Brendan Vickers
1 October 2007
Johannesburg — MY Organisation , the Institute for Global Dialogue, in partnership with the Friedrich Ebert Stiftung, recently hosted the fourth Southern African Forum on Trade (SAFT). The focus of this year's meeting was to revisit the normative, strategic and policy underpinnings of the regional integration project embodied in the Southern African Development Community (SADC).
In particular, delegates explored which approach -- "open" or "developmental" integration -- best meets the socioeconomic developmental challenges and profile of southern African nations.
Broadly speaking, there are two competing visions of regionalism.
The prevailing approach is "open regionalism". This is linked to globalisation and the multilateral governance of the world economy.
It privileges the centrality of the market in welfare optimisation, the promotion of exports and foreign investment, and the liberalisation of factor flows. This approach seeks active engagement with globalisation and its liberalising impulses, and is thus widely viewed as a stepping stone towards crafting a harmonised global system for trade and investment.
In contrast to this perspective, "closed" or "developmental" regionalism promotes structural transformation and production through a more selective and regulatory approach to liberalisation.
Through greater cooperation and burden-sharing, this approach would address regional inequities and regional production and supply-side deficits.
This is not an unimportant theoretical debate.
In its latest trade and development report entitled, Regional Cooperation for Development, the United Nations Conference on Trade and Development recommends that developing countries should strengthen regional cooperation with other developing countries, but proceed carefully with regard to North-South bilateral or regional preferential trade agreements.
The latter agreements may offer gains in terms of market access and higher foreign direct investment, but they can also limit national policy space, which can play an important role in the medium- and long-term growth of competitive industries.
The current Economic Partnership Agreement negotiations with the European Union are a case in point.
By contrast, strengthened regional cooperation among developing countries can help accelerate industrialisation and structural change, and ease integration into the global economy. However, to achieve this, trade liberalisation is not enough, as the SADC demonstrates.
Active regional cooperation should extend to areas of policy that strengthen the potential for economic growth and structural change, including monetary and financial arrangements, large infrastructure and knowledge-generation projects, and industrial policies.
Southern Africa has historically experimented with a variety of integration initiatives, resonating with the "new regionalism" wave that animated such projects worldwide in the 1980s.
During that decade, the infrastructural and functionalist impulses of the Southern African Development Coordinating Conference generated a number of collaborative interstate projects centred on reducing regional dependence on apartheid SA.
Its transformation from a loose organisation into the formal, legally-binding SADC in 1992 -- with SA joining in 1994 -- institutionalised a "developmental integration" paradigm.
The adoption of the SADC Trade Protocol in 1996, later accompanied by the Regional Indicative Strategic Development Programme, catapulted the SADC towards market-led "open regionalism". It is envisaged that this outward orientation will culminate in the establishment of an SADC free trade area by next year, customs union by 2010 and common market by 2015.
However, relatively low levels of intraregional trade flows, ongoing protectionism and supply-side constraints, and a lack of political will among some SADC members, have cast doubts on how feasible and attainable these set targets are.
Recently, Finance Minister Trevor Manuel questioned the viability of the SADC reaching a customs union three years from now. Delegates attending the SAFT forum therefore resolved that the SADC requires a more developmental integration approach, which entails better "governance" of the regional market to ensure socially-productive outcomes and economic diversification.
In addition, development finance institutions in the region must more strategically support the construction of economic and social infrastructure.
There is also a need to address the specific trade facilitation requirements of the region's many informal, cross-border traders (predominantly women).
Ultimately, however, economic advance in the region requires much more than investment and trade. It requires a favourable democratic environment, supportive public institutions and common norms and values (so-called soft infrastructure).
Without the latter, soft infrastructure, hard infrastructure -- roads, rails, bridges and ports -- will do little to build a united, people-centred regional order.
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