Revision of thesis (Master's) - Univerity of the Witwatersrand, 2004. / Title from PDF title screen (viewed July 27, 2009). Includes bibliographical references p. 107-119.

The current implementation of a free trade area in SADC has given rise to concerns that the present location of industry in the region will be adversely affected. Specifically, many of the smaller and less-developed countries fear that this change will result in a loss of their industry towards the more developed members, and particularly towards South Africa. This study uses the framework of the new economic geography to address these concerns. The new economic geography is a body of theory that has arisen in the last decade and allows for a dynamic analysis of the process of regional integration. Studies of such dynamic effects in the developing country context are exceedingly scarce, and particularly so in southern Africa. Another area of little research is in the comparison of the evolving industrial structure of different regional blocs. Thus, in response to this gap in the literature and in order to address the concerns of polarisation of industry within the SADC region, a two-pronged empirical approach is taken. The study first conducts a review of the spatial distribution of industry within SADC from 1970 to 1999. This is achieved through the calculation and examination of industrial locational Gini coefficients, measuring the relative degree of concentration of 28 ISIC (rev 2) industries for the years 1970, 1980, 1985, 1990, 1995 and 1999. Secondly, an empirical comparison is conducted with other blocs that are in the process of deepening regional integration, namely the European Union and Mercosur. Again, this is done through the calculation of locational Gini coefficients for individual industries for all three blocs at five year intervals from 1980 to 1995, and then for 1999. The average level of concentration within SADC is found to increase steadily from 1970 to 1990. Between 1990 and 1995, the level of concentration increases further, but at a lower rate, and, by 1999 industry begins to disperse. The Gini coefficient is a relative measure, and thus does not measure the absolute level of concentration. Thus, much of the increase in concentration seen is towards peripheral countries. To further interpret the Gini, the changes in concentration are compared to the absolute changes in manufacturing employment in South Africa. From this analysis, eight of the 28 industries analysed show particular tendencies to concentrate in the periphery. These are beverages, textiles, wearing apparel, paper and products, rubber products, other non-metallic mineral products, transport equipment, and professional and scientific equipment. Likewise, another six industries become more concentrated in South Africa over this time, namely food products, printing and publishing, industrial chemicals, petroleum refineries, miscellaneous petroleum and coal products, and electrical machinery. According to the Gini coefficient, the tobacco industry is by far the most concentrated, while the wood products industry is the most dispersed. It is also found that scale-intensive industries tend to be among the most concentrated. In the cross-bloc comparison, Mercosur has the lowest level of aggregate concentration with an average Gini of 0.08 in 1999. This compares with Ginis of 0.28 for the EU, and 0.22 for SADC. The EU has the largest increase in concentration over the period, while the concentration in Mercosur falls during the 1980s, increases in the mid 1990s and then falls again by 1999. A common theme, however, between all three blocs is a trend towards dispersion in the late 1990s. This is particularly apparent in SADC and Mercosur where the Gini decreases in value, while in the EU, the Gini only increases marginally in this period. Other studies of the EU have indicated that industry was starting to disperse at this time. This finding would be more apparent at a greater level of industrial disaggregation. The following industries are found to be agglomerated above the average level in all three blocs: tobacco, miscellaneous petroleum and coal products, and pottery china and earthenware. Conversely, transport equipment, paper and products, machinery except electrical, plastic products, rubber products, and fabricated metal products tend to be more dispersed across all three. Perhaps more interesting is that there appears to be some commonality between industries that become more agglomerated across all three blocs, while industries that dispersed tend to be region specific. The industries that show universal agglomeration tendencies are the highly sensitive wearing apparel and textiles industries, in addition to industrial chemicals, printing and publishing, iron and steel, and plastic products. In relation to SADC, the first two of these industries show an increased concentration in the periphery, as in the EU, while the remaining industries show tendencies to concentrate in the core. The new economic geography predicts that, as the presently high levels of transport costs begin to fall in SADC, industry will tend to concentrate in the core. However, the results of this study indicate that the effect on manufacturing is, to a large extent, sector specific, with some manufacturing industries concentrating in the core and others in the periphery. The study therefore concludes that the mass polarization of industry from the smaller countries in SADC towards South Africa is unlikely to occur with the further reduction in trade costs. Although certain industries may be attracted towards the core, the high degree of wage disparity in the region and present trade concessions from developed markets overseas towards the peripheral countries, will make these countries an attractive location, particularly for export orientated firms. Two main policy recommendations result from the study. Firstly, individual countries in SADC need to promote those industries that show concentration tendencies in their country. Secondly, in order for the periphery to maximize their gain from the free trade area, transport costs within the region need to be reduced rapidly and effectively.

University of Macau / Faculty of Law

To date the SADC region has managed to develop a manufacturing base but this base is still small as evidenced by its low contribution to GDP. For example, only three out of the fourteen SADC countries, viz. Mauritius, South Africa and Swaziland, had over 20 percent of their GDP originating from the manufacturing sector throughout the 1990s. Also to note is that while the manufacturing sector is quite diversified, the sector is dominated by industrial processes which are more of resource and labour-intensive in nature than those processes of scale-intensive, differentiated and science based in nature. TIle trade performance of the manufacturing sector supports these observations and as such the region is heavily dependent on imports for scale-intensive, differentiated and science based commodities. However, despite the fact that the region tends to focus more on resource- and labour-intensive manufacturing activities, products from these manufacturing activities are still significant components of manufactured goods imports into the region. Also to note is that since resource- and labour-intensive industries dominate manufacturing activities; these are the areas in which investment opportunities abound. For example, agro-based manufacturing presents most of the investment opportunities, with food processing presenting the majority of the investment opportunities followed by garments and textiles production. Mineral processing also presents significant investment opportunities. The analyses of the nature of the manufacturing sector also show that in a few SADC countries, viz. Mauritius, South Africa and Zimbabwe; scale-intensive, differentiated and science based industries also form a significant component of the industrial base implying more technologically complex manufacturing sectors. Since high technology and technologically complex manufacturing activities are limited, investment opportunities in these manufacturing sub-sectors are also limited to just a few countries However, with the SADC ITA in place, opportunities could arise for these limited technology-related manufacturing facilities to expand or engage in import substitution production so as to meet the demands of the growing regional market. It is also important to note that, while the region may not have as competitive advantage in these industries as in the resource- and labour-intensive industries, there is a need for the region to selectively identify and target such industries for priority development, a lesson SADC could learn from the East Asian NIC's took in their industrialisation strategy. The study also shows that the manufacturing sector has been a priority sector for both domestic and foreign investors. This has implications for industrial development because a strong and dynamic manufacturing sector would be developed, forming a sound basis for industrialisation as well as being able to effectively link and support all the other sectors of the economy. FDI could help the region to fully utilise the labour-intensive industries and use them as a stepping-stone to higher levels of industrial development. This is a lesson to SADC from the experiences of the East Asian NICs where while industrialisation was initiated by labour-intensive manufacturing, the countries were able to move into capital-intensive manufacturing due to FDI as it enabled the establishment of the industrial bases, thus leading to a rise in the share of manufactured exports. FDI could also help to develop the resource-intensive industries further by promoting further processing of raw materials into products of more value, thus propelling industrialisation through a resource-led industrial development programme as the current resource-intensive industries become fully utilised. The raw materials which occur in great abundance in the region's primary sector would have a ready market in the manufacturing sector where they would serve as inputs to the production of high value products. The currently smaller industrial base for scale-intensive products, differentiated and science-based manufactured products would benefit from the improved technological capabilities and managerial skills that result from FDI. Therefore, by impacting positively on manufacturing activities of both low and high MVA, FDI would thus have a facilitating role in establishing a more solid industrial base, broadening the current manufacturing base, and improving installed capacity utilisation. The study also shows that investment in productive capacity in the form of machinery and equipment is of great importance in the sampled SADC countries. Investment towards the acquisition of this capital is very important as this is directly relevant towards improving productive capacity. FDI could thus play a facilitating role by augmenting the current domestic investment in machinery and equipment. While the manufacturing sector within the region is still small and the current utilisation of installed industrial capacity is low, there is potential for further industrial growth. The current process to usher in the SADC Free Trade Area would have a facilitating role through various ways: viz. increasing the market size and enabling easier access through the reduction of tariff and non-tariff barriers, promoting regional competitiveness, improved utilisation of regional corridors, increasing opportunities for utilising identified intra-industry trade potentials, and providing opportunities for increased regional cross-border investment. Apart from the SADC FTA, the USA African Growth and Opportunity Act (AGOA) and the Cotonou Agreement will also motivate the identification and utilisation of existing and new potentials within the manufacturing sector in SADC. In order to improve the current nature of industries in the region, there is also a need to design and implement appropriate industrial policies and strategies. Such policies should consider the region's trade policies and the recently launched Regional Indicative Strategic Development Plan (RISDP) so as to complement them. The industrial policies should also address issues relating to industrial investment, technology and local technological capabilities development, human resources development, the structure and nature of industry, the competitiveness of industries, as well as facilitating the complementarities between the agricultural and manufacturing sectors. To this end therefore, instead of relying solely on individual national industrial policies, SADC is in the process of formulating a regional industrial policy and strategies which seek to promote and support sustainable industrial growth across the region, thus facilitating industrial development.

Mercantile Law / LL. D.

The Southern African Development Community (SADC) declared a Free Trade Area on 17 August 2008. The Free Trade Area is the ultimate objective of the Trade Protocol on trade cooperation in SADC, signed in 1996. The Protocol is supported and complemented by the ambitious Regional Indicative Strategic Development Plan (RISDP). The idea behind the SADC Trade Protocol was to counter the developmental challenges facing SADC member states and to improve the productive and trade capacity of SADC countries. The implementation of the SADC Free Trade Area has been guided by the WTO/GATT regulatory framework on regional trade agreements, particularly GATT Article XXIV, the Understanding on the Interpretation of GATT Article XXIV, as well as the Decision on Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing Countries (Enabling Clause). This research seeks to analyse the SADC Trade Protocol's provisions and the implementation of such provisions. To facilitate an understanding of factors that affect the implementation of the SADC Trade Protocol, SADC's institutional and operational framework is discussed from a legal-historical perspective. The provisions of the Trade Protocol are analysed for compliance with WTO/GA TT rules as well as for applicability within the SADC context. The provisions of the WTO/GA TT regulatory framework on regional trade agreements are also analysed with a view to determining whether they are applicable in developing country situations such as SADC. The Free Trade Area is seen as the first step towards regional economic integration in the region and is to be followed by a Customs Union, a Common Market and then eventually an Economic Community with its own central bank and regional currency. It is envisaged that the region will proceed through all these traditional theoretical phases of economic integration between 2008 and 2018. The implementation of the Trade Protocol has been beset with institutional, administrative and infrastructural challenges which pose obstacles to the attainment of the other stages of economic integration in the time frames prescribed in the RISDP. These challenges are assessed for impact on the regional economic integration of SADC by evaluating the progress towards implementing the Trade Protocol provisions and the implementation of measures taken towards the launch of the Free Trade Area. Emerging issues are also identified and analysed for their effect on the Free Trade Area and the general economic agenda of SADC. Of particular note is the Economic Partnership Agreements (EPAs) being negotiated with the European Union where SADC countries are negotiating in four different configurations. An analysis of this EPA situation reveals that it compounds a pre-existing problem: that of overlapping membership of regional trade agreements. Prior to the EPAs and the intensified drive towards the creation of the Customs Union, there was largely no need to rationalise the overlap in regional trade agreement memberships, but it is now a matter of urgency. The overlap in membership has complicated EPA negotiations and places serious doubts on the prospects of complete regional integration in SADC.This research concludes with observations on South Africa's complicated relationship with her SADC neighbours. South Africa's trade policies, as regards both the SADC region and the world, are discussed. Because of its political and economic dominance, South Africa's policies have a ripple effect on the rest of SADC; hence the need for South Africa to be vigilant in formulating and implementing its trade policies.

Foreign investments in SADC are regulated by Annex 1 of the SADC Protocol on Finance and Investments (SADC FIP), as well as the laws of SADC Member States. At present, SADC faces the challenge that this regime for the regulation of foreign investments is unstable, unsatisfactory and unpredictable. Furthermore, the state of the rule of law in some SADC Member States is unsatisfactory. This negatively affects the security of foreign investments regulated by this regime. The main reasons for this state of affairs are briefly explained below. The regulatory regime for foreign investments in SADC is unstable, due to recent policy reviews and amendments of key regulatory instruments that have taken place. Major developments in this regard have been the suspension of the SADC Tribunal during 2010, the amendment of the SADC Tribunal Protocol during 2014 to bar natural and legal persons from access to the Tribunal, and the amendment of Annex 1 during 2016 to remove investor access to international investor-state arbitration, better known as investor-state dispute settlement (ISDS). The regulation of foreign investments in SADC has been unsatisfactory, among others because some SADC Member States have failed or neglected to harmonise their investment laws with both the 2006 and the 2016 Annex 1. Furthermore, SADC Member States such as Angola, Democratic Republic of Congo (DRC), Malawi, Mauritius, Seychelles, Eswatini, Tanzania, Zambia, and Zimbabwe have multiple Regional Economic Community (REC) memberships. This places these Member States in a position whereby they have conflicting interests and treaty obligations. Finally, the future of the regime for the regulation of foreign investments in SADC is unpredictable, due to regional integration efforts such as the recent formation of the COMESA-EAC-SADC Tripartite Free Zone (T-FTA) and the African Continental Free Trade Area (AfCFTA). The T-FTA is entitled to have its investment protocol, while the AfCFTA investment protocol will be negotiated from 2018 until 2020. These developments entail that the 2016 Annex 1 will soon be replaced by an investment protocol at either the T-FTA or AfCFTA levels, thereby ushering a new regime for the regulation of foreign investments in SADC. The unknown nature of the future regulations create uncertainty and instability among foreign investors and host states alike. This study analyses the regulation of foreign investments in terms of Annex 1 and selected laws of SADC Member States. In the end, it makes the three findings mentioned above. In order to address these findings, the study makes four recommendations. The first is that foreign investments in SADC must be regulated at African Union (AU) level, by means of an AfCFTA investment protocol (which incidentally is now the case). Secondly, investor-state disputes must be referred to the courts of a host state, optional ISDS, the African Court of Justice and Human Rights (ACJ&HR) or other agreed forum. Thirdly, an African Justice Scoreboard (AJS) must be established. The AJS will act as a gateway to determine whether an investor-state dispute shall be referred to the courts of a host state, ISDS, the ACJ&HR or other forums. Fourthly, the office of an African Investment Ombud (AIO) must be created. The AIO shall facilitate the early resolution of investor-state disputes, so as to reduce the number of disputes that may end-up in litigation or arbitration. / Mercantile Law / LL. D.