VZCZCXRO8931
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSA #2331 3201158
ZNR UUUUU ZZH
R 161158Z NOV 09
FM AMEMBASSY PRETORIA
TO RUEHC/SECSTATE WASHDC 0236
INFO RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHOR/AMEMBASSY GABORONE 5564
RUEHMR/AMEMBASSY MASERU 2922
RUEHMB/AMEMBASSY MBABANE 4599
RUEHWD/AMEMBASSY WINDHOEK 5065

UNCLAS PRETORIA 002331 
 
SIPDIS 
 
PLEASE PASS TO USTR FOR BILL JACKSON AND COMMERCE FOR JED 
DIEMOND 
 
E.O. 12958: N/A 
TAGS: ECON ETRD SF
SUBJECT: SAG OFFICIAL: SADC TO FOCUS ON CONSOLIDATION OF 
FREE TRADE AGREEMENT 
 
¶1.  (SBU) Summary:  Trade flows within the Southern African 
Development Community (SADC) remain disappointingly limited 
in spite of the SADC free trade agreement, according to the 
SADC desk officer at South Africa's Department of Trade and 
Industry (DTI).  Poor infrastructure, non-tariff barriers, 
and lack of capacity have inhibited intra-SADC trade.  SADC 
plans to address these issues, but will probably not meet its 
2010 deadline of a customs union.  End Summary. 
 
------------------------------------ 
Trade Is About More Than Low Tariffs 
------------------------------------ 
 
¶2.  (SBU) Trade flows within the Southern African Development 
Community (SADC) remain disappointingly limited, in spite of 
the SADC free trade agreement, according to Njabulo Mbewe, 
the SADC desk officer at South Africa's Department of Trade 
and Industry (DTI).  He met Trade and Investment Officer and 
Deputy Economic Counselor on November 9. 
 
¶3.  (SBU) According to Mbewe, the elimination of many tariffs 
and the launch of the SADC free trade area in 2008 are not 
changing old patterns of SADC trade, even though 85 percent 
of intra-SADC trade is now tariff-free.  "South Africa still 
has a big trade surplus with the region," he said.  "Free 
trade hasn't led to a supply-response in the other SADC 
countries."  He blamed the non-response on poor 
infrastructure, non-tariff barriers, lack of capacity, and 
other constraints. 
 
¶4.  (SBU) Under the circumstances, SADC will now focus on 
consolidation of the SADC free trade agreement, Mbewe said. 
Between now and 2012, SADC negotiators will address issues 
such as rules of origin, non-tariff barriers, border red 
tape, and the elimination of remaining intra-SADC tariffs. 
In Mbewe's view, the last issue could be especially 
difficult, since the remaining intra-SADC tariffs protect 
sensitive industries. 
 
------------------------------------- 
Looking Ahead on Regional Integration 
------------------------------------- 
 
¶5.  (SBU) Mbewe said that plans for a SADC customs union will 
be put on a backburner, at least for now.  There is 
widespread recognition within SADC, he said, that a customs 
union is not feasible by the current deadline of 2010. 
However, he expressed doubt that SADC's political leadership 
would officially abandon the goal.  Within the SAG, Mbewe 
confided, there is displeasure that SADC discussions of a 
customs union revolve mostly around revenue sharing, rather 
than trade policy. 
 
¶6.  (SBU) Looking ahead, Mbewe said SADC members must 
formulate joint industrial and investment policies, lest 
member states chase after the same investments or create 
industries that duplicate rather than support each other.  He 
also stressed the need for SADC countries to do a better job 
of coordinating with each other and with development banks on 
infrastructure projects with regional dimensions.  He said 
South Africa's own development finance institutions -- the 
Industrial Development Corporation and the Development Bank 
of Southern Africa -- plan to step up lending outside of 
South Africa in an effort to promote "real" integration. 
Finally, SADC will explore free trade agreements with other 
African bodies such as COMESA.  "This is what business wants 
us to do," he said.  "They want to trade with the entire 
continent." 
 
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Comment 
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¶7.  (SBU) Mbewe's comments underscore the vital role of 
USAID's Southern Africa Global Competitiveness Hub in 
QUSAID's Southern Africa Global Competitiveness Hub in 
Gaborone.  The Hub aims to promote cross-border trade by 
enhancing the competitiveness of African products and 
services, building capacity for trade policy formulation and 
implementation, and strengthening the enabling environment 
for African businesses.  The Hub is often cited by South 
African officials as a model trade development and regional 
integration program. 
GIPS