PRESS RELEASE
PRESS/TPRB/74
27 April 1998TRADE
POLICY REVIEW BODY: REVIEW OF THE MEMBERS OF THE SOUTHERN AFRICAN CUSTOMS UNION (SACU)
TPRB'S EVALUATION Back to top
The Trade Policy Review of
the World Trade Organization (WTO) concluded its second review of the members of the
Southern African Customs Union's (SACU) trade policies on 21, 22 and 23 April 1998. The
text of the Chairperson's concluding remarks is attached as a summary of the salient
points which emerged during the discussion.
The review enables the TPRB
to conduct a collective examination of the full range of trade policies and practices of
each WTO member country at regular periodic intervals to monitor significant trends and
developments which may have an impact on the global trading system.
The review is based on two
reports which are prepared respectively by the WTO Secretariat and the government under
review and which cover all aspects of the country's trade policies, including: its
domestic laws and regulations; the institutional framework; bilateral, regional and other
preferential agreements; the wider economic needs and the external environment.
A record of the discussions
and the Chairperson's summing-up, together with these reports (two per country examined),
will be published in due course as the complete trade policy review of SACU and will be
available from the WTO Secretariat, Centre William Rappard, 154 rue de Lausanne, 1211
Geneva 21. The Secretariat reports are also available to the press on the WTO website (in
the newsroom).
Since December 1989, the
following reports have been completed: Argentina
(1992), Australia (1989 & 1994), Austria (1992), Bangladesh (1992), Benin (1997),
Bolivia (1993), Botswana (1998), Brazil (1992 & 1996), Cameroon (1995), Canada (1990,
1992, 1994 & 1996), Chile (1991 & 1997), Colombia (1990 & 1996), Costa Rica
(1995), Côte d'Ivoire (1995), the Czech Republic (1996), Cyprus (1997), the Dominican
Republic (1996), Egypt (1992), El Salvador (1996), the European Communities (1991, 1993,
1995 & 1997), Fiji (1997), Finland (1992), Ghana (1992), Hong Kong (1990 & 1994),
Hungary (1991), Iceland (1994), India (1993 & 1998), Indonesia (1991 and 1994), Israel
(1994), Japan (1990, 1992, 1995 & 1998), Kenya (1993), Korea, Rep. of (1992 &
1996), Lesotho (1998), Macau (1994), Malaysia (1993 and 1997), Mauritius (1995), Mexico
(1993 & 1997), Morocco (1989 & 1996), Namibia (1998), New Zealand (1990 &
1996), Nigeria (1991), Norway (1991 & 1996), Pakistan (1995), Paraguay (1997), Peru
(1994), the Philippines (1993), Poland (1993), Romania (1992), Senegal (1994), Singapore
(1992 & 1996), Slovak Republic (1995), South Africa (1993 & 1998), Sri Lanka
(1995), Swaziland (1998), Sweden (1990 & 1994), Switzerland (1991 & 1996),
Thailand (1991 & 1995), Tunisia (1994), Turkey (1994), the United States (1989, 1992,
1994 & 1996), Uganda (1995), Uruguay (1992), Venezuela (1996), Zambia (1996) and
Zimbabwe (1994).
TRADE POLICY REVIEW BODY: REVIEW OF
THE MEMBERS OF THE SOUTHERN AFRICAN CUSTOMS UNION (SACU)
CONCLUDING REMARKS BY THE CHAIRPERSON Back
to top
Over the past three days the
TPRB has conducted the first group review of the members of the Southern African Customs
Union (SACU), Botswana, Lesotho, Namibia, South Africa and Swaziland; this has also been
the second review of South Africa. These remarks, prepared on my own responsibility, are
intended to summarize the main points of the discussion and not to be a full report.
Details of the discussion will be reflected in the minutes of the meeting. The SACU
members provided written replies in the context of the meeting and have undertaken to
supply further details as necessary.
The discussion developed
under three themes: the macroeconomic and structural environment; trade policies and
sectoral issues; and trade agreements.
Macroeconomic and structural environment
Members commended the SACU
countries for the fundamental economic reform that they were undertaking; they had moved
away from import-substitution to more outward-oriented policies and were adjusting to the
political transformation of South Africa as well as to the fast changing environment of
globalization.
Members welcomed South
Africa's pursuit of structural adjustment and its reintegration into the world
economy. Members emphasized that the reform and its continued pursuit, including
substantial trade liberalization, would contribute to further diversifying South Africa's
exports away from their dependence on mineral products, particularly gold, and would help
to attract foreign direct investment. Noting in this context the role of the Growth,
Employment and Redistribution (GEAR) framework, Members sought clarification on its
coherence as a macroeconomic and structural strategy, comprising elements such as wage
policy and incentives schemes geared at capital intensive sectors, with the objectives of
job creation and an improvement in competitiveness. Some concern was expressed about the
perceived slowdown in privatization; and there was a certain worry that, as the region's
largest economy, South Africa might divert resources from neighbouring countries and make
it difficult for them to compete. Some Members also asked about the effects of the
east-Asian crisis on the SACU economies.
Members commended Botswana
on its recent economic performance; they asked about the coordination of its monetary and
trade policies, with Botswana not a signatory to the Multilateral Monetary Agreement
linking the other SACU members. It was emphasized that further liberalization under SACU
would help diversify the Botswana economy away from its dependence on diamonds and meat,
and create employment.
Members recognized that Lesotho's
status as a least developed country posed special challenges. They noted that Lesotho was
heavily dependent on SACU revenues and asked about efforts to widen and improve the fiscal
base; this question applied equally to Swaziland and, to a certain extent to Namibia. It
was further noted that these revenues could decline as SACU further liberalized its trade
regime. They added that Lesotho's market-oriented reforms, and trade liberalization under
SACU, should help to diversify the economy away from its dependence on remittances from
migrant workers.
Participants congratulated Namibia
on its efforts since independence in 1990 to restructure and diversify its economy,
including its export base, away from mining and agricultural and fisheries production;
combined with further trade liberalization under SACU, the reforms should help to create a
free-market environment and contribute to meeting objectives such as job creation.
Members asked about Swaziland's
development plan. Noting that investment, mainly in the industrial sector, had stagnated
since the political transformation in South Africa, some participants stressed that a
free-market environment should contribute to attracting foreign capital to Swaziland.
In reply, the representative
of South Africa said that coherent macroeconomic policies had resulted in an
unprecedented stability in South Africa's national accounts and in improved business
confidence; this, and the ongoing restructuring of the productive base, constituted a
strong platform from which future targets could be reached. On employment, he indicated
that South Africa had a multifaceted strategy to promote labour-intensive sectors in
manufacturing and to increase value-added in capital intensive sectors. He contested the
suggestion of any slowdown in privatization; rather an overall strategy was being followed
that would lead to improved efficiency and competitiveness. He added that in moving toward
a free-trade area in the Southern African Development Community (SADC), South Africa would
liberalize more rapidly than its partners, so as to allow them a longer adjustment period;
in addition, South Africa was convinced of the need to promote investment in the smaller
economies in order to help accelerate their development process.
The Botswana
representative noted that his country's currency was fully convertible and that
international reserves were the equivalent of 30 months of imports. She added that the
Government had established a task force for privatization, which was seen as an important
element in liberalizing and diversifying the economy. Both the representatives of Botswana
and Namibia indicated that the east-Asian financial crisis would affect their economies,
particularly through the slowdown in the sale of gem diamonds.
The representative of Lesotho
stated that his country's Structural Adjustment Plan had been implemented since the late
1980s and was improving Lesotho's economic performance, thus helping to reduce reliance on
remittances from migrant workers. The new Lesotho Highlands Water Project had also made a
significant contribution.
The representative of Namibia
said that the planned introduction of a value added tax (VAT) in 1999 should help
diversify the revenue base and lessen the impact of any changes in the SACU regime.
Namibia believed that the ongoing commercialization of public enterprises would put them
in a better position for successful privatization. He added that Namibia had embarked upon
a process of industrial development and export diversification supported by a tax-based
incentive scheme and an export processing zone regime.
The representative of Swaziland
noted that his authorities were also considering the introduction of a VAT, which together
with improved tax administration, should improve the revenue base and reduce reliance on
SACU customs duties. To promote investment, the Government had recently launched a
one-stop shop for investors and an Investment Act had been finalized.
Trade policies and sectoral issues
Trade policies
Members welcomed the recent
changes in the trade policy of SACU members and the adoption of more outward-oriented
trade practices. However, some Members considered that SACU's existing tariff structure
might not be completely appropriate for the smaller economies. Moreover, some import
prohibitions and controls were maintained. Overall, the trade regime still appeared to
show a certain anti-export bias. Members welcomed the Tariff Rationalization Process, but
a rather complex tariff regime remained, which lacked a certain transparency and
stability. Some sectors were protected behind high and escalating tariffs. One Member
expressed concern about the recent tariff increases on dairy products. Several Members
inquired about proposed tariff increases on certain electronic and agricultural products.
Members encouraged SACU countries to further simplify the tariff and reduce the rates.
Questions were raised about
rules of origin. Some Members questioned South Africa's VAT regime on imports, and raised
concern about the implementation of the WTO Customs Valuation Agreement by SACU countries.
Some Members sought
information on efforts to restructure South Africa's trade remedy regime, expressing some
worry about the application of anti-dumping measures. Questions were also asked about the
use of local content requirements in industries such as motor vehicles and
telecommunications. Some Members thought that certain technical standards were
unnecessarily stringent and cumbersome. Questions were raised on government procurement,
including as to whether South Africa intended to join the Government Procurement
Agreement.
On intellectual property,
concerns were expressed about certain aspects of South Africa's TRIPS legislation,
including its application to pharmaceuticals. South Africa was encouraged to modify its
TRIPS legislation and thus provide a model on intellectual property protection to other
SACU members. Information on the status of the various TRIPS-related bills was requested.
Members welcomed South
Africa's removal of the General Export Incentive Scheme, but drew attention to the wide
variety of export incentive schemes that still remained.
Speaking on behalf of its
SACU partners, South Africa noted that the perceived anti-export bias in its trade
policy instruments was not simply related to the tariff structure but to a complex set of
factors. In this respect, it was essential to examine specific trade matters as part of
the integrated approach South Africa had adopted on trade, industrial, investment and
competition policy matters. Industrial and trade policies aimed at accelerating industrial
restructuring and raising competitiveness. To achieve such restructuring, legitimate
industrial instruments and export promotion measures were being used.
The representative added
that the tariff structure was not complex, except perhaps with respect to textiles. The
ongoing tariff restructuring, which had incorporated a downward trend in rates, would
continue reducing the number of tariff bands. Moreover, South Africa was committed to a
structure of ad valorem tariffs and, excluding some agricultural products, this would be
achieved by 1999. The still frequent tariff changes were mainly linked to the
restructuring process. Strict guidelines were used to consider tariff increases; thus
while policy had at times been selective, changes were made in transparent manner.
Compound and formula tariffs applied to only a few items. South Africa would allow
formula tariffs to lapse by January 1999. Tariff phase-down schedules had also been
published for major sectors such as textiles, clothing, and motor vehicles.
Remaining quantitative
import restrictions were not a significant trade barrier with almost all such restrictions
having been removed. Restrictions on black tea would be tariffied and local content
requirements on this product removed within the next few months. Licensing was used on a
non-restrictive basis. Import restrictions on used goods would remain in order to protect
against disruptive prices. Most export controls were not applied restrictively and were to
be removed. The representative of Namibia added that his Government was in the
process of reviewing Namibia's import and export licensing regime, to assure full
conformity with WTO rules.
The representative of South
Africa noted that while it would be a major challenge to streamline the rules of origin in
existing and future trade agreements, and in the Lomé Convention, such rules were, by the
nature of customs unions, not an issue for SACU itself.
South Africa applied trade
defense measures in accordance with WTO rules and legislation was being amended to reflect
this. He added that given South Africa's short experience with such measures, further
experience and capacity would be required to cope with the growing number and complexity
of investigations.
The South African
representative noted that South Africa's approach to government procurement was based on
the desire to employ it as an instrument to achieve socio-economic objectives without
forfeiting good financial management. The representatives of the SACU members provided
details on their standards and technical requirements.
On intellectual property,
the South African representative said that his country was the only developing country to
have assumed full and immediate obligations under the TRIPS Agreement. To bring domestic
legislation into line with international rules, several legislative amendments had been
enacted over the last five years. The representative of Botswana gave details on
the Copyright and Neighbouring Rights Bill that was expected to be tabled in Parliament in
July 1998.
Sectoral issues
Expressing full appreciation
for the progress made by South Africa in liberalizing its agricultural sector, Members
inquired about plans for the abolition of the remaining control boards; some participants
expressed concern about the evolution of tariffs on agricultural products, including for
wine and dairy items. Questions were raised about trade policy instruments in
manufacturing, including in the motor vehicle sector. Questions were also asked about the
gold tax formula, and about further liberalization and privatization in services,
particularly in the telecommunications, transport and financial areas. Similar questions
on services were addressed to the other SACU members and Lesotho was also asked about
self-sufficiency in agriculture and outward processing in clothing.
The representative of South
Africa indicated that his Government had been engaged in an agricultural policy reform
process that would result in a White Paper for agriculture by end 1998. In line with such
reform, all agricultural marketing boards had been phased out in 1997 and export controls
on agricultural products had either been removed or were not applied restrictively. Price
controls had also been eliminated, except on sugar. Reform of the marketing of wine and
sugar was under way.
He added that the industrial
subsector was being restructured, with an emphasis on the use of supply-side measures. In
addition, reforms were also under consideration in telecommunications and in transport.
The representative of Botswana
noted the liberalization already achieved in telecommunications in her country, and the
representative of Lesotho indicated that steps were being taken to promote tourism.
He added that his Government had removed distortions caused by the agricultural
self-sufficiency policy followed in the 1980s; policy was now geared to exploiting
Lesotho's comparative advantage in the production of high value crops. In manufacturing,
Lesotho was committed to maintaining the momentum achieved in the past decade, including
in clothing, with an export-led growth strategy. The representative of Namibia
added that Namibia was committed to liberalizing its service sector and that it would
participate in the next WTO round of negotiations on trade in services. The representative
of Swaziland noted that liberalization of telecommunications in his country was
under consideration.
Trade agreements
Members took note of the
importance attached by SACU countries to their participation in the multilateral trading
system and of their determination that their regional agreements would conform with the
rules of the multilateral system. Certain SACU countries still faced some challenges in
reviewing their domestic legislation to ensure conformity with multilateral rules. Some
SACU members might also need to strengthen their institutional capacity to implement their
individual WTO rights and obligations; the WTO could provide technical assistance for
this.
Several WTO Members
highlighted the interlinkage among Southern African countries, which collaborated closely
through an elaborate network of regional agreements including SACU, SADC, and COMESA.
Details were requested on the status of the renegotiation of the SACU Agreement and the
implementation of the SADC Trade Protocol. The matter of a possible free-trade agreement
between South Africa and the European Union was raised, and some Members stressed the
requirement that it apply to substantially all trade. Members inquired about the
notification to the WTO of the regional arrangements.
Members noted that for the
countries under review, SACU was the focal point of their trade policy regime. It was
recognized that the network of agreements in which these countries participated
facilitated economic exchange. However, this network may have complicated trade relations
and perhaps created certain conflicts between national and collective interests.
The representative of South
Africa, speaking on behalf of the other SACU members, stated that their countries were
engaged in efforts to foster economic growth and balanced development through cooperation
and integration. Regional integration would help build a competitive regional economy that
would provide a basis for more effective integration into the world economy. Given the
disparity of economies involved, this process would require strategies to boost supply
capacity in the smaller SACU economies. Measures would also be needed to ensure that these
countries did not suffer sudden reductions in SACU revenue. The representatives of Botswana
and Namibia stressed that their Governments sought to make SACU more democratic.
With regard to the SADC
Trade Protocol, the South African representative indicated that SACU partners would make a
comprehensive offer at the soon to be held SADC Ministerial meeting. The ratification of
the SADC Trade Protocol was progressing and concerns about delays were premature. It would
be notified to the WTO following the conclusion of the substantive agreement and its
ratification.
Negotiations were still in
progress on a comprehensive trade, cooperation and development agreement between South
Africa and the European Union. Both parties desired to conclude those negotiations by June
1998.
Overall, Members welcomed
the collective participation by Botswana, Lesotho, Namibia, South Africa and Swaziland in
the review process. Members appreciated the recent measures taken by them towards economic
reform and market opening. Members also emphasized the importance of the continued pursuit
of these policies, both to increase market access and to improve the stability and
transparency of the SACU trade regime. I wish to emphasize that the thrust of the
discussion was supportive of the underlying direction of economic and trade policies in
Southern Africa during a period of sharp transition in that region. Members offered strong
encouragement to the five countries reviewed to consolidate and build on the achievements
of recent years. Back to top |