Transcript Overseas Development Institute

EPAs and regional integration –
what future for SADC and COMESA?
TIPS Workshop, Pretoria 4-5 March
Dr Mareike Meyn
Outline
First a little bit of theory:
 What is regional integration?
 Motivations for regional integration
 Static effects of regional integration
 Dynamic effects of regional integration
Then:
5. The status quo of regional integration in southern and
eastern Africa
6. Problems of overlapping memberships
7. How EPAs shaped regional integration in southern Africa
8. Reasons for the regional fragmentation as a result of
EPAs
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1. What is regional integration?
 Regional/economic integration describes six stages
how economies can integrate:
1. Preferential Trade Agreement
2. Free Trade Agreement
3. Customs Union
4. Common Market
5. Economic Union
6. Political Union
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2. Motivations for regional integration
 Economic integration implies the acceptance of
national constraints in favour of regional decisions.
 Why are countries giving up national sovereignty?
 Economic motivation
Static and dynamic gain of economic integration
 Political motivation
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3. Static effects of regional
integration
 Trade creation: Domestic products are replaced by more
competitive regional products.
 Effects on domestic producers?
 Effects on domestic consumers?
 Trade diversion: Products which were formerly imported
from the rest of the world are now imported from regional
producers as their production costs are lower than those
of the rest of the world plus customs duty.
 Effects on domestic producers?
 Effects on domestic consumers?
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4. Dynamic effects of regional
integration
 Economies of scale due to an enlarged market
 Enhanced efficiency due to increased competition
 Better and cheaper products (consumer benefits)
 Increased specialisation due to concentration on
comparative advantages
 Learning effects by competition
 Chance to attract FDI by enlarged market
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5. The status quo of regional
integration in southern and eastern
Africa
 One functioning customs union: SACU
 Intra-regional trade largely liberalised
 Three quarter of BLNS trade is within SACU while SA’s
trade with BLNS is minor
 SA accounts for 93% of SACU’s GDP (2003)
 One customs union to be implemented: EAC-5
 CET not yet implemented
 Intra-regional trade not yet liberalised (2010)
 EAC collapsed in 1977: problem of trade diversion and
Uganda and Tanzania did not benefit from trade creation.
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6. Overlapping membership of regional
integration in southern Africa
EAC
Tanzania
SADC
Mozambique
Angola
DR Congo
Malawi
Madagascar
Mauritius
Zambia
Zimbabwe
SACU
Botswana
Lesotho
Namibia
South Africa
Kenya
Uganda
Burundi
Rwanda
Swaziland
COMESA
Comoros
Djibouti
Eritrea
Ethiopia
Seychelles
Sudan
Egypt
Libya
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6. Problems of overlapping
memberships
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7. How EPAs shaped regional integration in
southern Africa: early 2007
SADC EPA
Angola
Mozambique
Botswana
Lesotho
Namibia
Swaziland
South Africa
ESA EPA
Tanzania
Kenya
Uganda
Burundi
Rwanda
DR Congo
Malawi
Madagascar
Mauritius
Zambia
Zimbabwe
(Seychelles
Ethiopia
Eritrea
Sudan
Comoros
Djibouti)
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8. How EPAs shaped regional
integration in southern Africa:
the status quo
EAC EPA
SADC EPA
Kenya
Uganda
Burundi
Rwanda
Tanzania
Mozambique
ESA EPA
Malawi
Madagascar
Zambia
Comoros
Botswana
Lesotho
Namibia
Swaziland
Mauritius
Zimbabwe
South Africa
Ethiopia
Eritrea
Angola
Djibouti
Sudan
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8. Reasons for the regional
fragmentation as a result of EPAs
 Non-LDCs were in a very difficult position
 Loosing EU market access or
 Disrupting regional integration
 Some countries preferred bilateral option
 Hardly involved in regional integration
 No regional compromises necessary
 EC was accused of ‘divide and rule’
 ACP: bilateral interim deals were negotiated without
involving the region
 EC: only way to avoid market disruption
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? What scenarios of regional
integration in southern
Africa can you imagine?
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Where to go from here?
 Scenario 1: The status quo prevails
 What happens to SACU (South Africa and BLNS divide)?
 What happens to SADC?
 What happens to COMESA?
 Scenario 2: The SADC CU and COMESA CU will be
implemented
 Bearing in mind that one country can only join ONE
customs union, what countries do you think would join
SADC and what countries would join COMESA? Why?
 How could the SADC and COMESA custom union’s
negotiations be aligned with the ongoing EPA
negotiations and what policy steps need to be done to
synchronise the processes?
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Where to go from here?
 Scenario 3: ‘One happy family’
 Southern and eastern African countries merge regional
integration efforts and form a new integration body
covering all SACU, SADC, EAC and COMESA countries
 What are the promoting factors for such a scenario?
 What are the constraining factors?
 Further questions for each group:
-
What scenario do you think is most likely? Why?
-
What would be the ‘ideal case’ of economic integration in
southern and eastern Africa?
-
Please describe the economic effects of trade creation and
trade diversion for the single member states in your scenario.
Future of regional integration? TIPS workshop March 2008 15
EPAs and regional integration –
what future for SADC and COMESA?
TIPS Workshop
5-6 March 2008