Trade is fundamental to the economic development of the Southern African Development Community (SADC)Region and has broader benefits that support the process of Regional Integration. Nations that expand trade with others through liberalisation of trade policies increase economic growth and improve the quality of life of their people.
The Protocol on Trade
The SADC Protocol on Trade (1996), as amended in 2010, is one of the most important legal instruments guiding SADC's work on trade. It is an agreement between SADC Member States to reduce customs duties and other barriers to trade on imported products among SADC Member States. The Protocol envisioned the establishment of a Free Trade Area in the Region. The Regional Indicative Strategic Development Plan targeted achievement of SADC Free Trade Area by 2008 and a Customs Union by 2010.
A Free Trade Area, in which Member States agree to remove tariffs against each other but are free to levy their own external tariffs on non-member nations, fosters economic cooperation between Member States. A Customs Union adds a common external tariff against non-SADC countries, with all members of the union receiving shares from that tariff.
During the 28th SADC Summit in Johannesburg in August 2008, the Free Trade Area was officially launched by 12 of the 15 SADC Member States. By the beginning of 2008, most customs duties had been eliminated on goods from the participating Member States (i.e. about 85% of goods attained zero duty in January 2008) and a Common Tariff System was applied to import of goods from non-Member States. The Protocol on Trade in Services was developed and signed in August, 2012 as a step towards achieving a Free Trade Area in Services.
The SADC Protocol on Trade in Services entered into force in January 2022.
Article 30 of the SADC Protocol on Trade in Services provides that the Protocol shall enter into force thirty (30) days after the deposit of instruments of ratification by two thirds of the Member States. Eleven out of the 16 SADC Member States had by 28 January 2022 deposited instruments of ratification while five Member States, Angola, Democratic Republic of Congo, Madagascar and United Republic of Tanzania plus the Union of Comoros, were yet to ratify the Protocol.
The SADC Protocol on Trade in Services provides the framework for a preferential trade agreement covering all commercial and tradable services in any services sector. The Protocol aims to encourage increased intra-regional trade in services through the gradual removal of unnecessary or overburdensome regulation affecting the cross-border supply of services within the SADC Region, a process known as progressive liberalisation.
Barriers to trade in services are found in the way that nations regulate services, e.g. through a country's banking or transport laws, where measures may be found that limit the ability of foreign services suppliers to trade freely across borders, or which discriminate against foreign service suppliers within the market place and distort competition in favour of domestic suppliers.
The Protocol offsets the general and specific obligations binding the ratifying or acceding Member States (referred to as "State Parties") to grant each other preferential market access and non-discriminatory ("national") treatment for SADC service suppliers. The State Parties guarantee to extend to all SADC State Parties the best conditions for trade that they grant to one SADC State Party or a non-State Party, including non-SADC countries.
In addition, State Parties guarantee that the same market access conditions for particular services and service suppliers, as set out in their accompanying sectoral commitments, will not be made more restrictive or discriminatory compared to their own "like" (comparable) domestic services and service suppliers.
The sectoral commitments, and any limitations thereto, are set out in national lists of commitments (similar to tariff schedules) for sectors that have been subject to negotiations. The lists of commitments differ between individual State Parties, reflecting different levels of national development of the services sector and regulatory capability and/or experience.
The first round of such sectoral negotiations was concluded in 2019 covering communication, financial, tourism, transport, construction and energy-related services. A second round of negotiations was approved by SADC Trade Ministers in 2021, covering regional trade in the remaining sectors, namely: business services; distribution; educational, health and social services; environmental services; and recreational, cultural and sporting services.
The adopted first round Lists of Commitments/Schedules comprise of commitments in the six priority sectors by all Member States except for outstanding schedules by Mozambique (in relation to energy-related services), Madagascar (construction and energy-related services) and Angola and Comoros - yet to become party to the Protocol (all six sectors). Member States have agreed to negotiate the outstanding offers in the six sectors during the second round of negotiations.
The adopted commitments have also been supported by Protocol Annexes containing some common trade-related regulatory principles in some sectors aimed at underpinning conditions for market access and national treatment. The Annexes, which are equally binding on each State Party, build on experience in the World Trade Organization (WTO) as well as other preferential or regional trade agreements covering trade in services.
Following the entry into force of the Protocol, both the adopted Lists of Commitments covering the six priority sectors and the Annexes became enforceable as of 13 January 2022. Noteworthy, the Protocol provides for denial of benefits to business enterprises of non-State Parties (i.e. including SADC Member States that are yet to ratify to the Protocol), hence services and services suppliers of the Member States that are yet to ratify/accede to the Protocol remain ineligible to its benefits. This means that even though the adopted Lists of Commitments in the first round include commitments by the DRC, Madagascar and the United Republic of Tanzania, these commitments will become effective only when these Member States ratify the Protocol and deposit their Instruments of Ratification with the SADC Secretariat.
The road to reach this point has been a long one. Originally, SADC Heads of State and Government agreed in 2000 to create a preferential trade agreement covering the services sector, building on the Protocol on Trade signed in 1996. Initially expected to form an Annex to the Protocol on Trade, it was recognised that a trade agreement on services would require a substantially different framework, just as it had in the World Trade Organization (WTO) with the creation of the General Agreement on Trade in Services (GATS). Accordingly, negotiations on a standalone agreement on services trade began in 2006, based on the GATS framework. The resulting agreement, the Protocol on Trade in Services was opened for signature in 2012.
While in many cases the negotiated commitments in the six sectors reflect existing national laws and regulations, the binding nature of the commitments means that prospective services suppliers from the SADC region can enter other SADC markets safely reassured that the regulatory conditions for trade in services are legally enforceable and cannot be made more restrictive in the future. This is especially important for service suppliers interested in expanding cross-border trade or investing in a commercial presence in another State Party. Creating regulatory certainty through binding commitments and ensuring that SADC service suppliers can consult on local requirements through the Protocol's transparency obligations is seen as making the conditions for trade and competition more attractive to potential traders and investors.
These are important steps towards achieving the subsequent SADC Integration Milestones such as the Customs Union, Common Market and Monetary Union.
SADC encourages the following strategies as a way to foster trade throughout Southern Africa:
- Gradual elimination of tariffs
- Adoption of common rules of origin
- Harmonisation of customs rules and procedures
- Attainment of internationally acceptable standards, quality, accreditation, and metrology
- Harmonisation of sanitary and phyto-sanitary measures
- Elimination of non-tariff barriers (i.e., any barrier to trade other than import and export duties)
- Liberalisation of trade in services
SADC addresses the Trade issues within the Region by focusing on five key areas:
As part of its programme of Regional Integration, SADC has made considerable progress in removing barriers to trade, encouraging growth in the Region. SADC has also signed a Protocol on Trade in Services to provide for liberalisation of trade in services.
Customs & Trade Facilitation
SADC aims to facilitate trade by simplifying, harmonising, standardising, and modernising regional customs procedures.
In order to support wider cooperation and effective monitoring of business practices, SADC has developed a Declaration on Regional Cooperation in Competition and Consumer Policies.
SADC is committed to removing barriers to trade, such as import/export quotas and administrative oversights.
Sanitary & Phyto-Sanitary Measures
Member States have agreed on a need to apply measures to ensure food, animal, and health safety across the Region. The SADC Protocol on Trade provides a framework for co-operation on these issues.