Under the African trade agreement Namibia’s beef, along with pasta, are
classified as sensitive items, under the Special Product Categorisation
clause that permanently exempts Namibia’s sensitive products from
liberalisation. Photo: Nampa
classified as sensitive items, under the Special Product Categorisation
clause that permanently exempts Namibia’s sensitive products from
liberalisation. Photo: Nampa
WINDHOEK
– Namibia’s revolutionary decision to put pen to paper on the African
Continental Free Trade Area (AfCTA), inked by President Hage Geingob at
an AU meeting early this month, has sent tongues wagging.
– Namibia’s revolutionary decision to put pen to paper on the African
Continental Free Trade Area (AfCTA), inked by President Hage Geingob at
an AU meeting early this month, has sent tongues wagging.
Moulded in
the image of the European Union’s own free trade regime, AfCFTA has
been hailed as an economic integration breakthrough by its proponents,
while armchair critics and protagonists of the protectionism doctrine
went haywire about it.
the image of the European Union’s own free trade regime, AfCFTA has
been hailed as an economic integration breakthrough by its proponents,
while armchair critics and protagonists of the protectionism doctrine
went haywire about it.
Ink had barely dried on the agreement when
Geingob, upon landing at Eros Airport in Windhoek from the AU meeting,
expressed some misgivings AfCFTA.
Geingob, upon landing at Eros Airport in Windhoek from the AU meeting,
expressed some misgivings AfCFTA.
According to Nampa news agency
Geingob, perhaps understandably, expressed concern with the 0.2 per cent
levy on imports that Namibia has to pay to the AU as part of the
AfCFTA, which would increase Namibia’s payment to the AU to N$53,9
million from N$26,9 million.
Geingob, perhaps understandably, expressed concern with the 0.2 per cent
levy on imports that Namibia has to pay to the AU as part of the
AfCFTA, which would increase Namibia’s payment to the AU to N$53,9
million from N$26,9 million.
“We also registered how we like to
push things through, like the 0.2 per cent on imports. We told them we
are a small open country. We just decide things, but when you look at
the details, you can see there are mistakes,” the agency quoted Geingob.
push things through, like the 0.2 per cent on imports. We told them we
are a small open country. We just decide things, but when you look at
the details, you can see there are mistakes,” the agency quoted Geingob.
This, naturally, begs the question of what actually this thing that Namibia acquiesced to sign up for is, after
initially dilly-dallying along with South Africa and Nigeria, the
continent’s two biggest economies in the south and western regions?
continent’s two biggest economies in the south and western regions?
How
safe is Namibia’ beef, pasta, fish and world-renowned lager beer, which
are all major exports for the country’s economy, which is still
comparatively in its infancy?
safe is Namibia’ beef, pasta, fish and world-renowned lager beer, which
are all major exports for the country’s economy, which is still
comparatively in its infancy?
To start with, Namibia’s beef and
pasta are safe because they have been classified as sensitive items,
under the Special Product Categorisation clause within the agreement
that permanently exempts Namibia’s sensitive products from
liberalisation, local renowned researcher and trade analyst Wallie Roux
points out.
pasta are safe because they have been classified as sensitive items,
under the Special Product Categorisation clause within the agreement
that permanently exempts Namibia’s sensitive products from
liberalisation, local renowned researcher and trade analyst Wallie Roux
points out.
“Will Namibia benefit from the AfCFTA? The answer for
the short term is probably no,” opines Roux. In his assessment, the
main reason why Namibia signed the agreement is because the country is
part of the Southern African Customs Union (SACU) and the Southern
African Development Community (SADC).
the short term is probably no,” opines Roux. In his assessment, the
main reason why Namibia signed the agreement is because the country is
part of the Southern African Customs Union (SACU) and the Southern
African Development Community (SADC).
As such, countries with a
larger manufacturing base and enabling physical and industrial
infrastructure like South Africa are in a better position to gain from
the expected benefits of the AfCFTA.
larger manufacturing base and enabling physical and industrial
infrastructure like South Africa are in a better position to gain from
the expected benefits of the AfCFTA.
“Namibia’s benefits in this
regard would most probably be indirectly, except for a few potential
export markets for some of our products, like beer for instance,” he
says.
regard would most probably be indirectly, except for a few potential
export markets for some of our products, like beer for instance,” he
says.
“However, Namibia’s logistics sector could benefit immensely
due to the country’s strategic location and its already developed
corridors to neighbouring countries,” says Roux.
due to the country’s strategic location and its already developed
corridors to neighbouring countries,” says Roux.
Namibia as part
of SACU, negotiated the AfCFTA under the auspices of SADC, and Roux says
in practical terms it was SACU who conducted the negotiations on behalf
of SADC.
of SACU, negotiated the AfCFTA under the auspices of SADC, and Roux says
in practical terms it was SACU who conducted the negotiations on behalf
of SADC.
“I do not have the final text with me, but suffice to
say that SACU did not negotiate anything outside of the text of its own
agreement, infant industry protection per se is not directly part of a
trade regime between countries – meaning it is still hedged within the
auspices of the SACU Agreement,” says Roux.
say that SACU did not negotiate anything outside of the text of its own
agreement, infant industry protection per se is not directly part of a
trade regime between countries – meaning it is still hedged within the
auspices of the SACU Agreement,” says Roux.
Academics and
economists with superior comprehension of the going-ons have pointed out
that on paper AfCFTA presents an immense opportunity through which
African countries would be trade among themselves in a market valued at
nearly US$4 trillion (about N$50.6 trillion) without trade restrictions
such as tariffs. Rwandan president Paul Kagame has waxed lyrical about
how the agreement would bring “prosperity for all Africans, because we
are prioritising the production of value-added goods and services that
are made in Africa.”
economists with superior comprehension of the going-ons have pointed out
that on paper AfCFTA presents an immense opportunity through which
African countries would be trade among themselves in a market valued at
nearly US$4 trillion (about N$50.6 trillion) without trade restrictions
such as tariffs. Rwandan president Paul Kagame has waxed lyrical about
how the agreement would bring “prosperity for all Africans, because we
are prioritising the production of value-added goods and services that
are made in Africa.”
Hypothetically, from a statistical point of
view, if Namibia sells goods that are valued at 0.2 percent that she is
paying in levy to the AU as part of the agreement, finance minister
Calle Schlettwein would be forced to buy for ministry finance officials
scientific calculators with more than the standard 12 digits capacity.
view, if Namibia sells goods that are valued at 0.2 percent that she is
paying in levy to the AU as part of the agreement, finance minister
Calle Schlettwein would be forced to buy for ministry finance officials
scientific calculators with more than the standard 12 digits capacity.
It is the only way they would be able to calculate the income of more
than N$113 billions – which is nearly double our spending for this year,
for which we have to borrow billions of dollar to make up for the
massive short fall – from the trillions of dollars worth of trades with
Africa.
than N$113 billions – which is nearly double our spending for this year,
for which we have to borrow billions of dollar to make up for the
massive short fall – from the trillions of dollars worth of trades with
Africa.
But the criticism is that the removal of tariffs would
deprive governments of the much-needed revenues through which they fund
their domestic development programmes. A UNCTAD research paper has
estimated that in the first years of implementation of the AfCFTA
African governments are likely to loose as much as N$53 billion each
year as a result of removing tariffs on nearly 90 percent of all the
goods they would be trading with one another.
deprive governments of the much-needed revenues through which they fund
their domestic development programmes. A UNCTAD research paper has
estimated that in the first years of implementation of the AfCFTA
African governments are likely to loose as much as N$53 billion each
year as a result of removing tariffs on nearly 90 percent of all the
goods they would be trading with one another.
As part of SACU, all
import duties to SACU member states are pooled and then administered by
South Africa and distributed to member states according to the revenue
sharing formula – a final revision of which is currently under debate
among SACU member states, with some objections from some members such as
Namibia.
import duties to SACU member states are pooled and then administered by
South Africa and distributed to member states according to the revenue
sharing formula – a final revision of which is currently under debate
among SACU member states, with some objections from some members such as
Namibia.
The effects of AfCFTA for Namibia and her siblings in
the SACU family is likely to be a decrease of revenues during the first
years of implementing the AfCFTA, opines Roux.
the SACU family is likely to be a decrease of revenues during the first
years of implementing the AfCFTA, opines Roux.
“Potentially the
SACU pool of import duties could shrink because of the removal of
tariffs. However, taking into account that SACU’s offer in the SADC FTA
has more than 90 percent of the tariff lines at zero duty (duty free),
the removal of tariffs in AfCFTA per se would not have a major impact on
the SACU pool in the short to medium term – main reason is that SACU
per se is almost self-sufficient in its own demand,” Roux says.
SACU pool of import duties could shrink because of the removal of
tariffs. However, taking into account that SACU’s offer in the SADC FTA
has more than 90 percent of the tariff lines at zero duty (duty free),
the removal of tariffs in AfCFTA per se would not have a major impact on
the SACU pool in the short to medium term – main reason is that SACU
per se is almost self-sufficient in its own demand,” Roux says.
“Should
trade between AfCFTA countries increase, which is one of the AfCFTA’s
objectives, it could stimulate local economies within individual
countries. This in effect would then increase government revenue
through local taxes in the long run,” he says.
trade between AfCFTA countries increase, which is one of the AfCFTA’s
objectives, it could stimulate local economies within individual
countries. This in effect would then increase government revenue
through local taxes in the long run,” he says.
However, one of the
concerns has been that the trade agreement may flood the Namibian
market with inferior products from countries where quality standards are
not enforced. The fear of poor quality standards goods entering
Namibia can also be countered by the fact that as part of SACU and all
imports into SACU states are scrutinised through the same quality
standards and its requirements like labelling.
concerns has been that the trade agreement may flood the Namibian
market with inferior products from countries where quality standards are
not enforced. The fear of poor quality standards goods entering
Namibia can also be countered by the fact that as part of SACU and all
imports into SACU states are scrutinised through the same quality
standards and its requirements like labelling.
“This should not be
a problem because it would be unwise for any country to lower its
existing quality standards. Furthermore, to refer to the standards of
beef for example, Namibia would not allow imports of beef from any
country outside of SACU on grounds of veterinary standards. Namibia
subscribes and adhere to the veterinary standards of the European Union
and the United States of America,” says Roux.
a problem because it would be unwise for any country to lower its
existing quality standards. Furthermore, to refer to the standards of
beef for example, Namibia would not allow imports of beef from any
country outside of SACU on grounds of veterinary standards. Namibia
subscribes and adhere to the veterinary standards of the European Union
and the United States of America,” says Roux.
Now the challenge on Africa is whether or not the grand plans for the roll out of AfCFTA would ever come to fruition.
And
this is something that Geingob has himself alluded to the very moment
he stepped out of the plane from the AU meeting in Mauritius.
this is something that Geingob has himself alluded to the very moment
he stepped out of the plane from the AU meeting in Mauritius.
“We
signed the continental trade agreement although we have some
reservations because we have the SADC Free Trade Area. We have the
Tripartite Free Trade Area, are we implementing it?” Geingob asked then
according to Nampa.
signed the continental trade agreement although we have some
reservations because we have the SADC Free Trade Area. We have the
Tripartite Free Trade Area, are we implementing it?” Geingob asked then
according to Nampa.
Roux points out that the AfCFTA is a key
component of the African Union’s ambitious long-term development plan of
Agenda 2063. “However, Africa is renowned for its ambitious plans,
especially with reference to its trade agreement regimes. The only one
that is really functional on this continent of ours, is the SACU
agreement, with say COMESA, ECOWAS and SADC fighting for a far distant
second and third place. Hence, signing and maybe ratifying, the
agreement is one thing; implementing it to its fullest potential is the
real challenge,” says Roux.
component of the African Union’s ambitious long-term development plan of
Agenda 2063. “However, Africa is renowned for its ambitious plans,
especially with reference to its trade agreement regimes. The only one
that is really functional on this continent of ours, is the SACU
agreement, with say COMESA, ECOWAS and SADC fighting for a far distant
second and third place. Hence, signing and maybe ratifying, the
agreement is one thing; implementing it to its fullest potential is the
real challenge,” says Roux.
So far 49 African countries, out of
55, have signed the trade agreement and it now needs to be formally
ratified by 22 signatory countries before it comes into force. In
Namibia, Geingob is now expected to take the agreement to Cabinet before
trade minister Tjekero Tweya tables it in the National Assembly for its
adoption and ratification
55, have signed the trade agreement and it now needs to be formally
ratified by 22 signatory countries before it comes into force. In
Namibia, Geingob is now expected to take the agreement to Cabinet before
trade minister Tjekero Tweya tables it in the National Assembly for its
adoption and ratification
