Question

WRITE AN ILLUSTRATIVE ESSAY THAT COMPARES AND CONTRASTS THE CURRENCY PEGS OF THE SADAC, EAC AND COMESA ECONOMIC REGIONS AS FAR BACK IN TIME AS POSSIBLE, AND DISCUSS HOW THE EXCHANGE RATE POLICIES OF THE DOMINANT ECONOMIES IN THE THREE REGIONS (SADAC, EAC AND COMESA) HAVE AFFECTED CROSS-BORDER TRADE. SUBSTANTIATE YOUR DISCUSSION WITH EXAMPLES. (100 MARKS)

how does late policies of the dominant economics in SADC, AEC and COMESA have affected cross boarders trade

Answer 1

The term ‘trade remedy laws’ refers to three types of national laws that impose import restrictions under specified circumstances. ‘Safeguard measures’ are temporary trade restrictions, typically tariffs or quotas, which are imposed in response to import surges that injure or threaten ‘serious injury’ to a competing industry in an importing nation. ‘Antidumping duties’ are tariffs in addition to ordinary customs duties that are imposed to counteract certain unfair practices by private firms that injure or threaten to cause ‘material injury’ to a competing industry in an importing nation. ‘Countervailing duties’ are tariffs in addition to ordinary customs duties that are imposed to counteract certain subsidies bestowed on exporters by their governments, when they cause or threaten to cause material injury to a competing industry. A practical issue that governments usually address in entering trade agreements is the protection of domestic industries against unfair trade practices or significant injury by competition from imported products. The world’s first modern anti-dumping law was enacted by Canada in 1904, against American steel makers.

The COMESA, EAC and SADC have provisions in their respective instruments on anti-dumping, subsidies countervailing and safeguard measures. The main treaties or protocols contain provisions on trade remedies in broad terms. These provisions are then supplemented in two ways: either by providing that Member/Partner States can use the relevant applicable WTO Agreements, namely, the Agreement on Anti-dumping, Countervailing, or Safeguard Measures, in the case of SADC; or through setting out detailed substantive and procedural provisions that are WTO-consistent, in regulations in the case of COMESA or in an annex and regulations in the case of the EAC. The COMESA and EAC instruments create dedicated regional sub-committees on trade remedies to oversee the implementation of the provisions; but the instruments do not create regional investigating authorities; and if an example be given of a cooperative investigating authority: under the International Trade Administration Act of South Africa of 2003, the Government established the International Trade Administration Commission (ITAC) also in 2003, in accordance with the requirement under the SACU Treaty of 2002 that Member States should have national laws and institutions on trade remedies; ITAC now serves as the investigating authority for the other SACU Member States, namely: Botswana, Namibia, Lesotho and Swaziland as members of the customs union. SACU investigations are supposed to use detailed WTO-consistent rules (Joubert, 2012). The detailed regulations under the COMESA and EAC instruments reproduce the detailed procedural requirements set out in the three WTO Agreements on trade remedies. The SADC Trade Protocol says it doesn’t prevent the member states from using the WTO Agreements. The main procedural requirements are notification of the initiation of the investigation, and of the taking of provisional and final measures; but above all the undertaking of a thorough public investigation involving interested parties to establish that the trade remedy measures can be taken – proof of the act of dumping or benefit of a subsidy or a surge in imports; proof of injury or a threat of it (material in the case of dumping and subsidization and serious in the case of safeguards); proof of a causal link; and establishment of the parameters or the extent of the measures to be taken to ensure they do not exceed the margin of dumping or subsidy, or the duties and quotas necessary to prevent serious injury from a surge of imports. No EAC partner state has used the EAC trade remedy provisions; and neither has any SADC member state invoked the SADC trade remedy provisions. It can be noted that Egypt and South Africa have been the only users of trade remedy measures in the tripartite region, but they have invoked and applied their domestic laws, and not the COMESA, EAC or SADC trade remedy provisions. The national laws have been formulated for consistence with the WTO Agreements as the thrusting motivation, rather than consistence with the REC regimes. In COMESA, Kenya has used a safeguard measure on sugar imports since 2002, which is due to expire in 2014, but the initiation of the safeguard measure was not under the detailed COMESA Trade Remedy Regulations; rather the measure was initiated under Article 61 of the Treaty which simply provides that a member state may take safeguard measures to last for up to one year after informing the Secretary General and the other Member States, but the measure may be extended by the COMESA Council of Ministers if satisfied that the member state has taken necessary measures to overcome the imbalances for which the measure was taken.