Sustainable Development: The missing piece in the Southern African Customs Union's regional trading arrangements?

By Wolfe Braude, Khutsafalo Sekolokwane on October 23, 2008

A sound SACU-wide sustainable development agenda is crucial to address poverty, access to health, education and income opportunities while ensuring environmental conservation that works in balance with economic and trade development. Within this context, the study reviews the regional trade agreements operating in the region and assesses the potential for these agreements to promote and frustrate sustainable development goals.

Key findings:

  • The majority of the RTAs reviewed focus largely on market access, to the exclusion of social or environmental issues. However, SACU countries engage in trade agreements in the hope that they will help eradicate or alleviate the high poverty incidence in their countries.

  • SACU countries have succeeded in gaining improved access to foreign markets, but with both positive and negative implications. Furthermore, the link between increased trade and decreased poverty does not appear to be a direct one, which reinforces the argument that market access is a necessary but not sufficient condition for the potential benefits of trade to be realized by countries.

  • Increased competition from imports due to liberalization can result in reduced production and eventually to job losses if sufficient adjustments are not made in time. The textile industry in South Africa is a good example of a sector where the impacts of trade liberalization have been mixed - while there was a growth in employment due to the labor intensity of the industry, sector was hard hit with factory closures and retrenchments. The motor industry in South Africa would also be vulnerable to increased competition if all its support measures were to be phased out. At the same time, however, it should be noted that cheaper inputs can benefit domestic manufacturers and even allow them to become more competitive, and increased foreign competition can reduce overpricing by companies that may have a significant share of the market.

  • The environmental impacts of trade liberalization across the SACU region remain unclear as no research had been undertaken on this issue at the time of writing. But the case the Namibian trade unions brought against a Malaysian textile investor is an illustration of the abuses that can occur when investors take advantage of a country's desire for trade and investment above sustainable development.

Key recommendations:

  • A set of national and region-wide sustainable development guidelines for trade negotiators should be drawn up based on regional consensus, in order to inform free trade negotiations and align them to national and regional priorities. To this end, a set of overarching regional sustainable development priorities should be drafted to complement the various National Sustainable Development Strategies (NSDS), and the SACU member states that have not yet completed NSDSs should be encouraged to do so.

  • The development of expertise at national level capable of identifying institutional and policy development is needed, specifically changes made necessary by trade reform commitments made at the international level. For example, given the trade liberalization implications of the WTO's current round, what type of intellectual property rights systems, competition law regimes and regulatory structures will promote sustainable development in each particular national context?

  • SACU countries need to conduct trade sustainability impact assessment studies. These studies are crucial as they enable countries to have sufficient detailed and relevant information on the economic, social and environmental implications of any trade agreement before negotiations are finalized, ideally before they enter any substantive stage.

  • There is need to establish regional protocols or even institutions that specifically promote sustainable development in order to provide clarity to trade negotiators on region-wide issues. This would include, for example, a regional standard for Environmental Impact Assessments would be useful, as well as a comprehensive regional environmental policy that is broader than just protected areas.

Report details

IISD, 2008