé Agreement) to a select number of African, Caribbean and Pacific (ACP)
countries. This meant that preferences enjoyed by Botswana (mainly for
its beef exports) were coming to an end.
Jay Salkin, a leading Botswana economist based
at the Botswana Institute for Development Policy Analysis (BIDPA),
believes that Botswana’s renewed interest in the WTO is due to the low
level of employment in the diamond sector and the erosion of preferences
to the European market:
While the diamond sector is by far the leading
sector of the Botswana economy in terms of its contribution to gross
domestic product and foreign exchange earnings, its contribution to
employment is extremely low (under 3.6%) due to the high capital
intensity of diamond mining and the fact that most of the diamond is
exported in rough form. As a result of the low contribution to
employment and fear of losing the market for beef in the EU, the
authorities have adopted an industrial strategy aimed at promoting
non-diamond industries both for export and local consumption.
He also feels that ‘The strategy could only
be achieved through active participation in the WTO to gain access to
new markets and at the same time opening up its own (SACU) market.’
Others feel that the current Minister of Trade
(Jacob Nkate) and his predecessor (Tebelelo Seretse) provided renewed
interest in WTO issues and exposed capacity constraints within the
Department of International Trade. Seretse played a key role during the
Doha Ministerial Conference (she was one of the vice-chairs), while
Nkate was the spokesperson for the ACP group in Cancún.
Interagency co-ordination
back to top
The Department of International Trade is
responsible for overall co-ordination of WTO negotiations. This
co-ordination is carried out via ad hoc contacts between officials
appointed by the relevant ministries and ad hoc meetings with relevant
representatives from the public and private sectors. The department
selects which other ministries participate in the consultative process.
Consultations are based on briefings by the department as well as
background papers, draft national positions prepared by the Ministry of
Trade and negotiating proposals from other WTO members.
Although the core functions of the Department
of International Trade deal with foreign trade, especially the WTO, the
conclusion from the interviews is that it is not capable of performing
its functions as would be desired. All the stakeholders interviewed were
dissatisfied with the adequacy of its services, efficiency of delivery
and overall effectiveness. Most people interviewed had complaints
regarding its operations.
The advisor for the Ministry of Trade feels
that the capacity constraints within the department limit its ability to
co-ordinate WTO issues:
The Department of International Trade is not
considered very effective because it has a limited number of staff to
deal with, among others, WTO matters, the EU, the Cotonou Agreement,
SADC, SACU [Southern African Customs Union] and bilateral agreement
matters. The majority of the staff do not have a good understanding of
trade issues, especially the WTO. Their academic training was not in
economics or law. This has, therefore, made it difficult for the
Department to perform its task effectively.
The stakeholders cite several examples of lack
of consultation between the lead ministry and other stakeholders. The
Director of Planning in the Ministry of Agriculture indicated that the
Department of International Trade does not include their input in the
country’s position:
There are many instances where the Ministry of
Trade officials have attended important WTO General Council meetings
without consulting the Ministry of Agriculture, even when the issues
under consideration are related to agriculture. The mechanisms for
intra-government co-ordination and consultation with domestic
stakeholders are weak. The country’s positions in the WTO are
formulated through ad hoc consultative processes, which include a select
number of government departments and the business society. A senior
trade official in the Ministry of Trade drafts a position paper which is
then shared between government departments and the permanent
representative to the WTO. The paper is then passed on to Cabinet for
approval without input from the stakeholders.
Others interviewed indicate that the lack of
interest in WTO issues is explained by the absence of political
leadership. Ministers of Trade do not hold their portfolios long enough
to appreciate WTO issues and in turn fail to provide the necessary
political leadership. The executive director of the Exporters
Association of Botswana (EAOB) feels that the high turnover of trade
ministers allowed officials of the ministry, who did not consult with
other stakeholders, to become passive participants in WTO processes:
Between the Singapore Ministerial and Cancún
Ministerial, we have had six ministers of trade. Our ministers are
always having to catch up and are therefore unable to provide the
political leadership that is required to ensure that we effectively
participate in the WTO processes.
The lack of inter-agency co-ordination in
Botswana is evident in the fact that the country has not made any
commitments in the services negotiations despite liberalizing the
telecommunications and banking sectors.
Economic background back to top
Botswana’s growth performance has been very
impressive. During the 1980s the country experienced real GDP growth
averaging 10% a year, before slowing down in the 1990s to 5.4% per year
due to slower growth in mineral sector activity. The rapid growth of
real GDP has lifted Botswana from being a low-income to a middle-income
country. GDP per capita has increased from US$1, 150 in 1980 to US$3,
066 in 2003.
Exports have played a very important role in
the economic development of Botswana, growing at an impressive annual
average of 21% since 1980 (Figure 1). Exceptionally
high growth rates in exports (25% per year) were recorded between 1983
and 1987.
Figure 1. Annual export growth 1982-2001
The value of exports increased from P348
million in 1982 to P8.3 billion in 1996; and to P14.6 billion in 2001. A
slowdown in world demand for diamonds between 1990 and 1993 affected
overall growth in exports.
Botswana’s exports are concentrated around
seven major products: diamonds, vehicles, copper-nickel, meat and meat
products, soda ash, hides and skins and live animals, and textiles.
Diamonds dominate Botswana’s exports. From
the mid-1980s to the late 1990s, the average annual share of diamonds in
total exports was 75% (Table 1). In recent years,
the share has increased to 84%. Other traditional exports, such as meat
and copper-nickel, have either levelled off or decreased in importance.
The share of textiles has also been declining.
Table 1
Botswana’s exports, as percentage of total
|
Product
|
1996
|
1998
|
2000
|
2001
|
|
Diamonds |
70.97 |
70.26 |
82.73 |
84.84 |
|
Vehicles |
13.78 |
10.78 |
1.91 |
2.02 |
|
Copper-nickel |
5.37 |
4.89 |
5.84 |
4.08 |
|
Textiles |
2.34 |
3.39 |
1.71 |
1.31 |
|
Soda ash |
0.84 |
1.10 |
0.69 |
0.88 |
|
Cereals |
0.05 |
0.14 |
0.13 |
0.11 |
|
Fruits and vegetables |
0.02 |
0.01 |
0.01 |
0.00 |
|
Milk and milk products |
0.00 |
0.00 |
0.00 |
0.00 |
|
Live animals, meat and related products |
2.85 |
3.76 |
2.17 |
2.96 |
|
Other products |
3.78 |
5.66 |
4.81 |
3.79 |
Source: Central Selling Organization.
Botswana’s direction of exports has remained
highly concentrated. Until 2000, the United Kingdom, Switzerland and
South Africa took up over 90% (see Table 2). The
only major change in the direction of Botswana exports was a shift in
the destination of diamonds from Switzerland to the United Kingdom.(1)
Table 2
Direction of Botswana’s exports (as a percentage of total exports)
| |
1995
|
1998
|
2000
|
2001
|
|
South Africa |
21.13 |
16.54 |
6.50 |
6.42 |
|
Switzerland |
30.75 |
16.33 |
13.33 |
0.01 |
|
United Kingdom |
37.26 |
55.59 |
69.92 |
85.83 |
|
Rest of the world |
10.86 |
11.54 |
10.24 |
7.75 |
Source: Central Selling Organization.
The share of exports to South Africa has been
steadily declining in recent years; in the period from 1995 to 2001,
they fell from 21% to just over 6.4%. This has been mainly due to the
decline in motor vehicle exports.
Despite several efforts by the government to
promote non-traditional exports, Botswana’s export basket remains
highly concentrated. The high proportion of diamonds in total exports
remains a major concern to both policy-makers and the business
community.
II. Local and external
players and their roles back to top
Government
The Ministry of Trade and Industry
The Department of International Trade in the
Ministry of Trade and Industry is the institution responsible for the
overall co-ordination of WTO negotiations. Co-ordination of WTO
negotiations is carried out through ad hoc contacts between officials
appointed by the relevant ministries and ad hoc meetings with relevant
representatives from the public and private sectors (i.e. industry
associations selected by the Ministry of Trade). Consultations occur on
a needs basis and circumstances determine who is consulted.
Consultations are based on briefings by the Ministry of Trade as well as
on background papers, draft national positions prepared by the Ministry
of Trade, and negotiating proposals from other WTO members.
According to the Advisor in the Ministry of
Trade, inter-agency co-ordination is poor due to weaknesses in the
Department of International Trade. Other stakeholders share the same
view.
The Ministry of Trade and Industry is crucial to
Botswana’s effective participation in the WTO. However, its internal
weaknesses, as well as its poor linkages with stakeholders, make it a
liability in the process. (Executive director, Exporters Association of
Botswana)
The Ministry of Trade is unable to provide
guidance to the Geneva mission on issues of interest to the country.
This may be attributed to shortage of qualified staff. As a consequence,
Botswana’s participation in the WTO is severely constrained.
(Permanent Secretary, Ministry of Foreign Affairs)
The Exporters Association of Botswana also
complained about the slow response of the Trade Ministry’s staff, the
lack of transparency and the inaccessibility of senior ministry
officials.
There is a general feeling that the Department
of International Trade does not have the necessary capacity and
competence to co-ordinate WTO issues. The department has only four
people working on international trade issues, including the WTO.
Ministers of trade
The high turnover of ministers of trade is
also seen as one of the main reason for weak inter-agency co-ordination
on WTO issues. Botswana had six different ministers of Trade in the
period between the Singapore Ministerial conference and the Cancún
Ministerial conference. The Executive Director of the Exporters
Association of Botswana has cited this as a reason for the lack of
consultation by the Department of Trade (see above). The high turnover
does not provide the necessary political leadership to deal with WTO
issues and consult widely.
South Africa has maintained the same Minister of
Trade since the Geneva Ministerial (Conference) and you could see that
with time his knowledge of WTO issues grew and so was the knowledge of
his officers. With us, it is one Minister per WTO Ministerial
conference. They always have to catch up but with a weak support
structure in the Ministry, we always end up observers. (Director of
Planning, Ministry of Agriculture)
Jacob Nkate and Tebelelo Seretse have shown an
interest in WTO issues. This has led to the setting up of new structures
for consultations on WTO issues. The Cabinet recently approved the
establishment of a high-level trade negotiating committee composed of
heads of ministries, state organizations and industry leaders.
However, others are sceptical of the new
arrangement. They feel that without improving the competence of the
officials in the lead ministry — the Ministry of Trade and Industry
— the committee will fail to provide the necessary guidance to negotiators
and the mission in Geneva.
Non-government bodies back to top
Consultations with non-government bodies occur
on a needs basis, and circumstances determine who is consulted.
Participants are industry and business associations, and research
institutions (e.g. the Botswana Institute for Development Policy
Analysis (BIDPA) and the University of Botswana) selected by the
Ministry of Trade.
The Ministry of Trade and Industry indicated
that they find it difficult to attract sufficient industry interest and
attendance at WTO consultations; these consultations normally occur
before ministerial conferences and attendance is normally very low. The
ministry feels that industry does not see the relevance of WTO
negotiations.
However, the industry and other
non-governmental institutions feel that the ad hoc nature of the
meetings does not warrant the allocation of scarce resources. They also
feel that their institutions have little, if any, impact on the
preparatory process for negotiations.
Two institutions are key to providing
analytical support on WTO issues: the University of Botswana and BIDPA.
The University of Botswana indicated that it is not consulted by the
Ministry of Trade. The head of the Economics Department stated that
We have never made any formal input into Botswana’s
position at the WTO, nor have we been notified of planned changes to
current activities and practices. Excessive government control accounts
for its inefficiency and ineffectiveness. The department would, ideally,
have a role to play, especially in terms of research and analysis. The
dearth of analysts to tackle issues related to trade and exports
requires that we should seek to venture into this important area (WTO
issues).
BIDPA indicates that it is only consulted just
before WTO ministerial conferences. Its executive director comments that
‘We would like to collaborate more with the Ministry of Trade on WTO
issues and avoid the current ad hoc arrangement.’
Foreign external players
back to top
A number of external players are involved in
formulating Botswana’s position at the WTO.
SACU
Even though the Ministry of Trade and Industry
is responsible for foreign trade and SACU member states are individually
represented in the WTO, Botswana’s foreign trade policy has
traditionally been determined by South Africa. Under the SACU Agreement,
other member states of SACU — Botswana, Lesotho, Namibia and Swaziland
— applied import duties set by South Africa and were provided with
compensation for surrendering their tariff-setting powers to South
Africa. South Africa’s Department of Trade and Industry (DTI) has
traditionally formulated and co-ordinated SACU’s trade policy. The
Industrial Development Corporation (IDC) — the business arm of the DTI
— and the South African Parliamentary Committees assist the DTI in
carrying out periodic reviews and assessments of trade polices.
However, the SACU Agreement allows smaller
members to make submissions in sectors where they need protection
(including protection from South African exports).
Even though South Africa was setting external
tariffs for all of us [SACU member states] we were able to protect
certain areas of interest to us such as beef. The situation was not as
it is portrayed. We could make submissions to South Africa and the
submissions were almost always taken on board. In addition, we did not
have the necessary expertise and capacity compared to South Africa’s
Board of Tariff and Trade to effectively participate in tariff setting.
(Secretary for Financial Affairs in the Ministry of Finance, Botswana)
Recently the SACU Agreement has been
renegotiated to allow active participation of the smaller member states
in the formulation of trade policy. SACU member states are now required
to negotiate jointly with third countries and participate in setting
common external tariffs. However, there is a feeling that South Africa
will take the lead because Botswana and other SACU states have the
capacity neither to negotiate a series of trade agreements nor to
provide analytical backup.
SADC Council of Ministers and African Trade
Ministers’ meeting
The SADC Council of Trade Ministers usually
meets before key meetings of the WTO to prepare a regional position,
formulated on the basis of country positions. Botswana has traditionally
not been very active in promoting positions at the regional level, as it
usually followed South Africa’s position.
Once a SADC position has been agreed upon it
is taken to the annual meeting of African Trade Ministers which then
formulates an African position.
ACP coalition
African, Caribbean and Pacific countries meet
before key WTO ministerial conferences to formulate a joint position.
Such a coalition ensured the renewal of the Cotonou waiver which was of
interest to Botswana. But it also blocked the launching of negotiations
on the new issues, of which trade facilitation was of benefit to
Botswana. At the Cancún Ministerial Conference, the Botswana Minister
of Trade was the spokesperson for the ACP.
III. Challenges faced and the outcome
back to top
Negotiating capacity
Considerable capacity is
needed for effective participation in the design, enforcement and use of
the rules and institutional mechanisms that shape the global economy. As
a latecomer to full participation in the trading system and negotiating
rounds, Botswana has experienced great difficulty in participating
effectively in the WTO processes. The Doha Round presents complex
challenges to Botswana: the broadening of the new issues will require
additional human and institutional capacity and bring a number of
challenges in its wake.
A shortage of staff explains
the deficiencies in trade-related expertise and negotiating skills. The
country lacks the capacity for effective participation in the
negotiation process, and has had a limited impact on the design of the
new rules. Knowledge of multilateral and regional trade policies,
institutions and agreements is limited. As the WTO process becomes even
more complex and technical, it is essential that Botswana develop the
capacity to articulate its interests and defend its rights within the
WTO framework.
The consensus emerging among
the stakeholders who were interviewed is that the Ministry of Trade and
Industry, as the co-ordinating ministry on WTO issues, needs to develop
an internal capacity by training people to align their skills with the
complexity of WTO negotiations. These must come from the
non-governmental bodies, government and the private sector.
Trade ministers also tend to
be poorly informed on the WTO and regional agreements and rules, and
other government officials and private-sector actors tend to be even
less knowledgeable. One reason is the high turnover of trade ministers.
Analytical capacity back to top
SADC countries face an
enormous task in their efforts to manage the activities arising from the
Doha Work Programme. Botswana needs to carry out careful analytical work
that identifies what the policy issues are and what Botswana’s
interests are in the many areas covered by the Doha Declaration. Such
analytical issues must be complemented by a solid empirical foundation
that accurately reflects local polices and practices.
There is a need to build
greater analytical capacity in the research and policy communities, and
ensure that this is designed to increase the number of researchers and
analysts in the region who are familiar with modern analyses of trade
and trade policy and the operation of the global trading system.
Improving the quality of policy analysis will lead to better prepared
negotiating briefs, through the preparation of high-quality analytical
studies designed to illuminate key trade issues. Improved organization
and availability of quantitative and qualitative data on trade-related
issues and ‘demand-driven policy analysis’ will assist Botswana in
preparing thorough and professional negotiating briefs.
Data limits our ability to do more
analytical work on trade issues. For example, the latest trade data we
have is for 2001. How do you expect us to advise on the flow of trade?
How can you initiate any anti-dumping investigations with a lag of three
years? (Johnson Maiketso, BIDPA researcher)
Involvement of other stakeholders
back to top
There is widespread recognition of the need to
involve a wide range of other ministries in the consultations in order
to benefit from their expertise, sectoral knowledge and contacts. The
effectiveness of trade policy-making is constrained by limited
government and private-sector access to information on international
trade developments, issues and agreements. The dissemination of
policy-relevant trade information is often inconsistent.
IV. Lessons for others back to top
It is evident that the
Ministry of Trade and Industry is key to Botswana’s effective
participation in the WTO. Weaknesses within it seem to be the root cause
of the absence of formal and effective domestic inter-agency
co-ordination. Key stakeholders that would otherwise provide valuable
input into Botswana’s participation in the WTO are not consulted. It
is therefore important that structures are instituted that will address
the problem. These will include:
-
improving capacity within the Ministry of Trade
and Industry;
-
improving inter-government consultation; and
-
improving consultation with other stakeholders.
Capacity of the Ministry of Trade and
Industry back to top
Lack of capacity in the lead
ministry on WTO issues translates into an inability to have effective
inter-agency co-ordination. The Department of International Trade should
be responsible for the country’s representative office in Geneva. It
should be entrusted with the task of inter-ministerial co-ordination of
all WTO-related issues, relying on Botswana’s permanent representative
at the WTO to establish and maintain relationships with other WTO
members and the WTO Secretariat.
The Botswana mission in Geneva
requires clear instructions from the capital on the positions that
should be taken in WTO meetings; and must be able to channel information
and briefings to the Department, which in turn should transfer this to
the government bodies affected and other stakeholders.
The mission in Geneva should
be large enough to allow participation in all major WTO committees and
meetings. The current arrangement, with one junior trade officer, is
inadequate. The office should provide the Department with regular
information and reports on the positions taken by other WTO members;
furthermore, the Department should respond in a timely manner after
consulting with all the key stakeholders.
The absence of an information
centre in the Ministry of Trade and Industry is one of the reasons for
poor dissemination of information to stakeholders. An information centre
can be given the task of streamlining information flows within the
government and to other non-government institutions on WTO-related
issues.
Intra-governmental co-ordination
back to top
Co-ordination of government
positions for negotiations should be conducted through an
inter-ministerial group, which should co-ordinate the different points
of view of the ministries with an interest in the negotiating process
and elaborate Botswana’s position for WTO negotiations. The group
should also follow up on the implementation of agreements reached at the
WTO and hold regular meetings and facilitate regular technical exchanges
between relevant ministries.
Seminars on WTO issues and
processes for ministry officials not directly involved in the
negotiations should be organized; this will stimulate the interest of
other government departments as they will begin to see their roles in
WTO negotiations.
There is need to develop a
strong co-ordination process between Geneva and the capital that will
include reports, feedback and relevant minutes of meetings sent from
Geneva to the capital and the sending of representatives. The
inter-ministerial group should invite officials from Geneva, on an ad
hoc basis, to brief meetings held in the capital.
Consultation with other stakeholders
back to top
There is a great potential for
private-sector organizations to contribute to Botswana’s participation
in the WTO. For example, the Exporters Association of Botswana is an
indigenous business organization with a wealth of knowledge on small to
medium-sized business operations; BIDPA has established a reputation for
rigorous, thorough and balanced policy research and analysis that
informs major public policy initiatives.
Botswana should advocate an
open and transparent approach to trade negotiations and use a broad
range of consultation mechanisms to seek the views of stakeholders. The
Ministry of Trade and Industry should meet frequently with all the
stakeholders, including the country’s negotiating team for economic
partnership agreements (EPAs) and other regional and multilateral trade
agreements, to keep them informed of progress in the negotiations and to
answer specific questions they may have. Through the Joint Integrated
Technical Assistance Programme (JITAP), Botswana has set up a high-level
national trade policy negotiating committee. The committee, expected to
meet regularly for an update on all trade negotiations and to plan
future trade negotiations, encompasses all relevant ministries and
government departments, public institutions, private-sector
organizations, NGOs and academic and research institutions. However, the
Ministry of Trade and Industry has not provided this committee with the
leadership it requires to ensure regular meetings and the exchange of
information.
NOTES:
1.- The shift results from an internal
arrangement at De Beers, which exclusively markets Botswana’s
diamonds, and does not reflect a change in demand. In the past all
Botswana’s diamond exports went to Switzerland, but eventually ended
up in London at De Beers’ Central Selling Organization, now the
Diamond Trading Company. back to text
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