SADC Rules of Origin: Undermining Regional Free Trade

SADC Member States have chosen regional integration as part of their strategy for global participation. While not a first best strategy, regionalism can complement more general trade and investment liberalization. Unfortunately the SADC Trade Protocol is seriously flawed. Back-loaded and confusingly differentiated tariff reduction schedules are well-known problems. Less clearly understood are the effects of complex and restrictive rules of origin.

As they are now, SADC rules of origin will hinder regional economic integration and, at best, have no impact on global competitiveness of regional producers. They will make SADC irrelevant for the most dynamic, internationally competitive manufacturers in the region. In many cases rules of origin have been designed to undo the trade creating effects of tariff liberalization.

These rules of origin should be a principal item on the agenda for the review of the Trade Protocol scheduled for 2004. Without fundamental reform, SADC is doomed to economic irrelevance