1. _________________________________________________________________________________ GTZ Seminar on Strategies towards an enabling BIC Magaliesburg 22-25 May 2006 Regional Integration and the BIC: Paper only or practical implications for businesses? Regine Qualmann GFA Group Adviser to SADC Secretariat

2. _________________________________________________________________________________ GTZ Seminar on Strategies towards an enabling BIC Magaliesburg 22-25 May 2006 I. Structure of Presentation The policy framework for investment at the regional level: International trends and practices SADC policy instruments for an improved BIC: The Trade and the Finance and Investment Protocols – Progress and limitations Practical experiences and challenges of advising on regional policy instruments

3. _________________________________________________________________________________ GTZ Seminar on Strategies towards an enabling BIC Magaliesburg 22-25 May 2006 II. Policy framework at the regional level: International trends and practices Regional preferential trade and investment agreements are proliferating throughout the world African countries are all members of one or more regional PTA Increasingly, African countries also have bilateral investment and/ or double taxation agreements While the majority of bilateral investment or double taxation agreements are of a North-South type, PTIAs are increasingly South-South (73 in 2004)

4. _________________________________________________________________________________ GTZ Seminar on Strategies towards an enabling BIC Magaliesburg 22-25 May 2006 II. Policy framework at the regional level (cont.) Regional preferential trade and investment agreements (PTIAs) aim at facilitating trade and investment through (usually non-binding) commitments to liberalize, promote and/ or protect investment PTAIs in Latin America are most far-reaching in scope covering national and MFN treatment as well as expropriation and dispute settlement provisions ECOWAS and COMESA are currently embarking on defining a more substantive set of policy measures

5. _________________________________________________________________________________ GTZ Seminar on Strategies towards an enabling BIC Magaliesburg 22-25 May 2006 SADC Objectives r Customs Union Common* Market FTA 200820102015 Monetary Union SADC Central Bank Regional Currency 2016 2018 *REGIONAL COMMON MARKET = Free movement of capital, labour, goods and services

6. _________________________________________________________________________________ GTZ Seminar on Strategies towards an enabling BIC Magaliesburg 22-25 May 2006 III. SADC Policy Instruments for an improved BIC (1) The SADC Protocol on Trade Provides for the creation of an FTA by 2008 – 85% of trade in goods to be duty free Individual tariff phase-downs are slipping in several cases Rules of Origin remain a problem, especially regarding access to the SA/ SACU market A mechanism to monitor and eliminate NTBs yet to be established Liberalization of trade in services: Work in progress Progress in goods and services market integration has been very limited in SADC

7. _________________________________________________________________________________ GTZ Seminar on Strategies towards an enabling BIC Magaliesburg 22-25 May 2006 III. SADC Policy Instruments for an improved BIC (cont.) (2) The SADC Protocol on Finance and Investment To be signed and ratified in 2006 with several MoUs under implementation – not investment Covers a broad number of areas, including: - co-operation on investment and on taxation - macro-economic convergence - regional capital and financial market development and co-operation - co-operation among SADC Central Banks

8. _________________________________________________________________________________ GTZ Seminar on Strategies towards an enabling BIC Magaliesburg 22-25 May 2006 III. SADC Policy Instruments for an improved BIC (cont.) (2) The SADC Protocol on Finance and Investment (cont.) Development of the FIP through a bottom-up approach (MoUs) to avoid mistakes of the Trade Protocol MoUs being implemented voluntarily but FIP implementation will need to be preceded by translation into national laws More institutions and sub-structures involved than in trade – but again little direct involvement of private sector Necessary to complement trade liberalization

9. _________________________________________________________________________________ GTZ Seminar on Strategies towards an enabling BIC Magaliesburg 22-25 May 2006 IV. Practical experience and challenges Trend is towards higher commitment of policy on trade and investment related measures but African RECs are lacking both in scope and depth SADC Member States particularly reluctant to commit themselves and follow-up implementation at regional level Example: Ongoing EPA negotiations are unlikely to cover New Generation Issues – investment, competition, public procurement, etc. SA pursues a national (and a multilateral) strategy which are not always compatible with the region

10. _________________________________________________________________________________ GTZ Seminar on Strategies towards an enabling BIC Magaliesburg 22-25 May 2006 V. Some conclusions and implications for GTZ work Regional Organisations in Africa have embarked on a much larger integration agenda than just trade but … most are too weak to live up to their co-coordinating and facilitating role Policy making at regional level is an important entry point for both Governance Reform and Economic Liberalization and Development Programs Role of advisers mainly of an OD plus type Exchange of experience across RO advisory programs needs strengthening – but they currently lack scale! High potential for development of tools to monitor implementation and impact of integration

11. _________________________________________________________________________________ GTZ Seminar on Strategies towards an enabling BIC Magaliesburg 22-25 May 2006 Thank you for your attention! Regine Qualmann RQualmann@sadc.int