Mauritius – Customs Training of Trainers Course on SADC Rules Of Origin

The SADC Rules of Origin are the cornerstone of the SADC intra-trade and serve to prevent non-SADC members benefiting from preferential tariffs. The determination of the eligibility of products to SADC origin and the granting of preferential tariffs to goods originating in the Member States is an important process in the implementation of the SADC Protocol on Trade and regional integration. Annex I of the SADC Protocol on Trade provide that goods shall be accepted as eligible for preferential treatment within the SADC market if they originate in the member States, and the qualification of such products shall be as provided in Appendix I of Annex I of the Protocol on Trade.

The 2nd Customs Training of Trainer Course was held on the SADC Rules of Origin at the World Customs Organization (WCO) Multilingual Regional Training Centre, Mauritius Revenue Authority from the 25th -30th November 2013. The objective of the training course is to establish a pool of trainers on the SADC Rules of Origin who can provide guidance and train on the subject at national level to Customs officials and relevant Stakeholders.

During his opening address, Mr Sudamo Lall, Director General of the Mauritius Revenue Authority, laid emphasis on the critical importance of the ‘Rules of Origin’ as it has ‘great impact on the duties to be collected, as businesses increasingly locate the different stages of their activities in a way that optimizes their value-addition chain’. On the other hand Mr James Lenaghan Director Customs mentioned that ‘the Rules of Origin in any Free Trade Area are of prime importance as they serve to determine which goods can benefit from preferential tariffs. This enables member states of a particular Free Trade Area to benefit from the tariffs advantages inherent to the Protocol of trade agreed within that Free Trade Area. Since Customs is the controlling agency for preferential origin, it is vital that our officers are trained to correctly apply the SADC Rules of Origin’.

During their short visit at the training workshop, the Executive Secretary ,Dr Stergomena Tax and the WCO Secretary General, Mr Kunio Mukiriya addressed the group on the importance of rules of origin as the basis for regional integration. Dr. Tax also urged the participants from all SADC Member States to cascade the knowledge gained at the Centre to their respective countries.

The SADC Customs Training of Trainers programme is being implemented in collaboration with the World Customs Organization (WCO), the Regional Office for Capacity Building (ROCB), the WCO Regional Training Centres and GIZ (Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ). Source: SADC Secretariat

Special Economic Zones and Regional Integration in Africa

SEZ and Regional Integration in AfricaOne of the most prominent features of the global trading landscape in recent years has been the worldwide proliferation of bilateral and regional trade agreements. Africa is no exception to this pattern. Another prominent development in Africa over the last couple of decades has been the increasing use by many countries in the region of various types of special economic zones (SEZ). These zones are more and more being viewed in the region as important mechanisms for attracting foreign investment, creating jobs, boosting manufacturing production and manufactured exports and contributing to much-needed industrial and economic development.

This paper – Click here for access – does not seek to provide an evaluation of the performance of the various special economic zone programmes established in Africa in recent years, but instead seeks to explore the various issues, challenges and opportunities that arise when countries – and especially developing countries – use special economic zones while simultaneously pursuing regional integration initiatives. This is a particularly important subject in the context of the COMESA-EAC-SADC T-FTA as a large number of the countries involved are actively using special economic zones or are currently in the process of establishing zone programmes. Source: Tralac

Uganda joins COMESA

COMESAUganda has become the 15th member of the Free Trade Area (“FTA”) established by COMESA. Under the membership, the tariff on Ugandan goods will be reduced to 0 percent when exported to other signees, compared to the two percent levy on goods to and from non-member states.

The COMESA FTA began in 2000, and its other member states are Burundi, Comoros, Djibouti, Egypt, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Sudan, Swaziland, Zambia and Zimbabwe. Uganda was a founding member of COMESA in 1994 but until now was excluded from the FTA. As the Democratic Republic of Congo and South Sudan are Uganda’s biggest trading partners, there is speculation that they will be the next two states to be granted membership.

Sub-Saharan Africa, which includes many of the FTA’s member states, has one of the strongest growth rates in the world, and its regional growth is expected to exceed five percent this year. The opportunity for infrastructural development will continue to grow in line with this, creating a wealth of investment opportunities for banks and lenders. Analysts have identified a particular need for infrastructure in energy and oil and gas-related sectors, as well as transport. Source: Lexology.com

Regional Blocs seek to remove Trade Barriers

THREE regional economic communities (Recs) have taken the lead as Africa seeks to remove trade barriers by 2017. The establishment of a Continental Free Trade Area (CFTA) was endorsed by African Union leaders at a summit in January to boost intra-Africa trade. Sadc, Common Market for Eastern and Southern Africa (Comesa) and the East African Community (EAC) have combined forces to establish a tripartite FTA by 2014.

Willie Shumba, a senior programmes officer at Sadc, told participants attending the second Africa Trade Forum in Ethiopia last week that the tripartite FTA would address the issue of overlapping membership, which had made it a challenge to implement instruments such as a common currency. “…overlapping membership was becoming a challenge in the implementation of instruments, for example, common currency. The TFTA is meant to reduce the challenges,” he said.

Countries such as Zimbabwe, Tanzania and Kenya have memberships in two regional economic communities, a situation that analysts say would affect the integration agenda in terms of negotiations and policy co-ordination. The TFTA has 26 members made up of Sadc (15), Comesa (19) and EAC (5). The triumvirate contributes over 50% to the continent’s US$1 trillion Gross Domestic Product and more than half of Africa’s population. The TFTA focuses on the removal of tariffs and non-tariff barriers such as border delays, and seeks to liberalise trade in services and facilitation of trade and investment.

It would also facilitate movement of business people, as well as develop and implement joint infrastructure programmes. There are fears the continental FTAs would open up the economies of small countries and in the end, the removal of customs duty would negatively affect smaller economies’ revenue generating measures.

Zimbabwe is using a cash budgeting system and revenue from taxes, primarily to sustain the budget in the absence of budgetary support from co-operating partners. Finance minister Tendai Biti recently slashed the budget to US$3,6 billion from US$4 billion saying the revenue from diamonds had been underperforming, among other factors.

Experts said a fund should be set up to “compensate” economies that suffer from the FTA. Shumba said the Comesa-Sadc-EAC FTA would create a single market of over 500 million people, more than half of the continent’s estimated total population. He said new markets, suppliers and welfare gains would be created as a result of competition. Tariffs and barriers in the form of delays have been blamed for dragging down intra-African trade.

Stephen Karingi, director at UN Economic Commission for Africa, told a trade forum last week that trade facilitation, on top on the removal of barriers, would see intra-African trade doubling. “The costs of reducing remaining tariffs are not as high; such costs have been overstated. We should focus on trade facilitation,” he said.

“If you take 11% of formal trade as base and remove the remaining tariff, there will be improvement to 15%. If you do well in trade facilitation on top of removing barriers, intra-African trade will double,” Karingi said. He said improving on trade information would save 1,8% of transaction costs. If member states were to apply an advance ruling on trade classification, trade costs would be reduced by up to 3,7%.He said improvement of co-ordination among border agencies reduces trade costs by up to 2,4%.Karingi called for the establishment of one-stop border posts.

Participants at the trade forum resolved that the implementation of the FTA be an inclusive process involving all stakeholders.They were unanimous that a cost-benefit analysis should be undertaken on the CFTA to facilitate the buy-in of member states and stakeholders for the initiative. Source: allAfrica.com

Free Trade talks to kick continent into the future

The first round of negotiations to establish a free trade area covering 27 countries in southern and east Africa will kick off on December 8, in Nairobi. It is envisaged that the negotiations will be completed in 36 months. (Really?)

The three trade blocs involved – the Southern African Development Community (SADC), the East African Community (EAC) and the Common Market for Eastern and Southern Africa (COMESA) – decided in October 2008 in Kampala to move towards a free trade agreement.

The intention is to boost intra-regional trade because the market will be much bigger, there will be more investment flows, enhanced competitiveness and the development of cross-regional infrastructure.

Industrialisation, making goods to sell instead of selling primary products, is a possible and also necessary spin-off. Competition with older established and also bigger emerging economies might be a stumbling block initially, but the huge new market may make it possible for locally manufactured goods to compete with those imported from outside the FTA.

Close to 600 million people live in the FTA with a gross domestic product of $1 trillion – suddenly we are boxing in the same weight division as China, India, Russia, Brazil, the US and the EU. Source: All Africa.com.

BriberyComment: Heard all of this before?  It could be hoped that some positive developments will materialise from more talkshops with promises to alleviate poverty and increase Africa’s slice of the international market. While the retail and telecommunications industries have made significant inroads into Africa, manufacturing remains a moot point. Does Africa have the political will to take risks? Removing internal border controls for instance are not high priority for sovereign governments. Neither for that matter is the question of the integrity of officials who man these borders. And, neither is the matter of removing one of the key contributors to cross border fraud – the “paper customs declaration”. Nonetheless, attempts are still being made to redress these ills. Recent developments within SACU indicate a genuine move towards customs-2-customs information exchange based on the ‘Customs Inter-connectivity’ concept. More on this shortly.

SADC Free Trade Area requires Integrated Border Management

At least two articles have surfaced within the last week calling for greater urgency towards the development of free trade areas in Africa. How much time, money and effort seem to be expended in futile trade discussions that – to the man in the street – are meaningless. One such article, appearing in the Freight & Trade Weekly (FTW) relates to a speech delivered by the South African Transport Minister imploring SADC members to fast-track an integrated border management framework to enable ‘free flow’ of trade in the region. Before pressurizing foreign countries to embrace such change it should at least be properly considered at home. For more than 15 years, South Africa has failed to implement any meaningful integrated border management of its own. Forget about the so-called economic protectionism amongst individual African countries. We have – on our own soil –an inter-departmental ‘protectionism’ which cares little for free flow of legitimate goods. Admittedly there are moves to ‘integrate’ certain frontline functions such as customs border control and immigration. This, however, still does not mitigate interference from other government agencies in tampering with ‘legitimate trade’. Each department seems hell-bent on enforcing its respective mandate regardless of consequential overlaps in activity, oblivious to the detrimental effect this has for legitimate trade. So what is ‘integrated border management’? In the context of a sovereign state it could imply one of two things:

  • A cooperative inter-departmental approach where ‘individual’ government departments perform combined interventions (according to their respective legal mandate) on people, cargo and conveyances according to a structured operational procedure and workflow; or
  • A Border Management Agency (being a single government entity) comprising the capacity to effect all immigration, customs and border control/security functions at ports of entry and exit.

Secondly, integrated border management at external borders can be further extended to include a streamlined import/export or entry/exit process to facilitate the movement of legitimate travellers, goods, and conveyances in a single transaction. This is described as a ‘one stop border’. A critical success factor here is the ability of two country’s border authorities to be able to co-locate with one another and affect a common clearance/passenger movement process. Theoretically these things are all easy to understand, but a whole lot more difficult to implement – more about this another time.

Therefore, before a successful SADC FTA can ever hope to materialise, the concept of proper risk-based inter-departmental control must be embedded and administered within a home country before attempting a bi- or multilateral initiative. The article “SADC must implement integrated border management” can be found on page 17, of the 28 October 2011 issue of the FTW.