Deepening Integration in SADC - Fes-botswana.org

The Government should find an alternative source of revenue before
the tariff cut is made;
Import licenses and prohibitions should be eliminated during the
early stages of the liberalisation scheme, and tariffs should replace
them if necessary;
A real-exchange-rate overvaluation should be avoided and nominal
exchange-rate anchors should be introduced at the beginning of
the reform; and
A uniform tariff structure should be introduced for efficiency reasons.
The Membership in SADC could represent an important opportunity
for Mozambique. Greater market access could spur economic activity.
At the same time, the consequences of the Rules of Origin and extended
transition times for protected industries must be considered.
Negotiations to accelerate the achievement of the free trade area (FTA)
and to relax the Rules of Origin have stalled. Regional trade
arrangements often divert imports from low-cost worldwide sources
to higher-cost regional ones. Such trade diversion is most likely to
occur when regional preferential rates are significantly lower than MFN
tariffs. For instance, to meet SADC requirements and sell to South
Africa, Mozambique must shift from cost-efficient sources of raw
materials to South Africa for plastics, and to the regions for fabrics.
Although South Africa has the largest economy in the region, that
country is not a low-cost producer by international standards.
Furthermore, because South Africa has a large comparative advantage
in the production of tradable items, the benefits of the regional trade
arrangement may accrue mostly to it.
6.9 Progress Regarding the Implementation of the SADC
Trade Protocol
M ozambique began implementation of the SADC protocol in
August 2001. Nearly the last country to submit its offers,
Mozambique was one of the first to deposit with the SADC Secretariat
the legal instruments necessary to implement tariff reductions. Much
of its implementation is "back loaded", with reductions on sensitive
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