Question

As a trade specialist, outline the policies which the Botswana government can use to promote international trade. (10 marks)

Answer 1

1. To secure market access at the most preferential customs duty rates: this is the main feature of Botswana's trade policy. The strategy involved here is: to negotiate for free trade agreements singly (as in the cases of Zambia, Zimbabwe and Malawi) , to negotiate as a member of SACU as in the case of SADC FTA , SACU‐India (on going), SACU‐MERCUSOR; initialing and eventually signing the Interim EPA alone ,to maintain membership of SACU; having a joint agreement with De Beers on diamond marketing , and finally to take benefit of the AGOA arrangement to access the USA textiles market.

2. To ensure stable and high prices for diamonds: we know that the diamonds are the country’s most precious resource, so the marketing should be done in such a way that it yields high profit.

3. To secure productive inputs at competitive prices : there should be low duty for all the producers, but duty rebates for exporters. Whilst, until the recent reform of SACU, Botswana had not much to say on duty levels, the now defunct 1969 SACU agreement had leeway for duty drawback for exporters accessing inputs from outside SACU ( for the anti-dumping cases ). SACU means that the availability of inputs is duty‐free from any supplier within the Customs Union.

   4. Diversification of exports beyond diamonds and beef: This strategy includes the setting up of enterprise support organisations to help the existing and new firms by Botswana as well as joint‐ventures with foreigners, to attain competitive production, as well as develop markets for exportable products (BEDIA). This policy therefore brings the trade policy and industrial policy closer .

5. To protect the domestic infant industries. This objective depends on a tariff‐based strategy, but this is not much famous in Botswana. The idea here is to reduce such kinds of market access barriers because any of the other members of SACU could also use the same, thereby distorting what is supposed to be a duty‐free market.