Regional Intergration, Globalisation and Democractic Stability: A South-South Perspective

Ladies and Gentlemen,

I wish to thank the organisers of the Second SADC-MERCOSUL Conference, especially the Ambassadors of MERCOSUL in South Africa, the National Director of the South African Institute of International Affairs, Dr Greg Mills, the Latin American Business Council, the Institute of Economic, Social and Political Studies of Sao Paulo, Daimler-Chrysler and the Anglo American Chairman's Fund for inviting me to participate in this conference.

While travelling to Sao Paulo from Johannesburg on Sunday, it struck me once again, that the flight time from South Africa to Brazil is less than that of a flight from South Africa to Europe. Southern Africa and MERCOSUL are therefore neighbours.

It is exciting and challenging to be here because not only are we close in a geographical sense, but we are bound together first and foremost by our shared values, commitment to democracy, social responsibility, the creation of employment, transparency, sustainable economic growth and the eradication of poverty. Values that are increasingly important in an ever faster evolving world. Values, that need to be actively pursued, not only by our political leaders and governments, but also by civil society and the business community.

Our belief in progressive governance in the twenty first century further binds us as southern neighbours and entrenches the principles of South-South Cooperation and Dialogue, so eloquently elaborated on by Julius Nyerere as early as 1982: "Politically, economically and technologically, we the Third World countries, are locked into the economies of the North. Moving towards self-reliance of the South, or any member of it, does not mean that the North is not there. What is needed, is that we shift the emphasis of our development plans, and in the future decide to base them on our own roots and our own resources."

Why is it that nearly 20 years later we are still grappling with the same challenges, notwithstanding the fact that the demise of the Cold War, together with the process of globalisation resulted in the rapid dismantling of political, economic, cultural and ideological barriers. The reality is that while globalisation represents an opportunity to fast-track development, it has also resulted in the increasing marginalisation of the underdeveloped. President Cardoso of Brazil encapsulated the challenges presented by globalisation recently (on the occasion of the luncheon given in the honour of the Heir Apparent and Vice Prime Minister of the Kingdom of Saudi Arabia) by saying: " We must make the globalisation process more symmetrical by making capital movements and access to the market into effective development tools. Only thus will we be able to prevent the crystallisation of hegemonies and the aggravation of inequalities."

President Cardosa was reflecting on statistics which pose a major challenge to all of us:

Since 1950 exports have increased tenfold. Foreign exchange flows have increased dramatically, it is now a startling 1.5 trillion dollars a day.

Mega multinationals have become a reality. A recent transnational communications takeover in the US created a company whose market value exceeds a GDP of nearly half of all UN members, though it is only the world’s fourth richest company.

According to a Task Force sponsored by the New York Council on Foreign Affairs, the assets of the 3 top billionaires are more than the combined GDP of all least developed countries and their 600 million people. At the end of 1997, there were more than 50 developing countries with entire banking systems that were smaller than the Credit Union for World Bank and IMF employees.

A 1% shift in the international (not the total) portfolios of G-7 institutional investors would amount to roughly $60 billion.

According to the 1999 UN Human Development Report, more than 80 countries have per capita incomes that are lower than they were a decade or more ago.

Since 1990, 55 countries, mostly in Sub-Saharan Africa, Eastern Europe and the former Soviet Union have had declining per capita incomes.

The income gap between the fifth of the world’s people living in the richest countries and the fifth in the poorest was 74 to 1 in 1997, up from 60 to 1 in 1990.

The richest fifth accounted for 86% of the World’s GDP while the bottom fifth shared 1%.

Kofi Annan Millennium report states that: "nearly half the world’s population still has to make do on less than 2$ a day. Approximately 1.2 billion people – 500 million in South Asia and 300 million in Africa struggle on less than $1 a day. People living in Africa – south of the Sahara are almost as poor today as they were 20 years ago".

The number of Africa’s poor have grown relentlessly and Africa’s share of the world’s absolute poor increased from 25% to 30% in the 1990’s.

Africa’s share of world trade has plummeted since 1960. It now accounts for less than 2% of world trade and if SA is taken out of the equation, the figure for Africa is a mere 1.2%. Africa is the only region to see investments and savings decline after 1970. Savings rate in many African countries are the lowest in the world. Tax revenue declined in poor countries from 18% of the GDP in early 1980’s to 16% in 1990’s.

In 1997 Africa’s debt estimated to be $159 billion and in 1999 this increased to 201 billion dollars. We are faced with the reality that outstanding external debts in many African countries exceed the entire GDP, and debt service requirements exceed 25% of total export earnings. No HIPC country can achieve sustainable economic development if the debt issue is not resolved.

Overseas development assistance has dropped more than one fifth in real terms since 1992.

Diseases such as HIV/Aids, Malaria, and Tuberculosis are causing havoc.

This is also a new world order in which we are experiencing an unprecedented scientific technological revolution. In 1993 there were 50 pages on the World Wide Web, today there are more than 50 million. In 1993 143 million people used the Internet, by 2001 there will be 700 million users. In 1996 the e-commerce market was 2,6 billion dollars it is expected to grow to 300 billion dollars by 2002. There are more computers in US than in the rest of world put together. Electrical power consumption per person in Africa is the lowest in the world; Africa has 14 telephone lines per 1000 persons, Tokyo has more telephones than the whole of Africa; less than half of 1% of all Africans have used the internet.

Many of our countries have taken steps to create a climate conducive to direct foreign investment. They have either through structural adjustment programmes or as country programmes put in place trade liberalisation policies; the strengthening of the rule of law; improvements in legal and other instruments; greater investment in infrastructure development, privatisation, greater accountability and transparency, greater degree of financial and budgetary discipline and the creation and consolidation of multi-party democracies. However foreign direct investment has not flowed sufficiently to Africa. [give latest UNCTAD figures].

Why are we faced with such a reality? Some of the answers can be found in the World Bank and other study findings, inter alia, that Africa’s economies are generally characterised by narrow commodity exports with little benefaction of diversification, therefore highly vulnerable to market fluctuations and commodity prices. Primary markets limited to the North, to which African countries are highly dependent for their imports; large rurally based agricultural population, engaged in subsistence economy, alongside a weakly developed large urban based economy; weak macro-economic policies and management principles combined with low skills, low productivity, corruption and lack of regulatory framework, lack of reliable socio-economic data. We must seek to answer the question – why is this so? We will have to accept the legacy of slavery, colonialism, imperialism, neo-colonialism and the Cold War contributed to Africa’s under-development. Will regional integration help us to overcome the legacy?

It is increasingly being accepted that regionalisation and regional integration can not be explained solely with economic formulas, such as economic stabilisation, tariffs or fiscal and monetary harmonisation.

The UN Millennium Summit was to a great extent dominated by deliberations on globalisation, under-development and poverty.

President Mbeki speaking at the Millennium Summit said:

"… billions struggle to survive in conditions of poverty, deprivation and under-development …

The question these billions ask is – what are you doing to end the deliberate and savage violence against us that, everyday, sentences many of us to a degrading and unnecessary death …

.. will, we, at last respond to this appeal! All of us, including the rich, will pay a terrible price if we do not, practically, answer – yes we do!

The fundamental challenge that faces this Millennium Summit is that, credibly, we must demonstrate the will to end poverty and under-development."

The Secretary-General of the UN in his report said: "The central challenge we face today is to ensure that globalisation becomes a positive force for all the world’s people instead of leaving billions in squalor." He goes on to say that "inclusive globalisation must be built on the enabling force of the market", but significantly, he mentions that "market forces alone will not achieve it, it requires a broader effort to create a shared future based on our common humanity in all its diversities". He identified six shared values: freedom, equity and solidarity, tolerance, non-violence, respect for nature and shared responsibility.

The Declaration of the Millennium summit – gives us a very strong foundation to meet the challenges of globalisation.

"The central challenge we face today is to ensure that globalisation becomes a positive force for all the world’s people. While globalisation offers great opportunities, at present its benefits are very unevenly shared, while its costs are unevenly distributed. We recognise that the developing countries and countries with economies in transition face special difficulties in responding to this central challenge.

Thus only through broad and sustained efforts to create a shared future, based upon our common humanity in all its diversity, can globalisation be made fully inclusive and equitable".

The Summit identified certain fundamental values to be essential to international relations in the twenty-first century. These include:

Freedom. Men and women have the right to live their lives and raise their children in dignity, free from the fear of violence, oppression or injustice. Democratic and participatory governance based on the will of the people best assures these rights.

Equality. No individual and no nation must be denied the opportunity to benefit from development. The equal rights and opportunities of women and men must be assured.

Solidarity. Global challenges must be managed in a way that distributes the costs and burdens fairly in accordance with basic principles of equity and social justice. Those who suffer, or who benefit least, deserve help from those who benefit most.

Tolerance. Human beings must respect each other, in all their diversity of belief, culture and language. Differences within and between societies should be neither feared nor repressed, but cherished as a precious asset of humanity. A culture of peace and dialogue among all civilizations should be actively promoted.

Respect for nature. Prudence must be shown in the management of all living species and natural resources, in accordance with the precepts of sustainable development. Only in this way can the immeasurable riches provided to us by nature be preserved and passed on to our descendants. The current unsustainable patterns of production and consumption must be changed, in the interest of our future welfare and that of our descendants.

Shared responsibility. Responsibility for managing worldwide economic and social development, as well as threats to international peace and security, must be shared among the nations of the world and should be exercised mutilaterally. As the most universal and most representative organisation in the world, the United Nations must play the central role.

The negative aspects of globalisation have also resulted in the mobilisation and organisation of millions of people who are campaigning for a more caring and equitable social order. This is illustrated by the growing number of non-governmental organisations around the world, and the unprecedented demonstrations in Seattle and Prague.

Ladies and Gentlemen

The process of globalisation is sustained by, and produces, national and regional inter-dependencies. By contrast to the Cold War focus on regionalism as a means of collective security arrangements, there is a new emphasis on political and economic regional groupings committed to people-centred economic development, to democratic consolidation, transparency, efficiency, social responsibility, equity, scholarship, peaceful resolution of conflicts and protection of our environment.

This Conference's stated aims are to focus on the perspectives of developing inter-regional forms of association, specifically in the commercial and economic fields with a view to advancing an agenda of co-operation between the two regional blocs (SADC and MERCOSUL) that may eventually lead to a free and more intense trade and investment flow across the South Atlantic.

More often than not regional co-operation/integration and intra-regional integration are seen against the backdrop of economic and trade concerns. In fact, regionalisation is mostly perceived as having only economic benefits for countries.

We believe that regional associations or integration must also be based on a sense of belonging, a shared value system of like-minded associates. In this shared vision of peace and stability, democracy, human rights, equity and social responsibility lie the roots of economic growth and prosperity and the improvement of the quality of life of our peoples.

We in Africa, who represent the poorest of the poor are seeking to learn from the experiences of others in the South.

The ASEAN evolved from a security type organisation towards an ASEAN Free Trade Area (AFTA). Interestingly, ASEAN's success has been determined by its original objective to provide a regional forum for peaceful intra-regional conflict resolution and to strengthen the bargaining power of its member states in international negotiations.

Inter- and intra-regional Trade Agreements and the co-operation, synchronisation and convergence of economic policies provide additional momentum to propel and deepen regional integration. The initial vehicle to reaching this phase is as I said earlier a political commitment, shared values and vision.

Ladies and Gentlemen,

There are still some people in SA and abroad who seem to cling to the notion that SA is a European outpost on the African continent. It is vital for all of us to accept that SA is an African country and that South Africa’s future is inextricably linked to the future of SADC, and the continent of Africa.

There is a close synergy between the issues and challenges facing South Africa and the region as a whole. While we grapple with some of the challenges and problems of integration we must, as has been stated so often, accept that SA cannot exist as an island of prosperity in a sea of poverty. If we do not engage with the region and the continent, we will eventually have to face the negative consequences in the form of cross border crime, drug and weapon smuggling, economic migrants and refugees from conflict, environmental degradation, and diminished trade, tourism and economic interaction opportunities.

Conversely, regional integration and intra-regional cooperation will provide a rich crop of rewards, such as the promotion of economies of scale, the development of comparative and competitive advantages, the creation of a climate conducive to investment, and the efficient utilisation and joint management of resources and infrastructure to the benefit of all.

Regional integration is a sine qua non for the continent’s renewal. Therefore SADC is the foundation on which we seek to achieve economic growth, prosperity, peace and stability and improve the quality of life of the masses of our people.

The countries of the Southern Africa region can achieve their full potential only through close cooperation in the exploitation of natural resources in a co-ordinated fashion, the pooling of technical expertise, the harmonisation of trade practices and the promotion of economies of scale. This is one of the principal tasks of the SADC.

The aim of SADC is to create a Community providing for regional peace and security, sector cooperation and an integrated regional economy. As a regional institution it has laid the basis for regional planning and development in Southern Africa.

It could not be otherwise:

Since the late nineteenth century SA has been an integral part of a Southern African regional economy. This involvement, whether as providers or recipients of migrant labour, transport services, hydropower or in trade has been of considerable significance both to South Africa and most other SADC member states. For over a century, South Africa has been a leading member of a Customs Union with four neighbouring countries [Namibia, Botswana, Lesotho and Swaziland], as well as part of a Monetary Union with three of them.

The region is characterised by acute imbalances, unevennesses and inequities. Not only are the sizes and levels of development of the economies of the various countries very different [see annexure 1 and 2] also the historical pattern of economic relations in the regional economy has been very uneven. Essentially, as many analysts have noted "the main poles of accumulation were located in SA, while the economies of the other countries were incorporated in subaltern roles as providers of migrant labour, services and as ‘captive markets’ for higher priced South African exports. These imbalances were exacerbated in the years of conflict and destabilisation that characterised the late apartheid period."

SA is the largest and most sophisticated economy within SADC and indeed within Africa. In SADC, the level of wealth, social and human development differs significantly between the various countries as they are at different stages of development. [see annexure 3]

During the 1990s the distribution of consumption in the SADC countries, for which data is available has been relatively skew. In SA the wealthiest 20% of the population had a 64,8% share of total consumption, followed by Zimbabwe with 62,3%. Lesotho with 60% and Zambia with 54,8%.

The generally accepted international standard for gross domestic fixed capital formation in developing countries is around 25% of GDP. In 1998, only four SADC countries exceeded this standard namely Lesotho (49,4%), Zambia (37,4%), the Seychelles (35,2%) and Swaziland (33%).

In 1998 total foreign direct investment in the SADC countries amounted to 22,5% ($821 million) of the total of Sub-Saharan Africa ($3,6 billion) in that year.

In terms of the Southern African Custom Union’s (SACU, which comprises Botswana, Lesotho, Namibia, South Africa and Swaziland) trade with the SADC region, Zimbabwe is the most important trading partner. In 1998, SACU’s exports to Zimbabwe amounted 34,6% of total exports to SADC countries, followed by Mozambique (16,4%), Zambia (13,4%), Malawi (7,6%), Tanzania (7.0%), the DRC (6,7%), Angola (6,6%), Mauritius (6,5%) and the Seychelles (1.1%). With regards to imports, 60,8% of total SACU imports from the SADC region came from Zimbabwe in 1998, followed by 17,5% from Malawi, 9,6% from Zambia, 8,2% from Mozambique, 1,3% from Mauritius, 1,0% from both the DRC and Tanzania, and 0,3% from the Seychelles. The major products exported by SACU to the SADC region in 1998 were machinery and equipment (12,6% of the total), mineral fuels and products (9,0%) and vehicles, parts and accessories (8,3%). SACU imports from SADC in 1998 consisted mainly of cotton (14,3% of the total), tobacco and tobacco products (8,4%) and certain apparel and clothing articles (6,8%). [see annexure 4]

Integrated overall regional development is a sine qua non for growth and development in any of our countries. Increased regional trade, sectoral cooperation programmes [SDI’s] and joint development of regional resources and infrastructure has to be achieved.

To date, SADC has successfully negotiated and signed 14 Protocols, of which 7 have entered into force.

PROTOCOLS AND TREATIES SIGNED AND RATIFIED

Signed:

SADC Treaty

Shared Watercourse Systems

Immunities and Privileges (South Africa has not signed)

Combating Illicit Drug Trafficking

Energy

Trade

Transport, Communication and Meteorology

Education and Training

Mining

Tourism

Wildlife Conservation and Law Enforcement

Health

Revised Protocol on Shared Watercourse Systems

Legal Affairs

Tribunal and Rules of Procedure Thereof

Charter of the Regional Tourism Organisation of Southern Africa (RETOSA)

Declaration on Gender and Development

Declaration on Productivity

MOU on Southern African Power Pool

MOU on co-operation in Standardisation, Quality Assurances, Accreditation and Meteorology (SQAM) in the SADC

MOU between SADC and the Association of SADC Chambers of Commerce and Industry (ASCCI)

Ratified:

Shared Watercourse Systems

Combating Illicit Drug Trafficking

Energy

Education and Training

Mining

Transport, Communications and Meteorology

Trade

Health

Entered into Force:

Immunities and Privileges

Shared Watercourse Systems

Combating Illicit Drug Trafficking

Energy

Transport, Communication and Meteorology

Mining

Trade

Charter on the Regional Tourism Organisation of Southern Africa

SADC Protocols under development, are the following:

Protocol on Fisheries (zero draft stage)

Protocol on Forestry (zero draft stage)

Protocol on Culture, Information and Sports

Protocol on Environment and Land Management

Protocol on Small Arms (being developed)

There has been some progress over the past year towards building a regional community. Most encouraging despite the conflicts in Angola and the DRC is the growing sense of political will, determination and urgency which SADC members are displaying in tackling the difficult challenges that confront us.

Slowly but surely, the SADC region is developing into a regional economic entity. Far-reaching economic reforms are being implemented by SADC Member States, in pursuance of their shared vision of creating a single economic space through deeper economic integration. Through the implementation of appropriate macro-economic policies, a number of SADC countries have managed to put themselves on a sustainable economic growth path.

The organisation came into existence in 1980 as the Southern Africa Development Cooperation Council (SADCC). One of its major objectives was to reduce the dependence of its members ‘particularly but not only on the Republic of South Africa’. Its original programme has been described as ‘integration through project coordination’ or ‘functional integration’, based on the view that the main barriers to intra-regional trade among its members were not tariffs or non-tariff regulatory barriers, but underdeveloped production structures and inadequate infrastructure. Its programme of action, accordingly, focused on coordinating efforts to jointly promote infrastructural development.

The adoption in 1992 of the Windhoek ‘Treaty of the Southern African Development Community’ reflected an important new departure. It committed SADC to widening its agenda by negotiating protocols of cooperation in a number of areas where it had hitherto not been particularly active. These included trade and security.

Some members of the Organisation have also come to see a need to move beyond ‘functional integration’ to embrace a programme of ‘development integration’. Development integration is the appropriate approach in a region in which, there are countries with economies of very different sizes and levels of development. In these circumstances it is argued that trade integration measures should be complemented by:

Efforts to promote coordinated regional industrial development, through the establishment of regional industrial policies;

Measures to give less developed members greater preference in access to regional markets and facilities and a longer period to reduce tariffs through asymmetrical trade agreements; and

Some coordination of macro-policies at a relatively early stage, particularly in relation to fiscal incentives for investment.

Lets look at some of these elements:

SDIs – since 1994 SA has championed Spatial Development Initiatives (SDIs). The Spatial Development Initiatives (SDIs) are concerned with unlocking the inherent under- and unutilised potential of economic development of specific spatial locations and corridors within certain sectors. SDIs in the SADC region are specifically designed to enhance economic integration and cooperation between the various countries and different sectors.

An SDI may be executed on a bilateral basis, a multilateral basis (eg, SDIs which span more than five states should even be restricted to one country only, with the eventual option of crossing into neighbouring states. [see annexure 5]

The key to the success of an SDI includes access to labour, transport, innovative economic and product development, competent government support on a local and national level as well as access to technology. It is a partnership between governments, developmental institutions and the private sector.

In SA most projects are based upon natural resources such as agriculture, minerals, tourism, energy and forestry. Initiatives within SA include the Phalaborwa sub-corridor, West Coast, Lubombo SDI, Fish River, Wild Coast, KwaZulu Natal SDI and the Platinum SDI. The Government has estimated that investment totalling R83 billion could materialise from the development of these corridors.

The regional programme has identified programmes such as the Walvis Bay Development Corridor, Gariep Development Initiative (Namibia), Okavango-Upper Zambezi International Tourism Initiative (OUZITI, consisting of Angola, Botswana, Namibia, Zambia and Zimbabwe), TAZARA Rail network (Tanzania and Zambia) and the Gaza Transfrontier Park Initiative (SA, Mozambique and Zimbabwe).

The Maputo Development Corridor (MDC) is one of the most ambitious and exciting development initiatives undertaken within the Southern African region. [see annexure 6] The vision was to rehabilitate the core infrastructure in the corridor (notably road, rail, port and dredging, and border post, through public/private partnerships (cognisant of state fiscal limitations) thereby re-establishing key linkages and opening up inherent under utilised economic development opportunities. Common to both countries was the importance of the initiative to the respective reconstruction and development programmes (specifically to achieving GDP and employment growth targets, increasing local and foreign fixed investment and improving exports). Underlying this vision was the desire to see this initiative contributing to other key policy areas – notably regional economic integration international competitiveness and a broadening of the ownership base in the economy of the corridor.

The current status of the key infrastructure projects of the Maputo Development Corridor.

Witbank to Maputo toll road. Concessioned for 30 years to TRAC (Trans African Concessions). Project value US$400m. Financial closure December 1997, with construction having commenced in March 1998. Recognised internationally for the well-structured contract and for the speed of delivery.

Rehabilitation of the Port of Maputo. Preferred bidder (Merseyside Docks and harbour Co.) now identified to establish a joint venture (public/private sector) company to manage, operate and maintain port and dredging. Value US$85m. Negotiations still in progress.

Rehabilitation of the Railway network of Maputo. Preferred bidders (Spoornet on Ressano Garcia Line and Consortia 2000 on Goba/Chicualacuala lines and marshalling yards) identified to establish a joint venture (public/private sector) company to manage, operate and maintain southern Mozambique rail network. Value US$70m. Negotiations still in progress.

Ressano Garcia/Komatiepoort Border Post. Bilateral agreement being developed for a single facility/one-stop border post. Project value US$33 million. Preliminary design completed. 3 Year construction programme planned. Parties currently looking at a Rapid Procurement Programme for short term actions.

There is a continual process of project identification and preparation in the MDC. There are currently 180 projects under consideration, in all economic sectors, with a total value of US$7bn and a potential to create an estimated 35 000 permanent new jobs. Potential contributions to foreign exchange earnings are also substantial. Of the above, approximately US$4bn has now been committed, with the creation of 12 000 jobs. Beyond these very tangible/visible impacts, the MDC has also had a strong bridge-building function – stimulating new bilateral agreements, restoring trust and addressing trade imbalances. The MDC is also playing a significant role in the regional economic integration debate – demonstrating strategy and demonstrating through projects the nuts and bolts of integration.

2. How structuring or a new regional trading relationship that promotes equitable and mutually beneficial development integration.

South Africa’s policy was to work towards a multilateral, regional agreement with flexibility to take into account bilateral specifics. We were conscious that the new rules created by the Uruguay Round of the Global Agreement on Tariffs and Trade (GATT) could pose problems for a purely bilateral route.

As Davies said in the first SADC-Mercosur seminar "The draft protocol prepared by international consultants commissioned by the SADC secretariat envisaged a rather mechanical timetable for tariff phase-downs, leading to the establishment of a free trade area. According to the proposal, countries were to be divided into categories according to the existing levels of overall tariff protection. Those with higher incidences of overall protection were to phase down more rapidly than the others. This formula was criticised as taking no account of the variations in capacity of the individual countries, nor of concrete conditions in specific industries or sectors. The proposal was also vague as to whether the region or a World Trade Organisation legal (WTO) free trade area, which requires only the removal of duties on ‘substantially all’ trade."

We were concerned about the consultant’s approach because a study by the South African Industrial Development Corporation and other studies suggested that the introduction of literal free trade would exacerbate rather than reduce polarisation. Therefore South African access to the markets of other SADC countries would need to be carefully structured and phased, we needed an asymmetrical arrangement (which could nevertheless qualify as a WTO-legal FTA), in which South Africa opened up its market to a greater extent than would be required by other countries, and which operated on a somewhat differentiated basis country by country.

South Africa also argued that the other SADC members should identify products for which they wanted better access into the South African market, and that they should stop the debate about the comparative average tariff levels, whose was lower than whose. This was, however, seen by several other countries, as SA’s attempts not to open up it’s markets to their exports.

The negotiations became protracted and it was only 4 years later – in September 2000 that the Southern African community Free Trade Agreement was signed by all SADC members [excepting Angola and DRC] – see table 13.2.

The signing of the Trade Protocol marked an important milestone in our region's history. It will increase regional trade through the removal of tariff and non-tariff barriers and discard other restrictions that block entry or increase the cost of doing business in the region.

This marks an important stage in the realisation of a region-wide market. Intra-regional trade is still relatively undeveloped, currently standing at 10% of total exports (as compared to 24% for MERCOSUR, 70% for APEC, 55% for the EU, and 52% for NAFTA).

This is only the beginning.

The Agreement is very complex and aims to achieve regional cooperation by asymmetrical reduction of trade barriers, over a 12 year period, and by achieving harmonisation, inter alia, in the financial institutions, customs and excise systems, investment policies, capacity building and macro-economic strategy.

Given the vast imbalance in trade between SA and other SADC members it was agreed that SA would meet 96.7% of its obligations within 5 years, while the others will drop tariffs on 97.6% of SA imports within 8 years.

Like any other regional grouping, SADC will have to deal with issues such as border control, duty evasion, tariff abuse, falsified certificates of origin, subsidies, potential job losses and corruption.

The agreement introduced "specific sectors" to deal with "sensitive sectors", e.g. clothing and textiles. The intention is to encourage the adding of value in the production chain and to encourage competitiveness. The goods will have to go through 2 converting processes, e.g. natural fibre will have to be converted to fabric and then to garments.

Some countries e.g. Tanzania, Zambia and Malawi were allowed provisional concessions to supply in accordance with specific quotes.

The sugar and wheat industry will also function on a basis of quotas because of the European and USA subsidies policy.

We have to also look at the implications of SACU to the SA-EU agreement. We believe that the effects will only be indirect, i.e., the SACU countries need to prepare for competition from Europe, however we have tried to cushion the effect and by tackling the problems of subsidised products.

Another issue that has to be tackled is the fact that the countries of the Southern African Customs Union [SACU], Swaziland, Lesotho, Namibia and Botswana, have depended on customs and excise revenues from trade. We must seek ways to cushion the effects of the loss of such revenues. SACU however will continue to exist as an organisation.

Given our commitment to mutual beneficial economic development that entails more than trade, we have taken steps to encourage joint partnerships and SA investments into SADC.

In this regard we have taken several concrete measures, inter alia, SA investors have been given a higher threshold for capital export to SADC; Institutions such as the Industrial Development Corporation and the Development Bank of Southern Africa are undertaking developmental projects in other SADC countries.

Another problem that we must tackle is the overlap of membership of SADC and the East and Southern African Trading bloc [COMESA].

SADC envisaged that there will be dispute between trading partners and therefore have strengthened the dispute resolution mechanisms.

Ladies and Gentlemen

The next phase, and challenge, for SADC will be the implementation of the Protocols in order to make regional integration a reality. This means that the existing SADC structures need to be strengthened in order to have the capacity to assist member states with implementation.

We are therefore entering one of the most important phases of SADC's history. At its Summit in 1999, SADC decided to review its institutional structure in order to become a more effective and efficient delivery-oriented regional organisation. The SADC Review Committee, comprising of the Troika plus One (Mozambique, South Africa, Namibia and Zimbabwe) completed their work and presented a report with recommendations to the Council of Ministers in Windhoek earlier this year for consideration and recommendation to the Heads of States and Government.

If the Review Committee's recommendations are accepted by SADC members, the organisation is poised to become a catalyst for the stabilisation of the region, effectively dealing with political, security and socio-economic challenges allowing economic growth and development.

We are concerned that there are some countries who do not accept the recommendations. If there are genuine concerns these must be accommodated however it is not in SADC’s interest to oppose change simply because countries are comfortable with the old.

I am sure, that Dr Stahl, Adviser to the SADC Secretariat in Gaborone, Botswana, will frankly discuss this process and SADC in detail during Session 5 tomorrow.

Prime Minister Blair speaking at the Millennium Summit said: "There is a dismal record of failure in Africa on the part of the developed world that shocks and shames our civilisation …

Nowhere are more people being left behind on the wrong side of growing digital and economic divide, …

30 years ago the same depressing analysis might have been made of parts of Asia or Africa …

There can be hope for Africa. There is political leadership, business opportunity and above all the will of the people for a better future in Africa. We must be partners in the search for change and hope."

It is imperative that we halt this marginalisation and that we forge a place for ourselves in the global community, that we facilitate Africa’s effective integration into the global economy, and that we leapfrog into the new technological and information age. Ensuring our rightful place in the global community will entail, amongst other things, the reform of international institutions and ensures our participation in the global decision-making processes and mechanisms. The current configuration of international institutions still continues to favour the developed world. This is true of all of the major international institutions, such as the World Bank, the IMF, the WTO, and the UNSC.

As I indicated earlier Africa has to accept it’s responsibilities. We must strive for the establishment of deeply entrenched democratic and political system in our sub-region and the African continent as a whole. The protection of human rights and the establishment of institutions and procedures will ensure that we collectively deal with peace and stability, thereby creating more favourable conditions to achieve sustainable economic development and improved living standards.

Conflicts are inextricably linked to underdevelopment, therefore, the regional integration and the African developmental Agenda cannot be achieved if there is no peace and stability on our continent.

Kofi Annan said "In intra-state conflicts in Africa, the main aim increasingly, is the destruction not only of armies but of civilians and entire ethnic groups. Preventing such wars is no longer a matter of defending states or protecting allies, it is a matter of defending humanity itself".

He was referring to the shocking reality that from Sierra Leone to Angola, from the streets of the DRC to Sudan, from the killing fields of Ethiopia and Eritrea, to the killing fields of Rwanda and Somalia, violent conflicts have become the scourge of our continent. We cannot accept the fact that over the past three decades over 8 million Africans have perished in the fires of ethnic and racial hatred, religious intolerance, political ambition and material greed. We cannot accept the fact that over 15 million refugees and displaced persons live in terrible conditions. This is the highest number of refugees anywhere in the world. We cannot accept the fact that landmines are indiscriminately planted, injuring and killing innocent citizens and that the infrastructure of many countries is systematically destroyed and their agricultural land laid to waste.

The "Report of the Panel on UN Peace Operations (Brahimi report) and the UN Secretary General’s Millennium Report categorically underscore the need for all who are involved in Conflict Prevention and Development – the UN, The Bretton Woods Institutions, Governments and Civil Society Organisations to address these challenges in a integrative comprehensive and holistic way".

To give meaning to this conclusion, we should look at some of the root causes of conflict. This, inter alia, includes the legacies of the past which has resulted in weak and dependent civil society; weak institutions of governments and civil society; ethnisation of politics; imposition of models of governments by former colonial powers; corruption; "privatisation of conflicts", people in Africa and internationally are profiting from the conflict.

We must seek to achieve the repositioning of the African continent in the international fold. This envisages a continent whose peoples are finally free from need, poverty, violence and disease; a region with a culture of human rights, good governance and respect for the rule of law; an area with investment flows and trade that sustains economic growth and development to such levels that Africa becomes an equal partner within the community of nations.

In essence this demands that we do not diverge from the values and vision we share with our MERCOSUR neighbours. Africa alone can not achieve the African Renaissance. We need to call on our neighbours in Mercosur to deepen and strengthen existing South-South relations in order to re-align and restructure South-North relations.

The similarity of development challenges between Southern Africa and South America, and indeed among other countries of the south, makes it imperative for our countries to adopt and present common positions in multilateral fora, including the democratisation of the United Nations, the Bretton Woods Institutions and the reform of the global political and economic order.

Both the Southern African and South American regions have commodity-based developing economies, with large and growing populations. Strong mining sectors in both regions offer not only the possibilities of investment, but also the sale of specialist knowledge and equipment. The agro-economies of South America and Southern Africa serve to draw the regions together in co-operating in multilateral forums, with shared membership of initiatives such as the Valdivia and Cairns Groups. Common problems and shared strategies include social issues such as under-development, crime, poverty, unemployment, educational reform and illegal immigration.

Our common national and international approaches further provide fertile ground for co-operation in jointly combating globalised threats to human security such as drug trafficking, trans-national crime, environmental degradation, poverty, disease etc. Governments can, however, not contribute to this end alone. Civil society and specifically the private sector, need to join Governments in their endeavours. I am heartened by the fact that the private sector supports this Conference, thereby stimulating co-operation between our two regions.

Ladies and Gentlemen

Regional integration and the increased prominence of multilateralism represent two major global trends. Regional and continental integration and cooperation is essential in making us more competitive globally. However, further alliances and relationships need to be developed with regions, states and organisations in the South, as well as in the North. In this way, understanding, acceptance and support can be generated for a common agenda of the South, while support and material backing can be generated for the issues under this common agenda in the developed North.

This Conference is held at an opportune moment. President Thabo Mbeki has been invited to attend and address the MERCOSUR Presidential Summit, to be held in Brazil in the City of Florianopolis on 15 December this year. The only other Foreign Head of State afforded this honour was former President Mandela who attended and addressed the MERCOSUR Presidential Summit during 1998 in Ushuaia, Argentina.

It is envisaged that negotiations for a Framework Trade Agreement with MERCOSUR will have been finalised for signature during the December MERCOSUR Presidential Meeting in Florianopolis.

In a world where we, the countries of the South, and specifically Southern Africa and South America could potentially be further marginalised, we must seize the initiative to pro-actively ensure that we are treated as equals by the North. If not, we will remain marginalised spectators in the events of the international arena. As political and economic groupings, SADC and MERCOSUR will be better positioned to tackle the negative effects of globalisation while reaping the advantage of its positive aspects.

THE SOUTH SUMMIT PROGRAMME OF ACTION SHOULD GUIDE US: I QUOTE:

"We the Heads of State and Government of the developing countries which account for almost four-fifths of the world’s population, have assembled here in Havana for the first South Summit at a truly historic moment in the evolution of human society. At the dawn of a new millennium, our countries and people stand at the crossroads of history poised between the achievements of the past and the hope and expectations of a yet uncharted future. Rather than be passive witnesses of a history not of our own making, we in the South will exert every effort to shape the future through the establishment of a World Order that will reflect our needs and interests while also laying the foundations for a more effective system of international development co-operation. To this end, we undertake to pursue a sharply focussed action-orientated agenda geared to implementing a number of high priority initiatives within specified time frames."

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