WORLD TRADE
ORGANIZATIONWT/TPR/M/34
WT/TPR/M/35
WT/TPR/M/36
WT/TPR/M/37WT/TPR/M/38
15 December 1998
(98-5045)
Trade Policy Review Body
21-23 April 1998
TRADE POLICY REVIEW BODY
SOUTHERN AFRICAN CUSTOMS UNION (SACU)
South Africa, Botswana, Lesotho, Namibia and Swaziland
MINUTES OF MEETING
Chairperson:  H.E. Mr. Ali Said Mchumo (Tanzania)
Page
I. INTRODUCTORY REMARKS BY  THE CHAIRP ERSON.................................................2
II. OPENING STATEMENT BY THE REPR ESENTATIVE OF SOUTH AF RICA................3
III. OPENING STATEMENT BY THE REPRESENTATIVE OF NAMIBIA ...........................5
IV. OPENING STATEMENT BY THE RE PRESENTATIVE OF  BOTSWANA......................6
V. OPENING STATEMENT BY THE RE PRESENTATIVE OF LESOT HO ..........................7
VI. OPENING STATEMENT BY THE REPR ESENTATIVE  OF SWAZILAND..................10
VII. STATEMENT BY THE FIRST DISC USSANT ..................................................................11
VIII. STATEMENT BY THE SECOND DISC USSANT.............................................................13
IX. STATEMENT BY THE THIRD DISC USSANT.................................................................15
X. STATEMENT BY MEMBERS OF THE TRADE POLICY RE VIEW BODY ..................17
XI. REPLIES BY THE REPRESENTATIVES OF THE MEMBERS OF SACU AND
ADDITIONAL CO MMENTS..............................................................................................23
XII. CONCLUDING REMARKS BY  THE CHAIRP ERSON....................................................36WT/TPR/M/34, WT/TPR/M/35,
WT/TPR/M/36, WT/TPR/M/37,
WT/TPR/M/38
Page 2
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON
1. The Trade Policy Reviews of the members of the Southern African Customs Union (SACU) -
Botswana, Lesotho, Namibia, South Africa and Swaziland - were held on 21-22-23 April of 1998.
2. The Chairperson welcomed the delegations of:  South Africa, led by Minister Alec Erwin;
Namibia, led by Deputy Minister Wilfried Emvula;  Botswana, led by Permanent Secretary
T. C. Moremi;  Lesotho, led by Permanent Secretary D. M. Rantekoa;  and Swaziland, led by
Permanent Secretary Timothy Dlamini.  The Chairperson also welcomed the discussants
Ambassador Lyne of the delegation of the United Kingdom, Mr. Meier of the delegation of
Switzerland and Mr. Chifamba of the delegation of Zi mbabwe.  As usual, all discussants would act in
their personal capacities.  A summary of the main points to be raised by the discussant had been
circulated in document WT/TPR/D/19.
3. The Chairperson recalled the purpose of the Trade Policy Review and the main elements of
the procedures of the meeting.  The reports by the Governments were contained in the following
documents:  WT/TPR/G/35 (Botswana), WT/TPR /G/36 (Lesotho), WT/TPR/G/37 (Namibia),
WT/TPR/G/34 (South Africa) and WT/TPR/G/38 (Swaz iland).  The reports of the WTO Secretariat
were contained in the following documents:  WT/TPR/S/35 (Botswana), WT/TPR/S/36 (Lesotho),
WT/TPR/S/37 (Namibia), WT/TPR/S/34 (South Africa) and WT/TPR/S/38 (Swaziland). Written
questions were submitted by seven delegations:  Australia;  Canada;  European Communities;  Hong
Kong, China;  Japan;  New Zealand;  and the United States.  Copies of these questions had beentransmitted to the delegations.WT/TPR/M/34, WT/TPR/M/35,
WT/TPR/M/36, WT/TPR/M/37,
WT/TPR/M/38
Page 3
II. OPENING STATEMENT BY THE REPRESENTATIVE OF SOUTH AFRICA
A. OVERALL ECONOMIC POLICY
4. The representative of South Africa stated that the country's overall economic policies were
not solely governed by the need to comply with th e WTO, but by an overall analysis as to what was
required to provide a better life for its people.  In light of South Africa's immense challenges, it was
imperative that the rapid reform process was sustainable.  Four meanings were attached to the concept
of sustainable.  First, employment creation and economic activity must be able to sustain themselves
in an open world economy.  Second, social groups must be part of a consensus around both the costs
and the benefits of reform.  Third, growth and development must be sustainable from an
environmental perspective.  Finally, South Africa's development was only sustainable if it was part ofa regional growth and development success, requiring sensitive new social institutions and a robust
institutional capacity for the development of the democratic process.
5. The economic and socio-economic processes of the reform were undertaken within the
framework of the South African reconstruction and development programme, which focussed on five
essential policy thrusts:  (i) the meeting of the basic needs of the people;  (ii) the development ofhuman resources;  (iii) a deep restructuring of the economy;  (iv) the democratization and the
participative nature of the economic institutions;  a nd (v) the implementation of these reforms within a
disciplined macroeconomic programme (the so called growth, employment and redistribution
programme, GEAR).
6. In restructuring the economy, the Government was committed to a profound fiscal reform to
ensure that the finances of the States were managed well.  It had produced a three-year medium-term
expenditure framework within which the budget was formulated and it had published the requirements
for inter-governmental fiscal relations.  Linked to  this was a reform process of its financial markets
designed to improve transparency, to reduce the systemic risk and to open them to international
competition.  Moreover, the Government had commenced on a restructuring of the State sector,including a restructuring of State assets, privatization, and bringing in strategic equity partners.
Examples in this area included the privatization of a number of smaller enterprises in the radio sector,
avionics, and air travel, and the completion of strategically equity partnerships in telecommunications
and the airports company.
B. T
RADE POLICY
7. In the area of trade policy, South Africa's objective was to lower the levels of protection as
envisaged in the five-year tariff reduction programme.  Progress had been made on the SACUagreement, while a free-trade agreement in the S ADC had commenced.  They had been designed to
strengthen the economic basis of the region and to be trade-creating.  A negotiation with the European
Union, South Africa's largest trading partner, had been launched.  At the multilateral level, South
Africa was profoundly committed to a rules based system, strongly favouring more coordination and
greater efficacy of action by the various multilateral institutions.
C. T
RADE -RELATED POLICIES
8. South Africa took the approach that the private sector needed to be supported on the supply
side;  support measures for manufacturing had been designed.  In the absence of such policies,
free-trade agreements would not reach their desired objectives.  In this regard, South Africa was
actively involved with its neighbours in en couraging regional investment programmes.WT/TPR/M/34, WT/TPR/M/35,
WT/TPR/M/36, WT/TPR/M/37,
WT/TPR/M/38
Page 4
9. Reforms were also undertaken in the area of supervision regulation of all commercial and
economic activity.  At the centre was a body of legislative acts that dealt with the competitive and
corporate legislation.  A comprehensive reform of the competition law was to be tabled shortly beforethe cabinet.  Other areas that had been addressed were reforms of the tax legislation, corporate law,
liquidation law, securities law, consumer protection and various other ownership forms.  The labour
market reforms aimed to ensure equity and efficiency in South Africa's industrial relations.
D. D
EVELOPING COUNTRIES AND THE MULTILATERAL FRAMEWORK
10. The representative emphasized that insufficient attention had been paid to problems of the
developing world and its regulation of trade and trade-related measures.  The way in which
developing and developed countries interacted with the rules-based system was different.  Supportmeasures that were non-actionable in the WTO Agreements - such as R&D support, environmental
support and regional support - required sophisticated institutions to be in place if these measures were
to be effective.  Developing countries did not have in place such institutions.  Moreover, developing
countries also lacked the institutional capacity to handle anti-dumping measures.WT/TPR/M/34, WT/TPR/M/35,
WT/TPR/M/36, WT/TPR/M/37,
WT/TPR/M/38
Page 5
III. OPENING STATEMENT BY THE REPRESENTATIVE OF NAMIBIA
11. The representative of Namibia said that at independence in 1990 Namibia inherited a strong
dualistic economy with a highly skewed income distribution and limited access for most of its people
to the mainstream economy.  The economy was further characterized by a trade balance in favour of
South Africa, strong dependence on imports and an economy based on primary commodities with
limited value addition. As such, the first national development plan defined the broad macroeconomic
objectives, namely economic growth, poverty alleviation, income redistribution and employment
creation.  Trade was considered an important instrument to achieve the stated objectives.  To that
effect, the following objectives had been adopted:  (i) promotion and further liberalization of trade;
(ii) development of export and expansion of the ma nufacturing base;  (iii) diversification of export
products and markets;  (iv) provision of tax base incentives for manufacturing enterprises and traders;
(v) support to small and medium-size enterprises;  and (vi) creation of an environment conducive to
investment and growth.
12. For these policies to be effective, an overall stable macroeconomic environment was required.
The national budget had been the key instrument to achieve such a macroeconomic environment,while the private sector would be the driving force of the economy.  As such, the Government had
been that of putting in place a regulatory framework that facilitated private sector development.  The
Foreign Investment Act, the export processing zone regime, and the small and medium enterprise
policy were some of the other initiatives put in place.  In keeping with its Uruguay Round
commitments, Namibia would continue to place tariff reductions.  Non-tariff measures would bereviewed with a view to their elimination.
13. The representative noted that Namibia had a fairly open economy with foreign trade
accounting for up to 125% of GDP.  Realizing the importance of trade co-operation, regional and
bilateral agreements constituted important elements in Namibia's trade policy framework.  Namibia
was the signatory to a number of trade agreements , including Cross-border initiative, SACU, SADC,
COMESA, and preferential trade arrangements su ch as the Lomé Convention.  Although the SACU
arrangement was a focal point of its trade policy regime, the existing structure and the process of
decision-making was unfavourably on Namibia's i ndustrial development.  Therefore, Namibia
actively participated in reform initiatives to make SACU transparent, democratic and mutually
beneficial to its partners.
14. Beside trade agreements, Namibia formed part of the Common monetary area which involved
monetary cooperation, amongst others, Lesotho, Swaziland and South Africa.  Under this agreement,Namibia applied similar exchange controls and interest rate policies to the member countries.  As a
member of SADC, Namibia attached great importance to its overall objectives as well as its strategy
to broaden and deepen regional integration in general and trade cooperation in particular.  The SADC
protocol would go a long way in addressing the trade imbalances within the region, promote regional
development, and facilitate greater integration into the global economy.
15. The representative concluded by stating that Namibia was committed to a strong and fair
multilateral trading system that took into account the special needs and challenges facing  developing
nations.  Namibia urged the WTO members to take into consideration the unique position of Southern
African developing economies when reviewing their trade practices.WT/TPR/M/34, WT/TPR/M/35,
WT/TPR/M/36, WT/TPR/M/37,
WT/TPR/M/38
Page 6
IV. OPENING STATEMENT BY THE REPRESENTATIVE OF BOTSWANA
A. ECONOMIC ENVIRONMENT
16. The representative of Botswana noted that the economy continued to achieve rapid economic
growth, 7.5% in 1996/97 compared to 5.6% in the previous year.  Despite growth, Botswana was
heavily dependent on emeralds and diamonds, with diamonds providing 15% of government revenue.
Therefore, the Government promoted diversification of the economy away from diamonds into
manufacturing, tourism and other subsectors.
B. TRADE AND INVESTMENT POLICIES
17. Concerning trade and investment policies, the representative said that Botswana was
committed to creating a conducive investment and trade environment.  To this end, a wide range ofpolicies and legislation had been developed, including a new industrial development policy;  a
national policy on vocational, training and education;  the Standards Act of 1995;  the Industrial and
Property Act;  and the Botswana Telecommunication Act of 1996.  Policies in the pipeline included a
competition law;  a copyright act;  and a policy on small and medium-sized enterprises.  In addition, a
task force had been set up with the mandate to de velop a privatization policy, while a science and
technology policy and a national master plan  for agriculture were being formulated.
18. On investment policies, she noted that foreign investors were accorded equal treatment.  In
addition to the liberalization of the foreign exchange system, the Government provided financial
assistance to both foreign and national investors in the form of capital and training grants.
C. R
EGIONAL AND MULTILATERAL TRADING ARRANGEMENTS
19. Botswana touched great importance to regional and economic integration and saw the region
as an important instrument for trade liberalization.  Concerning SACU, it was committed to the
renegotiation and thought there was a need to de mocratise SACU and to promote dependable market
access.  In the SADC fora, Botswana had participated actively in the trade negotiations, and was one
of the first countries to ratify the protocol.  On the Lomé Convention, Botswana had beeninstrumental in improving market access for non-traditional exports.
20. While Botswana was committed to the multilateral trading system, it posed major challenges
to a small country like Botswana.  The obligations were profound and had far-reaching implications
for small economies.  To better understand these implications, she stressed the importance of capacity
building in order to create the necessary technical capacity.WT/TPR/M/34, WT/TPR/M/35,
WT/TPR/M/36, WT/TPR/M/37,
WT/TPR/M/38
Page 7
V. OPENING STATEMENT BY THE REPRESENTATIVE OF LESOTHO
21. The representative of Lesotho explained th at at independence in 1966, Lesotho had no
industrial base.  The political and economic environment within the subregion was severely
constrained by the now defunct apartheid system that prevailed in South Africa.  Nevertheless, an
export-led development strategy, together with a structural adjustment programme, had aided the
economic performance of the country.  Measures of the success were sustained growth in the
manufacturing sector;  improved overall fiscal balance;  lower inflation;  improved position of the
balance of payments;  and expansion of export oriented manufacturing.
22. However, several challenges remained:  unemployment of over 30%, which was aggravated
by the declining employment of migrant mineworkers in South Africa;  scaling down of a large waterproject (the Lesotho Highlands Water Project) would have a negative impact on the economy;  poor
performance of the agricultural sector remained a threat;  the potential erosion of preferential
treatments to exports to North America and Europe;  and the uncertainty of maintaining SACU
revenues.  To address these challenges, Lesotho was fully participating in the SADC trade protocol,
which would facilitate economic integration in the region.  Lesotho was also committed to therenegotiations of SACU and to the rules of the multilateral trading system.  The Government had
effected a comprehensive review of major legislatio ns to align the country with current regional and
global agreements to which Lesotho was a party.
23. Lesotho's blue print for development was the national development plan, which was
addressing the effectiveness of the public service.  In the context of poverty reduction, the planemphasised strategies for the creation of an enabling environment for small, medium and micro
enterprises;  promotion of labour-intensive comm unity development projects;  increased flow of
private foreign investment;  and improving agri cultural output through emphasis on exports and
further liberalization of marketing arrangements.  The plan further called for action to reduce
environmental degradation.  The Government was committed to the development of the private sectoras the engine of economic growth.  In this regard, the privatization programme was a key instrument.
24. At the sectorial level, farming had been plagued by droughts whose impact negated the effects
of improved infrastructure, improved extension services, use of high yielding hybrid seeds, promotion
of fertilizers and access to credit.  Government had removed distortions such as producer price setting
above import parity prices, and import controls on maize and wheat and their products.  In order to
exploit its comparative advantage, the Government was committed to the creation of conducive
conditions for long-term foreign and domestic investment.  In order to effectively manage the landareas, the Government formulated the National  Environmental Action Plan (NEAP) in 1989 and
established the National Environmental Secretariat.  Special programmes had been launched
addressing environmental issues.
25. With regard to tourism, the potential was yet to be fully exploited;  important tourism
infrastructure and facilities projects were under implementation, while visa requirements for entry oftourists to Lesotho had been relaxed.
26. The Government attached importance to promoting labour intensive investment, especially in
agriculture, industry, building and construction.  The Labour Code, which provided for a tripartite
arrangement for industrial dispute settlements, was established in 1993 and a Labour Court was
established in 1994.
27. The relative contribution of trade to GDP rose from 7% in 1980 to 10% in 1996.  Lesotho's
direction of trade had recently shifted away from SACU member states (especially South Africa) as
the country's main export market.  The growth and export strategy adopted by the Government wasWT/TPR/M/34, WT/TPR/M/35,
WT/TPR/M/36, WT/TPR/M/37,
WT/TPR/M/38
Page 8
the key factor behind the expansion of exports.  In this regard, the investment incentives packages had
been effective in encouraging inflows of private di rect investment, particularly into the textile and
clothing subsector.
28. Lesotho's economy was vulnerable to external th reats, notably the reduction of SACU tariffs,
which would impact on the customs receipts.  The retrenchment of Lesotho nationals working in
South Africa's mining industry would yield lower remittances from migrant workers.  Moreover, the
decline in construction activity associated with the completion of phase I of the large Lesotho
Highlands Water Project, would cause a drop in customs revenue from the project's related imports.
Changes in the trading regime as a result of fr ee trade negotiations between South Africa and the
European Union, between SACU and Zambia, and am ong SADC member states, would also have a
bearing on Lesotho's economy.
29. Against this backdrop, the trade policy of Lesotho aimed at:  (i) preserving and maintaining
external competitiveness;  (ii) strengthening th e balance-of-payments position;  (iii) diversifying
export products and markets;  (iv) developing export capacity of small, medium and micro
enterprises;  (v) improving competition and access to the retail and wholesale services;  and (vi)improving efficiency of allocation and use of resources by removing trade distortions.
30. In recognition of the large current account deficit (averaging 17% of GNP over the period
1990-96), the Government attached high priority to exports by diversification of Lesotho's
manufacturing industries and markets.  In this regard, Lesotho actively participated in the
renegotiation of the SACU agreement, the SADC trade protocol and the European Union-ACP post
Lomé Convention proposals.
31. Lesotho's policies and practices were largely influenced by the SACU arrangement and in
particular by South Africa's practices.  The general trade policy environment was liberal with minimal
non-tariff barriers:  there were no formal import quotas and no State trading bodies;  import and
export procedures were transparent;  there were no export taxes and controls;  and import permitswere automatically issued for industrial products if environmental, safety for human and animal
health, national security and social morale criteria were satisfied.  With regard to the agricultural
sector, the import controls and restrictions were the remnants of the past import substitution policy.
Trade liberalization in agriculture was initiated in 1996, with controls remaining on importation of
poultry, eggs, raw meat and milk.  The main reasons for having these controls were to cushion the
impact of the measures being practised in South Africa, and livestock production was the principal
income generating industry for the small agricultural holders.
32. Concerning tariff policy, Lesotho had no indepe ndent tariff policy as the SACU agreement
had accorded South Africa the discretion to determine tariff policy.  This loss of fiscal discretion
formed part of the SACU renegotiations. Consultations had also been carried out between Lesotho
and South Africa to rationalize the tariff structure.  However, the SACU agreement allowed Lesotho
to levy additional duties on imports in order to protect strategic, infant industries;  this provision hadnot yet been invoked.  Moreover, the discretion given to South Africa to determine tariff policy did
not absolve SACU members of the management of ta riffs.  Smuggling of goods and tariff evasion was
the collective responsibility of all members;  auditors and forensics were engaged to find the
loopholes and reflect on actions to take.
33. The location of Lesotho had caused South Africa to provide protection from sub-standard
imports into Lesotho as well as preventing dumping from third countries.  As such, the standards
applied had been those of the South African Bureau of Standards.  Local-content schemes  were not
applied in Lesotho.WT/TPR/M/34, WT/TPR/M/35,
WT/TPR/M/36, WT/TPR/M/37,
WT/TPR/M/38
Page 9
34. In the context of globalization of world economy and the opening of South Africa's economy,
Lesotho was in the process of establishing the St andards and Quality Assurance legislation, reviewing
the intellectual property rights legislation and formulating a competition legislation.  In view of thefact that the country had no experience in countervailing and anti-dumping management, intensive
training of the concerned staff  would be embarked on.WT/TPR/M/34, WT/TPR/M/35,
WT/TPR/M/36, WT/TPR/M/37,
WT/TPR/M/38
Page 10
VI. OPENING STATEMENT BY THE REPRESENTATIVE OF SWAZILAND
35. The representative of Swaziland noted that Swaziland had a limited domestic market.  To this
end, its industrial policy was biased towards the promotion of export oriented industries.  After two
decades of economic growth, Swaziland faced the challenges of slow growth characterized by
stagnating investment, and a high rate of unemployment.  Government revenue was falling, while
expenditure continued to grow.  To meet these challenges, Swaziland had established an economic
and social reform agenda, ESRA, which was designed to accelerate economic growth, improve the
provision of social services, and enhance governan ce.  Within the framework of ESRA, the Swaziland
Investment Promotion Authority (SIPA) had been established and the Companies Act had been
updated.
36. Swaziland was committed to further tariff liberalization, which would encourage an efficient
allocation of resources and contribute to increased growth.  The cornerstone of Swaziland's trade
policy remained SACU.  As a member of SACU, Swaziland's external trade policy was governed by
the common external tariff, which was set by South Africa and lowered on the basis of South Africa's
offer under the Uruguay Round.  Swaziland believed  in regional cooperation and would implement
the SADC trade protocol.
37. Swaziland wished to see a successful conclusi on to the SACU negotiations, which would
assist in the process of increasing regional tr ade and development, and in implementing the SADC
trade  protocol.  Swaziland benefited from its membersh ip of the Lomé Convention with the EU, and
from its classification as a developing country, thereby qualifying for GSP status.
38. The main objective of the comprehensive review of the agricultural sector was to increase
commercialization through liberalizing markets.  With this objective in mind, the Government was
preparing plans for separating the regulatory  function, which would remain a Government
responsibility, from the commercial functions.
39. On services, a draft legislation for the Swaziland Post and Communications Corporation had
been prepared, outlining separate corporate entities for post, fixed and cellular telephone networks.
Negotiations had commenced with the qualified bidders.  A new Insurance Act, which would allow
competition, was under preparation.  In the meantime, applications for removal of monopoly
conditions affecting brokers and agents, were dealt with on a case-by-case basis.
40. To conclude, he noted that Swaziland had difficulty in implementing some of the agreements
of the WTO, including the notification requirements.  Efforts were being made to establish a national
technical committee on trade and customs matters.  T echnical assistance in this regard was sought.
The representative expressed hope that WTO developed member countries would assist Swaziland in
building institutional capacity to better respond to her rights and obligations under the WTO
Agreements.  He also hoped that the forthcoming WTO Ministerial Conference would address the
predicament of least-developed and developing countries.WT/TPR/M/34, WT/TPR/M/35,
WT/TPR/M/36, WT/TPR/M/37,
WT/TPR/M/38
Page 11
VII. STATEMENT BY THE FIRST DISCUSSANT
41. The first discussant noted that SACU embraced some 45 million people and accounted for
30% of African GDP.  Therefore, it was an important economic grouping within the global picture.
However, unlike the European Union, SACU was domin ated in population by just one country, South
Africa, which accounted for over 80% of the total population.
42. The first issue that he discussed was the factors affecting trade policy of this large and
intertwined region.  The five countries under review were in the midst of a fundamental transition.
They were not only adjusting to the fast changing environment of globalization, but they were
simultaneously having to travel the road from the siege economy of "fortress South Africa " during
the apartheid years, to a liberalized economy, collaborating not only through SACU but through
SADC, and more widely within Africa and in the multilateral trade system.  One should keep in mind
that this was an interim phase, which was evolving rapidly.
43. The discussant noted that there were wide variations in the nature of the five economies.
SACU, for example, encompassed an unusual range of income levels from GDP per head in South
Africa and Botswana averaging over US$3,000 to less than US$500 in Lesotho.  Similarly, at oneextreme, South Africa had a relatively sophisticated manufacturing sector, which accounted for a
quarter of GDP.  At the other extreme, Lesotho was a predominantly agricultural economy and
heavily dependent on remittances from migrant workers.
44. A second point related to tariff reform.  Since the early 1990's, SACU had been opening up to
the rest of the world.  The number of tariff lines had been reduced, as had the number of non- ad
valorem  lines.  The percentage of lines carrying zero rates had increased.  Ninety eight per cent of all
tariff lines were bound at the end of the Uruguay Round.  All quantitative restrictions, save one, had
been tariffied.  An import surcharge introduced in 1985 for balance-of-payments purposes was
eliminated in 1995.  Legislation had been redrafted or amended in such areas as anti-dumping,
countervailing duties, safeguards measures, and inte llectual property, with a view to bringing it into
line with WTO rules.  This readiness to open up was all the more commendable in that it had taken
place within a difficult macroeconomic context.
45. The big challenge facing SACU policy-makers in the period ahead was to simplify and reduce
the tariff further.  The tariff reforms had left the SACU common external tariff still well short of the
degree of openness to trade which many economists considered to be one of the essential ingredients
of a successful development strategy.  The simple average MFN tariff in mid-1997 was around 15%,
and the simple average bound rate 19.8%.  Bound ceiling rates were as high as 399%, and some 23%of all lines carried rates above 30%.  Moreover, the tariff system was complex.  Ad valorem  rates
came in 45 different bands.  In addition to ad valorem  duties, specific, compound, mixed and formula
duties were applied.  Moreover, manufacturers could apply to the Board on Tariffs and Trade for
changes in the tariff rates.
46. He then turned to the relationship between tariff reform and government revenue.  Under
existing arrangements, Botswana, Lesotho, Namibia and Swaziland each received 17% of SACU
customs revenues, with the remaining 32% accrued to South Africa.  These revenues were very
important for some members;  in both Lesotho and Swaziland they formed around 50% of all
government revenue, and in Namibia over 30%.  Th e discussant wondered how this dilemma would
be addressed.
47.  On tariff escalation, there was a tendency for higher rates to be concentrated on finished
industrial products.  This implied that industries were sheltering behind protective tariff walls, which
had a number of implications.  First, consumers had to pay more for certain finished products than ifWT/TPR/M/34, WT/TPR/M/35,
WT/TPR/M/36, WT/TPR/M/37,
WT/TPR/M/38
Page 12
these goods entered SACU duty-free or at low rates.  Second, those sectors of industry which were
enjoying protection were going to have difficulty competing on world markets.  To off-set some of the
anti-export bias, a number of schemes were in place offering rebates, refunds and draw-back of importduties, and credits.  Finally, to the extent that tariff protection appeared to be in favour of capital
intensive products, protecting them appeared to run counter to the aims of reorientation of resources
away from capital intensive towards labour intensive sectors.  Comments on these points were sought
from the SACU member representatives.
48. Privatization had been a key feature of reform in many countries and had some well known
benefits.  However, the reports presented at the meeting suggested that privatization was still at a
relatively early stage of its development.  The discussant asked for additional information on currentthinking in relation to privatization.
49. An other point related to disparities in wage policy and labour costs.  The Secretariat report
on South Africa noted that "the international competitiveness of manufacturing has been hampered by
upward pressures on unit labour costs resulting partly from a lack of skilled labour.  This sector was
protected mainly by tariffs".  The South African Government's report refered to the "strong traditionof collective bargaining which underpins South Africa's industrial relations environment", and to
consultation between Government, organized labour and business.  The report also noted the
challenge of ensuring that agreements underpinned growth, job creation, social development,
economic restructuring and income distribution.  The discussant questioned about the extent to which
the built-in tensions between these various objectives could be resolved, and about the long-termeffects of the protection of these relatively high wage levels, the case was clear in terms of social and
political stability.
50. Finally, he turned to the broad and topical question of the East Asian financial crisis.  He
asked what effects did the Governments anticipate from the crisis.  He also asked if there were
concerns about competition with cheaper products from the region, and the possible effects oninvestment and tourism, respectively.WT/TPR/M/34, WT/TPR/M/35,
WT/TPR/M/36, WT/TPR/M/37,
WT/TPR/M/38
Page 13
VIII.  STATEMENT BY THE SECOND DISCUSSANT
51. The second discussant noted that the countries under review had undertaken great efforts to
design and successfully implement a reasonable economic trade policy. The Governments were
confronted with important challenges in designing an efficient regional integration programme.  He
focussed his discussion on this integration process with its impact on external economic relations.
52. Before turning to the TPR per se  he noted that the grouped approach provided the opportunity
to gain a useful oversight on the regional opportunities and constraints.  However, the model of the
single country review could not be copied with out modifications.  The review would be largely
enhanced if the reports would not just be the compilation of country reports dealing with the same
aspects.  Cumulating the different national dimensi ons did not easily allow a proper analysis of the
regional challenges.
53. A rather elaborated network of regional arrangements had been established.  Examples
included those of SACU, SADC, COMESA, different free-trade area arrangements, as well as
Common Monetary Area.  While such a network of agreements facilitated the economic exchange
among the parties to the arrangements, autonomous actions of a party could be of concern for othercountries belonging to the network.  Examples in the latter area included the loss of market
opportunities when a major partner opened up the market towards third countries.  He asked how
SACU members intended to manage the interrelationships among all the regional and preferential
arrangements.  He also asked for further information on the decision-making mechanism of the
supreme bodies of SACU, SADC and the MMA.
54. From the Secretariat report on Botswana, the discussant quoted the difficulties posed by the
interrelationship between the SACU  and SADC arrangements:  an anti-export bias had been created
by SACU, a customs union inside SADC.  The di scussant asked how the parties to the SACU
agreement intended to address these issues, and how the parties were going to tailor the common
external tariff in order to optimize th e export capacity of each SACU member.
55. On notifications, he noted that they were lacking or seemed to be postponed.  Swaziland had
requested technical assistance for capacity building in this context.  The discussants requested
information on when the notification requirements would be completed.
56. He then turned to rules of origins.  In a dense network of regional preferential trading
arrangements, the rules of origin regime played an important role.  The report of the Secretariat
indicated that the rules of origin regimes were identical in SACU and SADC.  In relation to other
preferential trading arrangements, he asked how these rules differed.  The report also indicated thatcircumvention had occurred.  He sought further information on the efforts undertaken to prevent
abuses by economic operators, and what efforts were under way to streamline the rules of origin
regimes.
57. On the status of the renegotiation of the SACU  agreement, he asked for information on:  the
setting of import duties and contingency trade measures;  the use of duties for protection of infantindustries and other industries of major importance to the BLNS economies;  and the establishment of
a dispute settlement mechanism.
58. The trade protocol of SADC had not yet been ratified by all signatories.  He asked when it
would be ratified and the date of entry into force.  The timeframe and process leading to the
establishment of the SADC free-trade area were to be determined by the Committee of Ministers ofTrade.  In this connection, he asked for information on the time frame for each SADC member, asWT/TPR/M/34, WT/TPR/M/35,
WT/TPR/M/36, WT/TPR/M/37,
WT/TPR/M/38
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well as their sensitive sectors and products.  He wondered if there were any proposals for a SADC
customs union, with a common external tariff.
59. Finally, he noted that South Africa's bilateral trade negotiations with the European Union
were expected to be finalized in the near future.  He asked for some details on the coverage of the
negotiations, the prospects for South Africa's agricultural exports to the European Union, the effects
on other SACU members, and what steps would be taken to offset possible negative consequences.WT/TPR/M/34, WT/TPR/M/35,
WT/TPR/M/36, WT/TPR/M/37,
WT/TPR/M/38
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IX. STATEMENT BY THE THIRD DISCUSSANT
60. The third discussant focussed his intervention on specific trade policy and sectoral measures.
Within this framework, he centred on South Africa since it played the lead role in determining the
common external tariff arrangement.  Against this background, he welcomed the new post-apartheid
Government and the adopted reforms, especially in th e area of trade liberalization.  For instance, the
tariffication of quantitative restrictions on agricultural products (except one) was a welcome move.
However, some trade prohibitions and controls were maintained.
61. On safeguards, South Africa had made commitments in relation to the phasing out of import
controls under Article 11.1 of the WTO Agreement on Safeguards.  He asked when these controls
would be implemented.
62. South Africa had not requested for a delayed application of Article VII of GATT on customs
valuation, yet it maintained formula duties based on minimum import prices.  He asked what was
being done to remove this inconsistency.
63. The third point he discussed related to the tariff system.  Tariff bindings were at  ad valorem
rates, yet non- ad valorem  tariffs, including formula and specific duties, were applied.  The
transparency and predictability of trade liberalization measures in South Africa had been set back by
the application of selective tariff protection and frequent tariff alteration.  He asked what the
Government was doing to enhance transparency in this area.  In addition, he noted that the Tariff
Rationalisation Process (TRP) constituted an effort to streamline and simplify South Africa's tariff
regime.  However, the process may bring higher effective rates of protection.  He questioned aboutwhat was being done to avoid this.
64. In agriculture, South Africa was obliged under the WTO Agreement on Agriculture to bind
tariffs on albuminoidal substances based on eggs .  He asked what the Government was doing to
comply with this requirement.  He also asked for a status report on the liberalization of the marketing
of agricultural products, including wine, and sugar.
65. On TRIPS, he sought clarifications on the situation relating to the protection of geographical
indications and the status of trademark protection to WTO members not parties to the Paris
Convention.  He also requested for an update on the legislative process relating to bills on intellectual
property.
66. He then turned to anti-dumping, countervailing and safeguard measures.  He asked what
measures had the Government taken to ensure compliance with the requirements of the WTO
agreements in these areas.
67. The discussant noted that during its previous review, South Africa had acknowledged that the
maintenance of specific excise duties on certain imported beverages were inconsistent with their
obligations.  He asked what actions were being taken to remove these duties.  In the area of domestic
taxation, he also asked why there was a double uplift of the value of imports subject to ad valorem
excise duties when calculating the payable value-added tax.
68. The discussant asked if there had been any further developments since the completion of the
reports in the areas of price controls and services, which were in the hands of government parastatal.
69. Finally, he turned to export measures.  South Africa maintained a variety of export incentive
schemes.  The consistency of these schemes with South Africa's commitments was questionable
because, either local contents were required or compliance with the WTO Agreement on SubsidiesWT/TPR/M/34, WT/TPR/M/35,
WT/TPR/M/36, WT/TPR/M/37,
WT/TPR/M/38
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was not clear.  He asked the delegation for clarifications and information on any plans to streamline
these schemes.WT/TPR/M/34, WT/TPR/M/35,
WT/TPR/M/36, WT/TPR/M/37,
WT/TPR/M/38
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X. STATEMENT BY MEMBERS OF THE TRADE POLICY REVIEW BODY
70. Members commended the SACU countries for th e fundamental economic reform that they
were undertaking.  The countries had moved away from import-substitution to more outward-orientedpolicies, while adjusting to the political transformation of South Africa as well as to the changing
external environment.
71. Members found that this new approach of the review enabled the WTO members to discuss
trade policy in a fruitful manner and contribute to th e transparency and better understanding of the trade
policies of these countries.  They also thanked the Secretariat and the respective Governments for
comprehensive reports.  Several members had submitted advanced written questions, to which they
were looking forward to receiving responses.
72. The representative of Hong Kong, China noted that South Africa was a party to a number of
regional and bilateral trade agreements, including the SACU agreement and the SADC treaty.  He
welcomed the indication of the South African authorities that such agreements complimented those of
the WTO.  In the interest of transparency, he encouraged timely and effective notification of all
concerned agreements.  He also welcomed South Africa's steps to simplify its tariff structure.However, the tariff structure remained complex and was frequently changed for selective protection.
For example, manufacturers had the right to apply to the Board on Tariffs and Trade for the
imposition of a protective duty or a tariff increase.  He hoped that South Africa would accelerate the
tariff simplification process so as to facilitate and enhance trade and investment activities.
73. He encouraged South Africa to put more effort to open up its government procurement sector,
especially by removing the offset measures such as those encouraging local development, domestic
content and investment.  He also encouraged Sw aziland, Botswana, Lesotho and Namibia to put more
effort to open up access to, and enhance transparency in, their government procurement procedures.
74. The representative of New Zealand welcomed South Africa's trade liberalization through
unilateral action, regional agreements, and its strong co mmitment to the WTO.  In the area of agriculture,
South Africa had implemented comprehensive reforms, with the goal of reducing support and introducing
competition.  He strongly commended South Africa for ending export subsidies, and reducing domestic
support.  South Africa joined a select, but hopefully growing, group of countries to do so.
75. He noted with concern that South Africa's tariff polic y continued to restrict trade.  In this regard,
he referred to the results of a recent Board on Tariffs and Trade report on the dairy industry, which
introduced higher tariffs on a range of products;  the tariff increases were running counter to the general
thrust of South Africa's trade lib eralization policy.  Moreover, South Africa had a complex tariff structure
containing a wide variety of duties, ranging from ad valorem , specific, compound, mixed and "formula"
duties.  Nevertheless, it had liberalized its trade policy and had introduced tariffs to replace non-tariff
barriers.  He was encouraged that a rationalization process was underway, but this process could increase
tariff escalation and therefore increas e the effective rate of protection.
76. He was pleased that South Afri ca had tariffied all quantitative re strictions in agriculture and
tariffied its non-tariff measures in accordance with its Uruguay Round commitments, but noted with
concern that high levels of tariff as well as tariff quotas existed in some sectors.
77. To conclude, he commended South Africa's move to amend its legislation on anti-dumping,
countervailing and safeguard measures with a view to bringing it in line with the relevant WTO
Agreements.WT/TPR/M/34, WT/TPR/M/35,
WT/TPR/M/36, WT/TPR/M/37,
WT/TPR/M/38
Page 18
78. The representative of  Canada noted that the process of regional integration was well under
way in Southern Africa.  As Canada had learnt from its own experiences with trade liberalization, this
process could help domestic industries adopt greater competition and facilitate the transition to aglobal, rules-based trading system.
79. Although Canada was on the whole encouraged by the trade policy directions of the members
being reviewed, there were a number of specific areas of concern on which he had submitted written
questions.  He asked for an update in the following areas:  (i) the status of South Africa's negotiations
with the European Union;  (ii) the proposed tariff rate increase affecting commodities such as wheat
and poultry;  (iii) the process of rationalization of the tariff structure under the direction of the Board
on Tariffs and Trade;  (iv) South Africa's fulfilment of its minimum access agricultural commitments;and (v) the trade remedy regime.
80. The representative of Australia welcomed the support for the multilateral trading system.  The
rules-based global trading system clearly provided im portant guarantees and benefits for small players in
the world economy.  However, the WTO commitments could also pose challenges for member States,
particularly developing and least-de veloped countries.  In this regard, she noted that there was a great deal
of flexibility within the system to help address these problems.  Moreover, focused and targeted technical
assistance could  also play an important role in this regard.
81. Substantive progress had been made in South A frica and the member countries of SACU, which
had contributed to faster growth, increased internati onal trade, and larger flows of investment.  Botswana
had experienced encouraging rates of economic growth in tandem with a diversified economy andincreased skills base.   Namibia had shown an increased commitment to promote trade liberalization,
including its recognition of the important role played by  the private sector.  Lesotho, which was faced with
particular challenges as a least-developed country, had moved to remove distortions in agriculture.  In
particular, it had moved away from a policy of  food self  sufficiency.  In this regard, the representative
noted that trade liberalization had an important role to play in ensuring sustainable food security and
providing appropriate signals to food producers.  Swaziland pursued efforts attracting foreign direct
investment.
82. Impressive advances had been made in reforming South Africa's trade and economic policies
since its last review in 1993.  The country had experienced a rapid reintegration of its economy into the
multilateral system.  Attracted by its free-market principle and economic fundamentals, investment was
beginning to flow into the country.  The most recen t revision of its tariff system covered tariffs across a
wide-range of industrial and agricu ltural products.  The result had been that many applied tariffs were now
below South Africa's bound rates.  The South African  Government's intention of continuing lowering
protection and simplifying its tariff system was an important signal about its commitment to developing a
competitive South Africa.
83. As South Africa's regional and bilateral preferen tial trade links were becoming more complex, it
would be important to ensure that these developments  were consistent with the WTO rules, rather than
resulting in trade distortions.
84. Australia strongly supported South Africa's inte ntion to move completely away from providing
export subsidies for agricultural products, and to repl ace this highly distorted form of assistance with
support which met the "green box" criteria.
85. The representative of Japan, while appreciating the efforts and the commitments by the
SACU countries on economical reforms, including privatization, and trade liberalization, asked for
further information on SACU, including the expected schedule for renegotiation.  He raised concern
regarding the automatic application of anti-dumping measures, the application of safeguards, and theWT/TPR/M/34, WT/TPR/M/35,
WT/TPR/M/36, WT/TPR/M/37,
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relationship between the additional duties and Article XXIV of the GATT.  Japan also noted that the
formation of a free-trade agreement by the SADC member countries should be fully consistent with
Article XXIV of  GATT.  Regarding other regional agreements, he asked for details on the status ofSouth Africa's negotiations with the European Union and the United States, respectively.
86. While the representative welcomed the GEAR strategy and expected full implementation of the
strategy, he raised concern about South Africa's  tariff regime, such as high tariff rates on some products,
tariff escalation in textiles, and the timing of the introduction of HS 96 into its tariff schedule.  He also
raised concern about the withdrawal of the plan to reduce tariff rates on television receivers, and the
consideration to raise tariff rates on cathode-ray tubes, which although within the bound tariff rates,
lacked transparency and predictability.
87. On government procurement, Japan asked if South Africa had any intentions to accede to the
WTO Government Procurement Agreement.  Regarding local content requirements, he stated that Japan
would watch carefully so that the notified TRIMs were not enlarged and that they will be eliminated as
schedules, and noted that a TRIM on credit facilities had not been notified.
88. The representative of the United States applauded South Africa on the progress that it had
made on its trade policy since the election of President Mandela in 1994.  The revolutionary reform
process, and specifically the elimination of export subsidies and agricultural marketing boards had not
gone unnoticed.  In addition, Botswana, Lesotho, Namibia and Swaziland had all made commendable
progress in liberalizing trade in recent years.
89. South Africa, as the largest economy in the region, had the greatest responsibility to ensure
that SACU's provisions were consistent with the WTO.  She noted that the tariff structure of SACU
did not meet the needs of all its members, and that the rules of origin were too restrictive to assist
smaller members in fully utilising their preferential access to South Africa's market.  Customs
Valuation was another important aspect of market access.  Therefore, she hoped that SACU and its
members would move expeditiously to implement th is Agreement, eliminating valuation uplift and
other abuses.
90. She also noted that the proposed South Africa-European Union free-trade agreement did not
cover "substantially all trade", as required by Article XXIV of the GATT.  Moreover, its
implementation may have an adverse impact on the revenues critical to the budgets of some SACU
members.  She urged that care be taken to structure the agreement according to WTO rules and with
attention to its trade diversion aspects.
91. An other area of concern was excise taxes.  She hoped that South Africa could work with
other SACU members to ensure that discriminatory excise taxes imposed on imports of beverages
were revised to meet the national treatment requirement of the WTO.
92. On intellectual property rights, she looked to South Africa as the leader of trade in the region
to provide a model in the implementation of TRIPS provisions.  Promotion of intellectual property
rights was important to the development of entert ainment and computer industries, as well as to
sectors such as pharmaceuticals.  Respect for patent rights promoted not only economic development
but also could more directly impact on the well-being of the citizens.
93. To conclude, she emphasised that United States stood ready to continue to support African
countries in the spirit of cooperation through a number of new multilateral and bilateral technical
support initiatives, including under the auspices of President Clinton's Partnership for EconomicGrowth and Opportunity for Africa initiative.WT/TPR/M/34, WT/TPR/M/35,
WT/TPR/M/36, WT/TPR/M/37,
WT/TPR/M/38
Page 20
94. The representative of the European Union acknowledged South Africa's efforts to reduce and
simplify its customs tariff.  However, the customs tariff  remained complex and could constitute a
trade barrier.  Compound, mixed and formula duties coexisted with ad valorem  and specific duties,
giving South Africa's trade partners problems when trying to figure out the true tariff protection.
Moreover, South Africa's tariff could be changed with relative easiness in order to selectively protect
sectors.  A related question was posed on the SACU tariff restructuring;  he asked if the tariff
restructuring would affect the SACU negotiations , notably concerning the revenue sharing formula.
95. South Africa's trade policy was an important component of its growth, employment and
redistribution strategy, which aimed at export led growth of some 6% per year from 2000.  In this
regard, South Africa should accelerate trade liberalization and complement it with the necessarymeasures in trade-related matters.  He asked for information on South Africa's plans for further
liberalization.  In particular, the European Union thought South Africa should put into effect a legal
framework for competition policy.  While respecting the South African goal for affirmative action
towards its less advantaged groups, he considered that the opening of its public procurement to
competition could also be an important step for its growth prospect.
96. On intellectual property, the representative noted that the report gave a somewhat rosy picture
of the existing intellectual property rights system in South Africa.  In this regard, he referred to some
specific questions which had been submitted in writing.
97. Turning to standards and technical regulation, he asked if there was any intention within
SACU to move to an internal market in terms of regulatory requirements.  Noting that notifications
had not been systematic, he also asked how the SACU members ensured compliance with the
provisions in the WTO Agreement on Technical Barriers to Trade.
98. Efforts had been underway to improve and simplify import and export procedures so as to
maximize the benefits of liberalization.  He asked if the SACU member countries agreed that
simplification of trade procedures was one of the key reforms to improve trade performance and increating a stable and transparent climate for investments.
99. Finally, he noted that one of the main principl es under the European Union-South Africa trade
agreement was that it should benefit the SADC regi on at large.  SADC countries would have equal or
better access to the South African market than the European Union, and the rules of origin regime
would stimulate intraregional trade.
100. The representative of Nigeria noted that an unique feature of SACU member states was their
commitment to sound macroeconomic policies, trade and investment liberalization, and social and
political stability.  These were essential ingredients for any successful economic undertaking.  SACU
should remain open, further eliminate tariff and non-tariff barriers on an MFN basis, ensure
predictability in its operations, facilitate access to its markets for both goods and services, and avoid
double taxation.  He also noted with delight that the SACU member countries were doing a good job
of maintaining the environment, including th e prevention of the depletion of wildlife.
101. The representative suggested that the TPRB could consider a review of the trade policies of
the Economic Community of West African States (ECOWAS).
102. The representative of Egypt complimented the c ountries under review for their reform efforts.
He asked for information on SACU's  anti-dumping measures.
103. The representative of India expressed his full appreciation for the commitments of the SACU
member countries to the WTO and the multilateral trading system.  Most of the trade restrictions hadWT/TPR/M/34, WT/TPR/M/35,
WT/TPR/M/36, WT/TPR/M/37,
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Page 21
been removed and procedures had been simplified, although some more work needed to be done to remove
the complexities in tariff system and selective protection.
104. The increased interdependence of the SACU countries  had, to some extent, affected lndia's trade
with these countries.  In this connection, he mentione d that some of the Indian exporters had complained
that technical regulations, specifications and norms pr escribed by the South African Board were stringent
and cumbersome.  Examples included pharmaceuti cals and commercial vehicles, which had to be
registered in South Africa for entr y into the SACU market, and the registration process was cumbersome
and time-consuming.  Indian exporters also stated to  be at a disadvantage as compared with domestic
manufacturers  of the region in so far as investment opportunities were concerned.  The representative
requested the SACU member countries to look into th ese aspects.  He also encouraged SACU Members to
continue with and strengthen their reform programme s and trade liberalization measures so as to ensure
increased intra-regional trade as well as integration into the global market.
105. The representative of Cuba noted that the history of Southern Africa was one of bloodshed
and he was delighted to see that there was now a possibility of unification.  He mentioned that strong
links (in areas such as medical and social services) existed between countries in his region and certaincountries in Southern Africa.
106. The representative of Chile focussed his intervention on the agricultural sector.  As many as
14 agricultural boards were operating in South Africa.  The representative asked when these were
going to be eliminated.  He also wondered to what  extent the Government would address the decline
in net imports of agricultural products.  As stated in the Secretariat report, exports and imports ofagricultural products were subject to control by the Ministry of Trade and Industry.  In the case of
wine imports, they were also subject to quality controls.  In light of the recommendations put forward
by an Investigating Committee set up by the Ministry of Agriculture, the representative asked if
measures had been adopted to abolish these controls.  The representative also asked about recent
measures to improve the complex tariff system.
107. The representative of Switzerland commended South Africa for its economic reforms,
including the tariffication of quantitative restrictions and the abolition of import surcharges.  South
Africa had faithfully implemented the tariff reductions of the Uruguay Round and even in an
accelerated way in certain sectors.
108. Regarding intellectual property rights and pharmaceutical products, he supported the
Government's goal of ensuring an adequate and reliable supply of safe, and cost effective quality
drugs to all South Africans.  However, he was de eply concerned about the Amendment Bill (B72-97).
The new legislation contained a risk to infringe on intellectual property rights and could give a
negative signal to foreign investors.
109. The representative of Mauritius noted that the different models and patterns of developments
could not make one and all equally comfortable as regards implementation of obligations.  There was
a need to tailor the requirements based on those core principles.  Hence, he appealed for a greaterunderstanding from WTO members to recognize the challenges that the developing and least-
developed countries had to face in the process of implementing the WTO rules.
110. The representative of Norway applauded South Africa for the positive role it played in the
regional cooperation in Southern Africa.  It was very important for the economic development in the
region that South Africa both politically and economically continued to give priority to regionalcooperation.WT/TPR/M/34, WT/TPR/M/35,
WT/TPR/M/36, WT/TPR/M/37,
WT/TPR/M/38
Page 22
111. The representative of Zambia noted that developing and some developed countries were faced
with difficulties in the implementation of WTO Agreements.  It was the choice between the need to
abide by such agreements on one hand, and the need to pursue national objectives of growth andequity on the other.  The dilemma of choice was indeed clear in the South African case.  In this
regard, Zambia appreciated the dynamic approach that South Africa had adopted in dealing with its
WTO obligations.  The progressive removal of non-tariff barriers to trade was a signal to the
neighbouring countries that trade was the only means of underpinning interface between investment,
trade and growth.
112. The representative of Côte d'Ivoire noted that the countries under review had, in light of their
believe in the multilateral trading system, undertaken important reforms.  However, they had not
always yielded the expected benefits.  Therefore,  she appealed to the international community that
support should be extended to needed countries.WT/TPR/M/34, WT/TPR/M/35,
WT/TPR/M/36, WT/TPR/M/37,
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XI. REPLIES BY THE REPRESENTATIVES OF THE MEMBERS OF SACU AND
ADDITIONAL COMMENTS
113. The replies by the representatives of the member countries of SACU were divided into three
themes:  (i) macroeconomic and structural environment;  (ii) trade policies and sectoral issues;  and
(iii) trade agreements.  The representatives said that answers to technical or specific questions would
be complemented through additional documents to be submitted at a later stage.
(i) Macroeconomic and structural environment
(a) South Africa
114. The TPR illustrated that we would have to take into account the difficulties developing
countries have in developing appropriate instit utional capacities to actually manage the reform
process.  This matter was one of the key challenges that the WTO was facing in orientating the
multilateral trading system in a manner conducive to developing countries.
115. The major reform achievements carried out by South Africa had been profound.  Although
growth had fallen slightly short of the targets, th e deep restructuring of South Africa's productive base
had created a platform from which future targets could be reached.
116. On employment, the strategy was not solely to create a labour intensive manufacturing sector.
A multi-faceted strategic approach had been adopted, aimed at promoting industrial restructuring.
Analysis of the South African economy had shown that while the manufacturing sector would be
important, it would not necessarily be the main employment creating sector in the future.  Labourmarket policies were linked to policies carried out in the areas of human resource development,
industry and trade.  These policies had resulted in a drop in the conflictual resolution of industrial
relations problems.
117. South Africa's tariff reform was closely associated with its industrial policy.  Despite
considerable tariff reform, South Africa had not experienced a de-industrialization process.  In fact, anaccelerated restructuring of every sub-sector had been accomplished, which had led to improved
competitiveness.
118. Profound agricultural reforms had implications for socio-economic stability in a world of
volatility.  Because of price flexibility in its agricultural system, South Africa would not experience
food security problems similar to those experienced recently in neighbouring countries and in South
East Asia.
119. On privatization, he said that the broad policy challenge was part of an overall sector reform,
and the pace was dependent on a broad based agreement.
120. Turning to the Secretariat report, the representative expressed his appreciation, but wanted to
correct and/or clarify some statements in the Summa ry Observations.  First, the statement that sector
specific acts regulated investment in South Africa was misleading;  there were no regulations that
specifically affected investment (paragraph 8).  Second, the maximum ceiling rates of almost 400%only applied to 12 lines under the HS chapter 22 and the actual rates were a small fraction of that
(paragraph 10).  Third, the deduction that the tariff structure was complex should be treated with
caution;  the complexity only applied to a few lines (paragraph 13).  Fourth, except for black tea, the
only import measure for agricultural products were based on sanitary and phytosanitary measures;WT/TPR/M/34, WT/TPR/M/35,
WT/TPR/M/36, WT/TPR/M/37,
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import licences were in place for statistical purposes (paragraph 14).  Fifth, since the completion of
the report the maximum rate of ad valorem  excise duties (excluding tobacco and liquor products) had
been reduced to 10%, while more items had been made subject to this maximum rate (paragraph 16).Sixth, the fuel levy applied irrespective of origin (paragraph 16).  Seventh, tyres were not subject to
restrictive import controls (paragraph 16).  Eighth, there was no local content requirement applied to
coffee (paragraph 17).  Nineth, export controls on agricultural products had already been removed, or
were no longer applied restrictively (paragraph 18).  Tenth, during the course of 1997 price controls
on agricultural products (except sugar) had been removed (paragraph 19).  Eleventh, South Africa had
been engaged in a reform process over the last two years which would result in a White Paper for
agriculture by the end of 1998;  this policy framework was not reflected in the Secretariat report.Twelfth, all agricultural boards had been abolished during 1997 (paragraph 24).  Thirteenth, South
Africa regarded albuminoidial substances as bound (paragraph 25).  Fourteenth, import controls on
tyres, firearms and chemicals were not non-tariff barriers (paragraph 26).  Restrictive import controls
on tyres had been lifted;  import controls on firearms were applied as a security measure;  while in the
chemical sector, only certain liquid fuels were subject to quantitative restrictions.  Finally, exportcontrols only applied to used vehicles (paragraph 26).
(b) Namibia
121. Namibia acknowledged that it was likely that its revenue derived from SACU, which currently
contributed some 30%  to the national budget, would d ecline.  The intention was to transfer the current
excise arrangement to each member as a national tax.  In addition, Namibia had decided to introduce avalue-added tax in 1999 to consolidate the current system.
122. During the second half of 1997 the price for most mined commodities had declined;  this trend
had accelerated as the implications of the East Asian crisis became apparent.  It could have far reaching
ramifications on the Namibian economy, as revenue generated by the minerals sector (in particular
diamonds) had been the largest contributor to gove rnment revenue.  Further, mineral exploration
activities in Namibia would be dampened with many "junior" companies being unable to raise sufficient
funds on the stock markets to meet their commitments.
123. The gold base metal market and commodity prices were also affected by the crisis.  This had
negatively affected Namibia's only manganese mine , Otjosondu Manganese Mine, as Indian suppliers
had dropped their delivery price by 45%.  The crisis ha d also contributed to the potential closure of the
operating mines of Tsumeb Corporation Lim ited, Namibia's largest base metal producer.
124. Namibia approached privatization through an intermediary step of commercialization and
parastatal reform.  Namibia was active in creating commercial entities to perform functions that could
eventually be privatized;  examples included the so cial security function and the bulk of the water
supply function.  Similarly, certain public enterprises were restructured to make them streamlined and
financially sound.  It was believed that this refo rm would enhance their eventual privatization.
Moreover, given the small domestic market, extreme income inequalities and the low level ofindigenous entrepreneurship in Namibia, privatizati on policy had to take local ownership interests into
account.
125. Since the exports of primary commodities accounted for more than 85% of Namibia's export
earnings, the Government had embarked upon a process of industrial development and export
diversification.  Inhibiting factors influencing this  policy were the anti-export bias resulting from high
tariff protection and the competitive edge of South African industries.  Nonetheless, Namibia had put
into place certain measures, and  adopted an export le d development strategy.  To that effect, a tax base
incentive scheme and an Export Processing Zone (E PZ) regime had been introduced to encourage local
value addition and to attract investment.WT/TPR/M/34, WT/TPR/M/35,
WT/TPR/M/36, WT/TPR/M/37,
WT/TPR/M/38
Page 25
(c) Botswana
126. On the macro front, Botswana's priority was to ensure sustainable diversification of the economy
with an emphasis on job creation;  the unemployment rate was currently at 21%.  It was in this respectthat the Government encouraged participation of the private sector in the creation of employment.  It was
also noted that its currency, which was determined independently, was fully convertible, backed by
foreign reserves of about US$5.7 billion (equivalent to 30 months of imports).  Botswana, as stated by the
representative, had a potential to become a financial services centre.
127. Botswana was committed to regional cooperation as a way to find markets for its products.
Botswana was also committed to a rules-based mul tilateral trading system.  Nonetheless, there were
challenges arising out of their obligations which required the creation of an appropriate institutionalcapacity.  Supports in this area were welcomed.
128. Overall, the East Asian financial crisis would be severely felt in Botswana's economy dominated
by primary commodity production (including diamonds, nickel, copper and soda ash).  The bulk of this
was accounted for by gem diamonds.  Some of the countries in East Asia were important markets for
Botswana's export of commodities, notably diamonds. The economic collapse in this region had had adramatic impact on disposable incomes, and the diamond market was one of the first sectors to suffer.  In
1997, diamond jewellery sales in the East Asia region fell by about 20% (expressed in U.S. dollars) and a
further fall was expected in 1998.  In addition to the expected reduction in Botswana's exports of
diamonds, a sharp fall in government revenue was anticipated.
129. Botswana recognized the need to develop a privatization policy to improve the efficiency of the
economy.  The Government provided services that traditionally were provided by the private sector.  It
was recognized that the dominant role of the Government had tended to crowd out the private sector.
However, privatization was a complex process which required proper legislation, institutional
arrangements, and rationalization of entities to be privatized.  Above all, the process required public
education and commitment of all stakeholders.  A task force on privatization was expected to produce areport by the latter part of 1998.
(d) Lesotho
130. A number of policy options had been looked at by the Government in order to reduce
dependence on customs revenue.  Arrangements were under way to improve revenue collection, widen
the tax base, and introduce a value-added tax.  It was also noted that the retrenchment of a large number
of Lesotho nationals from the South African mines had negative effects on the current account deficit.
Concerning investment, the Government had embarked on a comprehensive programme aimed atcreating an investment friendly environment.  In this respect, efforts were also underway to speed up
privatization.
(e) Swaziland
131. Swaziland was dependent upon revenue from the SACU;  indeed, it amounted to more than 50%
of total revenue.  Although the renegotiations of the SACU were not finalized, it had been agreed that anyfuture revenue dispensation would not result in any member's income being destabilized.  Swaziland was
committed to diversifying its revenue base in order to reduce the dependence on trade taxation.  In this
regard, the Government was reviewing the possibility of introducing a value-added tax.  Further reforms
aimed at modernizing the structure of taxation.  In addition, collection rates were expected to be enhanced
through improvements in the tax administration.WT/TPR/M/34, WT/TPR/M/35,
WT/TPR/M/36, WT/TPR/M/37,
WT/TPR/M/38
Page 26
132. The Government had recently launched the Swaziland Investment Promotion Authority (SIPA),
which would act as a "one-stop shop", promoting Swaziland as an attractive location for investment, and
to facilitate the establishment of new businesses.  The incentive structure had been reviewed and a newinvestment code had been finalized.
133. The first discussant expressed his appreciation for the comprehensive information provided by
the countries under review.  He noted that several members had raised concern that South Africa
appeared to feel a need to protect itself.  He also thought it had been useful that the difficulties for
developing countries in dealing with the requirements of WTO membership had been underlined.  He
then turned to the remarks made on the East Asian crisis.  It was a problem everyone were going to be
grappling with in the months ahead, but it had been graphically illustrated by the remarks made byNamibia and Botswana.  He sympathized with the difficult task in diversifying their economies.  In the
area of privatization, the direction was more towards parastatal organizations and commercialization.
The discussant concluded by welcoming the remarks made by Swaziland on the emphasis to attract
investment.
134. The representative of the United States asked for more information on the status of the ILO
technical assistance to amend the 1996 Industrial Relations.
135. The representative of India pointed out that issues relating to labour were not to be contested in
the WTO.   It had been decided at the Singapore Ministerial Conference that it was the ILO which was to
consider labour issues and not the WTO.
136. The representative of Nigeria expressed his support for what the delegate of India had said
regarding labour issues.
137. The representative of Norway stated that his Government's understanding of the Ministerial
Declaration from Singapore was somewhat different from what was stated by India and Nigeria.
(ii) Trade policies and sectoral issues
(a) South Africa138. The representative started out by clarifying that South Africa was bound by international laws of
treaties to honour its international obligations, including its WTO commitments;  amendments to
legislation or regulations, where necessary, had been, or were being, effected into the domestic law.
139. He noted that several members had assumed that South Africa's export promotion measures were
used to address the anti-export bias.  However, detailed analysis was required at a product, sectoral and
exchange-rate basis to grasp whether an anti-export bias existed or not.  Similarly, questions had been
raised regarding the use of development agencies, such as the Industrial Development Corporation.Again, this was a legitimate instrument for developing countries to use.  South Africa's export credit
facility complied with the consensus rules set by the international union for credit and risk insurers.  The
local content requirement of 70% was imperative for a developing country and it was a legitimate
instrument for promoting industrial activity.
140. On the impression that South Africa provided protection easily, he noted that the tariff setting
mechanism was highly consultative and transparent.  While providing details on the procedures, he
emphasized that the process provided for all interested parties to make appropriate representation.  In
addition, tariff increases had to comply with strict policy guidelines:  they were not allowed to go beyond
the bound rates;  they were of a temporary nature;  they had to be linked to strategic investments;  and
they were conditional upon the achievement of targets relating to the sustainability of the investment.WT/TPR/M/34, WT/TPR/M/35,
WT/TPR/M/36, WT/TPR/M/37,
WT/TPR/M/38
Page 27
141. Except in a few instances, South Africa had removed quantitative import restrictions. The
restriction on tyres was removed on 1 January 1997;  the one on black tea would be tariffied within the
next few months;  and those on liquid fuels, used products, hazardous substances, certain firearms andarmaments were applied for reasons related to the Montreal Protocol Products and similar arrangements.
The local content requirement on black tea would be removed with tariffication.  When the tariffication
process was completed all remaining licensing requirements would only be used to enforce quality
standards.  However, South Africa's regulation on liquid fuels was linked to the considerable capacity in
synthetic fuel production from coal.  The restrictions on second-hand and used products were retained in
order to protect massive dumping.  Imports of used machinery and equipment were allowed if they were
substitutes and not locally manufactured;  permits were generally issued within three days of application.
142. In responding to questions on tariff complexity, South Africa was committed to tariff reductions
to meet its Uruguay Round commitments.  In addition, further simplifications and reductions had been
proposed down to 12 bands by 1999.  In fact, against the average bound rate of 19%, the average
industrial tariff in June 1994 was 15.6%, and had since then been reduced to 11.4%.  Tariff increases had
been few and limited to exceptional circumstances.  On tariff escalation, South Africa's tariff showedescalation;  in particular on consumption goods, which was a deliberate policy to encourage job creation
in labour intensive sectors.
143. In agriculture, specific duties on agricultural products were generally substantially below South
Africa's bound rates;  if a specific rate would exceed the bound rate, the specific rate would be capped by
the ad valorem  rate.  Formula duties only applied to six agricultural tariff lines.  Where agricultural tariffs
exceeded the bound rates for minimum market-access commitments, tariff quotas had been implemented
using the mechanism of rebate provisions.  In respect of wine, a tariff quota was being implemented and
import restrictions had been removed.  The South African Customs Service was being restructured and
should in future be better able to eliminate tariff evasion.  South Africa intended to gradually shift the
actions against dumped and subsidized imports of agricultural products to anti-dumping andcountervailing measures.
144. A White Paper had been produced, whose objectives included increasing agricultural
productivity and output;  creating opportunities for resource poor farmers;  creating additional
employment in agriculture;  and reducing the cost of food to ensure household food security.  All
statutory interventions in the marketing of agricultural products in terms of the old act had been repealed.
Therefore, statutory pricing, price pooling, and import and export controls had been terminated, while the
marketing of the relevant products had been deregulated.  Levies on wheat, cotton, grain sorghum andpotatoes were being considered for research and information purposes only.  In the case of the wine
industry, the relevant legislation was being amended to reflect a similar policy thrust.  A new strategy for
sugar had also been published in which tariff dispensation and the statutory maximum price for sugar
were addressed.  Export subsidies would be phased out in 1998;  any replacement measure would be non-
trade distorting and within the "green box" framework.  On market access, the representative noted thatagricultural imports had grown steadily over a range of products.
145. On technical measures, South Africa was in the process of reviewing its stance on transport of
live animals by sea.  For example, shipment of live sheep from Australia to South Africa would undergo
such a review.  These reviews were based on animal welfare concerns, good husbandry practices, WTO
compatibility, and a general good science approach.  South Africa had recognized foreign referenceagencies in the context of certain technical standards, including sanitary and phytosanitary measures.  In
dealing with agricultural product quality standards, South Africa did not distinguish between domestic
and imported products, and regulated the standard at a point of domestic sale.  South Africa's quality
standards were in line with the Codex Alimentarius;  this system did not readily require the more
stringent controls that the SPS Agreement would allow.WT/TPR/M/34, WT/TPR/M/35,
WT/TPR/M/36, WT/TPR/M/37,
WT/TPR/M/38
Page 28
146. Finally, he turned to services.  The telecommunications monopoly would be reviewed within two
years.  Certain subsectors had been liberalized since the scheduling of South Africa's commitments in
GATS.   With regard to questions on transport services, the restructuring of the state-owned enterpriseswas currently being investigated.  Reforms would be announced in 1998 in regard to the total Transnet
system.
(b) Namibia
147. Namibia was examining the possibility of introducing an anti-dumping legislation.  However, a
constraint to its development was lack of institutional capacity.  The limited capacity had also been a
constraining factor in fulfilling its WTO obligation in the area of technical barriers to trade.  Nevertheless,
based on internationally recognized principles, the Government had launched a programme on the ruleson technical regulations.  With regard to the 1991 agreement between Namibia and the South African
Bureau of Standards, it was aimed at facilitating Namibia's fish exports to the European Union.  This
agreement had been entered into in view of the fact that Namibia did not have a National Bureau of
Standards of its own.
148. The 10% upliftment of customs valuation was applied to all imports, except for goods with a
zero duty rate.  The continuation of this practice would be reconsidered with the introduction of a value-
added tax.
149. Namibia was in the process of reviewing its import and export licensing regime with a view to
bringing it in conformity with the WTO rules.  Specifically, Namibia was hoping to rationalize the
licensing regime in terms of product coverage and institutions involved.  It was emphasized that licenseswere issued for statistical purposes.  Seasonal import bans on maize and wheat would be lifted with effect
from 1 May 1998.  Maize and wheat were the only whole grain on which import restrictions (quantitative
measures) were placed.
150. The Government sourced its goods and services through competitive bidding procedures.  Only
under certain circumstances did the Government exercise the right to give preference to local suppliers.
151. Although competition policy was on the agenda of the SACU renegotiation, Namibia had already
started to develop a competition policy framework and a draft bill had been tabled for the first reading in
the Parliament.
152. Namibia was committed to liberalizing its services sector.  However, liberalization must not be
inimical to the broader national objectives, such as sustainable development.  To this effect, Namibia was
part of the Coordinated African Programme of Assistance on Services.  Through its participation in the
programme, national capacity would be strengthened to enable Namibia to effectively participate in thenext round of negotiations on trade in services.  Addressing Namibia's environmental concerns, a final
draft of the Environmental Management Act of 1998 had been forwarded to the Attorney General office
and it was expected to be in place by September 1998.
(c) Botswana
153. On the questions related to Botswana's intellectual property rights regime, the representative
explained that the legislation was developed in two phases.  The first phase covered the development of
an Industrial Property Act, which was passed in 1996, and the development of a Copyright Act, which
would be tabled before Parliament in the latter part of 1998;  both legislation would be fully compatible
with the TRIPS Agreement.  The next phase would include the development of legislation by 2000,
covering geographic indications, integrated circuit, and undisclosed information.WT/TPR/M/34, WT/TPR/M/35,
WT/TPR/M/36, WT/TPR/M/37,
WT/TPR/M/38
Page 29
154. The Botswana Bureau of Standards, which was a member of ISO, was fully operational.  Five
technical committees had been established, with authority to recommend to the Standards Council on
voluntary and mandatory standards;  only standards affecting health, safety, and the environment wouldbe declared as compulsory. The Bureau was in the process of establishing various procedures, which
would comply with the WTO Agreement.  For example, the national testing and calibration systems had
two separate advisory committees, which comprised of members from the private sector, and all
laboratories were advised to operate in accordance with ISO Guide 25. The representative also noted that
Botswana played an important role in the harmonization of  standardization legislation in both the SACU
and SADC areas.  In this regard, Botswana worked closely with the South African Bureau of Standards.
155. Competition was encouraged in the field of telecommunications.  The Government would enter
into a performance contract with the Botswana Telecommunications Corporation for the provision of
fixed network services;  consultations on the contract were still ongoing.  The following areas had been
opened for competition:  sales of equipment, storage and forwarding of facsimile services, public
telephone, packet switched data services, electronic mail services, internet, and cellular telephone
services.  The Botswana Telecommunications Authority (BTA) had also issued an invitation to tender forcommercial Frequency Modulation licences.  With regard to cellular phones, the BTA had recently
awarded tenders to two international companies, Mascom Wireless (Pty) Ltd and Vista Cellular (Pty) Ltd.
156. Specific sales tax were levied on the following goods:  alcoholic beverages, petroleum products,
cigars and cigarettes.  The tax was collected on imported goods at the time it entered Botswana, while, for
domestic goods, the tax was collected at the time of sale.  Botswana was aware that higher rates of exciseduty on imported than domestically produced beverages was not in compliance with WTO requirements.
However, these excise duties were SACU tariffs and could not be abolished unilaterally.
157. Agricultural products affected by export controls covered statutory grains and horticultural
products (including sorghum, millet, maize and pulses);  to manage supply and promote local production,
article 12 of the SACU agreement provided for an import permit system.  Although there were no exportrestrictions for processed forestry products in Botswana, the increasing pressures on forest resources
forced the Government to take measures to reduce depletion.  The Government had stopped the
harvesting of forest resources until a comprehensive programme was drawn up and implemented through
a policy.
158. In the context of the SACU trade regime, Botswana gave priority to restructure the industrial and
agricultural development policies.  Priority was also given to restructure the tariff policy in the SACU.
159. To conclude, she stated that Botswana was in the process of developing a competition policy,
which should be presented to the Government by the end of 1998.
(d) Lesotho
160. In responding to the question on the decline in exports, the representative replied that it was due
to import quotas on textile and clothing imposed by the United States.
161. The standards bill would be tabled before Parliament at its next seating, and it would include
provision of voluntary standards, compulsory standards, certification and establishment of a board.
162. The representative said that Lesotho had not yet submitted its notification to the WTO
Committee on State Trading Enterprises.  However, these enterprises were in the process of being
privatized.  Commercialization and privatization was envisaged to increase private sector participation.WT/TPR/M/34, WT/TPR/M/35,
WT/TPR/M/36, WT/TPR/M/37,
WT/TPR/M/38
Page 30
163. On services, he noted that the investment incentive package did not cover services.  But
Lesotho's commitment towards improvement of the services sector was reflected in the Government's
participation in the Coordinated African Programme of Assistance on Services project as well asLesotho's liberal commitments in the GATS.  With regard to liberalization of telecommunications, the
Government  intended to contract management to Lesotho Telecommunication;  a detailed programme
would include a setting up of a Steering Committee, and the engagements of a financial workout
specialist and a sales advisor.
164. Finally, he said that the banking sector was quite liberalized;  any investor was allowed to
operate a bank provided that they fulfilled the requirements of the laws governing financial institutions.
The minimal local asset requirement had been lowered because it was seen as an impediment forinvestors.  Under the auspices of the privatization unit, the banking sector reform programme would
involve the two state-owned banks (Lesotho Bank and Lesotho Agricultural Development Bank).
(e) Swaziland
165. In responding to questions about Swaziland's liberalization in services, the representative pointed
out that a draft legislation on the Swaziland Post and Telecommunication Corporation envisaged separatecorporate entities for post and general cellular telephone networks;  tenders were opened in January 1998,
and negotiations had commenced with the qualified bidders.  He also noted that the new Insurance Bill
allowed competition.
166. Swaziland did not have a legislation on standards.  The Standards and Quality Bill 1997, which
pended enactment, provided for the Swaziland Standards Authority that would be responsible for thepromotion, control and maintenance of the standardization and quality of commodities.  Meanwhile,
South African standards were adopted on a voluntary basis.
167. Swaziland was in the process of developing a Competition Bill, but it considered it necessary to
have a SACU wide competition policy.
168. Finally, Swaziland was committed to ensuring that its intellectual property laws and regulations
would be in line with the WTO Agreement on TRIPS by 1 January 2000.
169. On the replies by the representative of South Africa, the third discussant noted that there was a
need of a clearer distinction between which types of questions the TPRB should deal with and which
types of questions should be dealt with in the specific mechanisms associated with the various
agreements.  Another important issue that needed to be pursued further was the dilemma for most
countries in pursuing their development objectives, including improvement of their competitiveness,
while fulfilling their commitments towards the WTO.  On import licensing, he noted that it was in placefor statistical purposes, but the response by Botswana also implied that it could form a quantitative
restriction.  Why, if only for statistical purposes, did it not apply across the board?  He asked for
clarification on this issue. Clarification was also requested on the application of different excise duties,
especially on imported beverages.  With regard to formula duties, he asked why this system, which had
been recognized as no longer being effective, was not completely phased out.  He recognized that anattempt had been made in clarifying disruptive competition (including disruptive prices) to second-hand
clothing, but he could not recall any attempt to define the term disruptive competition.
170. The second discussant shared the South African view that the key on quantitative restrictions was
under which WTO Agreements they were justified.  He also recognized the difficulties developing
countries were faced with in implementing the provisions of the WTO Agreement on TRIPS.WT/TPR/M/34, WT/TPR/M/35,
WT/TPR/M/36, WT/TPR/M/37,
WT/TPR/M/38
Page 31
171. The representative of the United States recognized the leadership role that South Africa had
taken within the region to promote aviation safety.  Although short of "open skies", the new civil aviation
agreement between the Unites States and South Africa was the first with any African nation to allowairlines to operate code sharing service.  She also noted Lesotho's efforts to update its civil aviation
legislation, and bring safety and operational standards in line with AKEO requirements, while applauding
Namibia's moves to deregulate the road (including maintenance) and transportation industry (including
aviation).  She encouraged the countries to continue to address these issues.
172. On tariff and agricultural policies, the United States was encouraged by the reforms.  She
referred to the suggestion made by the United States that South Africa could consider using the Chicago
Board of Trade Prices when calculating tariffs on wheat imports.  While welcoming the recent bindingsin agriculture, she asked when South Africa intended to bind its tariffs on fishery and preparations of HS
0315 and 16.  She encouraged Lesotho to reform its food security policies through trade liberalization.
173. While she was encouraged by the stated intent of the countries under review to enact legislation
in the area of intellectual property rights consistent with the WTO Agreement on TRIPS by 2000, she
referred to the written questions on the 1997 Amendments to the Medicines and Related ControlledSubstances Act.
174. To conclude, she applauded Botswana's tax reforms, and hoped that SACU duties would be
eliminated in the context of SACU renegotiations.  She also noted Namibia's and Lesotho's introduction
of a value-added tax in place of the current tax regimes, encouraging greater transparency and less
discrimination.
175. The representative of the European Union noted its satisfaction with the explanations given
during the meeting.  Referring to the tariff liberalization and the underlined preoccupation of improving
the competitiveness, he asked if South Africa was considering joining the WTO Information Technology
Agreement.
176. The representative of Japan asked Namibia for further details on the two anti-dumping schemes
(i.e. the national scheme and the SACU scheme) and their relationship.
177. The representative of Mauritius noted that the TPR was an exercise in transparency much more
than it was an exercise in conformity.  He also commended the countries under review for having given
an outstanding demonstration in transparency.
178. The representative of Australia appreciated the difficulties that South Africa faced, particularly in
dealing with subsidized imports, but asked for further information with regard to the high tariff on red
meat.
179. The representative of New Zealand commended South Africa's move to terminate the general
export incentive scheme earlier than scheduled and Swaziland, Lesotho and Botswana for their wisdom in
not using export subsidies.  The representative noted, however, that Namibia had reverted to cash
incentives for its exporters and asked for clarification in this regard.  As a fellow successful southern
hemisphere wine producer, New Zealand wondered why South Africa considered it necessary to protectits competitive wine industry with tariffs.
180. Responding to queries on the appropriateness of the Trade Policy Review Body to deal with
certain issues, the Chairperson recalled the role of the Trade Policy Review Mechanism and confirmed
that the content of the Secretariat report was consistent with this role since it only shed light on tradepolicies and practices of South Africa as a WTO Member.WT/TPR/M/34, WT/TPR/M/35,
WT/TPR/M/36, WT/TPR/M/37,
WT/TPR/M/38
Page 32
181. The representative of South Africa supported the notion that when there was a formal query
which could lead to an enforcement action or a dispute settlement action within the WTO, it was more
appropriate that South Africa dealt with them in other structures than the TPRB.
182. He agreed that the use of quantitative restriction for the purpose of statistics was unsatisfactory.
Therefore, South Africa would review the issue.
183. On the question of disruptive competition, he noted that second-hand equipments had no real
price.  There was a cost associated with removing such equipments in a developed country, so
accordingly the pricing system was completely distorted if the equipment was transferred to the
developing world.  That led to a situation where you could have a number of pricing problems, which in
the South African competition law would qualify as predatory pricing.
184. He noted that South Africa's quantitative restrictions had been notified under Article 11.1 of the
WTO Safeguard Agreement, and of the three product groups notified, tariff heading HS 40 had already
been liberalized.  The other categories were justified under GATT, Article XX.
185. On intellectual property rights, he pointed out that one should not underestimate the necessary
legislation that had to be enacted, and the institutions that had to be built.  With regard to the question onfisheries, these would not be bound until South Africa had completed a policy review.  In responding to
the question from the European Union on wine and vermouth, South Africa noted that it had revised its
tariffs.  South Africa had considered entering the WTO Information Technology Agreement, but it would
require further discussions with their SACU partners.  Finally, in responding to Australia's question on
red meat, South Africa would begin shifting towards the use of dumping and countervailing measures,while trying to correct some anomalies between different types of meat.
186. The representative of Namibia noted that Namibia was studying the possibility of introducing its
own legislation, while harmonizing its legislation with those of the SACU countries.  The legislation in
place was a South African anti-dumping legislation, and not for the whole of SACU.
187. The representative of Botswana noted that with regard to the questions on different excise rates
and import controls, they were part of the wider SACU tariff structure.
188. The representative of Lesotho noted that it had abandoned the policy of self-sufficiency in
agriculture and had shifted to a policy of food security at both household and national levels.
(iii) Trade agreements
(a) South Africa
189. The representative of South Africa noted that the trade agreements within the Southern
African region were numerous and quite complex,  but regional arrangements would supersede
existing agreements.  However, the objective of the Government in regard to regional policy was to
create, in partnership with other countries, the conditions for a better life of its people.  In this regard,
South Africa was engaged in efforts to foster economic growth and balance development through
cooperation and integration.  The envisaged SADC free-trade area was designed to strengthen the
trade creation effects.  With regard to the Customs Union itself, South Africa fully accepted the needfor a renegotiation of its terms.
190. Regional integration would be the fundamental pillar of building a competitive regional
economy.  However, trade, on its own, would not reverse the current structural imbalances in the
patterns of trade flows within the region.  The opening of trade must be combined with investmentWT/TPR/M/34, WT/TPR/M/35,
WT/TPR/M/36, WT/TPR/M/37,
WT/TPR/M/38
Page 33
and industrial strategies to boost the supply capacity.  Its broad guidelines included asymmetrical
market access to their SADC partners, i.e. South Africa would liberalize earlier than its partners.  To
this end, South Africa would make non reciprocal  unilateral offer during the course of 1998.
Moreover, access by the EU to the South African market would follow access by SADC partners in
those products where there was a competitive dimension.  It was essential that there were coordinated
investment promotion processes, particularly in infrastructure.  Finally, South Africa believed that
there must be coordination on an overall strategy to bring about industrial development in the region
and to enhance trade.
191. The representative noted that the latest Budget provided for a relaxation of the foreign
exchange controls.  For new investments in SADC, the transfer made by South African corporationshad been increased from R 50 million to R 250 million.  The limit for general offshore investment had
been increased from R 30 million to R 50 million.
192. On the revenues of SACU, the representative stressed that it was essential that there was no
dramatic or destabilizing change in the revenue accruing from this source. South Africa had proposed
in its negotiations with the European Union that, if there was a loss of revenue income, the EuropeanUnion would take a proportionate share of the cost of adjustment for the BLNS countries.
193. The SADC protocol on trade provided for the elimination of tariffs and non-tariff barriers to
trade in goods and services.  Although the increasing importance of trade in services was recognized,
the interactions to date had focused on trade in goods.  In this regard, South Africa, together with its
SACU partners, would make a comprehensive offer at the Ministerial Meeting in July 1998.
194. In responding to the questions raised on rules of origin, the representative noted that it was a
major policy challenge to bring about a compatibility between SACU and SADC.  The challenge
would also arise in the context of the South Afri ca/European Union negotiations as well as future
Lomé arrangements.
195. On the ratification of the SADC trade protocol, the representative mentioned that the protocol
was a framework document, and the signature by parties was a clear statement of intent.  In South
Africa, as was the norm with many other countrie s, ratification was done by the legislature after
detailed substantive commitments had been entered in to by the executive. Therefore, the lack of a
detailed schedule for reduction of tariffs and non-tariff barriers in SADC, meant that it was premature,
in South Africa's case, to table the protocol for ratification before the legislature.
196. Turning to the South African/European Union negotiations, he noted that a free-trade area
would be established in conformity with the WTO requirements.  South Africa had entered into the
negotiations because the European Union was its largest trading partner, an important source of
foreign direct investment, and the principle supplier of capital goods.  Therefore, the proposed
agreement should bring about an integration of the manufacturing processes of the two economies,
and improve market access opportunities.  Both parties wanted to conclude the negotiations in
substantial form by June 1998.
(b) Namibia
197. On bilateral agreements, Namibia had entered into a preferential trade agreement with
Zimbabwe, which provided for the duty-free access of goods produced in either country subject to a
25% local content requirement for manufactured goods.  Namibia had further concluded MFN trade
agreements with China, the Democratic Republic of Congo, Cuba, Ghana, India, Malaysia, thePeople's Democratic Republic of Korea, Romania and Russia.  These agreements were mainly geared
towards enhanced trade cooperation.  As such, they did not overlap with the MFN clause of the WTO.WT/TPR/M/34, WT/TPR/M/35,
WT/TPR/M/36, WT/TPR/M/37,
WT/TPR/M/38
Page 34
198. On free movement of goods and services in SADC, the representative concurred with South
Africa's statement.  Again, reference was made to South Africa's statement on the legislation on
quantitative restrictions on goods from outside the customs union area.
199. The function of marketing boards in Namibia had changed from that of controlling to that of
only supporting.  In addition, these bodies continued to play an important role in the consultative
process towards national policy formulation.
200. The issue of infant industry protection and th e protection of industries of major importance
was a subject of the renegotiation of the SACU Agreement.
201. The representative referred to South Africa's statement on the questions related to the
timeframe for the implementation of the SADC trade protocol, as well as the SACU renegotiation.He also indicated that Namibia intended to rati fy the SADC trade protocol by the middle of 1998.
202. To conclude, he stated that substantial progress had been made regarding timely notification
and it continued to be an area of priority as was the case of overall implementation of the various
WTO Agreements.
(c) Botswana203. The question of trade had to be looked at in the broader context of investment and industrial
development.  It was within this context that Botswana was concerned with regard to SACU/SADC,
especially as it related to the possible disadvantage that SACU member States would have vis-à-vis
SADC member States because of the common external tariffs.  It had been agreed that within SACU,
South Africa would take the lead in tariff reduction.  Referring to the Secretariat's report on Botswana(paragraph 41, page 29), the representative expressed satisfaction with the progress that had been
made in trying to address this issue within the context of the SADC trade negotiations.
204. To conclude, she noted that whilst progress on notifications had been achieved, there was still
a lot of work to be done.  Techncial assistance in this regard was sought.
(d) Lesotho205. The representative noted that most of the issues had been addressed satisfactorily.  However,
he added that Lesotho remained fully committed to the SACU renegotiations and the implementation
of the SADC trade protocol.
(e) Swaziland
206. On the ongoing trade negotiations between the European Union and South Africa, the
representative expressed concern about the possible investment and trade diversion efforts, as well as
the possible revenue losses.  He suggested that both parties would consider ways in which they couldprovide assistance to enable Swaziland to cope with any adverse consequences.  Swaziland was
looking forward to finalizing the renegotiation of SACU and was supportive of the implementation of
the SADC trade protocol.
207. The second discussant thanked the countries under review for the answers.  He noted that the
regional integration process in South Africa was in movement.  The process was complex and it did
not only concern trade.WT/TPR/M/34, WT/TPR/M/35,
WT/TPR/M/36, WT/TPR/M/37,
WT/TPR/M/38
Page 35
208. On rules of origin, he noted that three trade arrangements or preferential arrangements had
also been concluded on a bilateral basis.  He appreciated the intention of the country's under review to
timely notify these agreements to the WTO.
209. The first discussant noted that several of th e remarks of the SACU members had highlighted
the difficulties developing countries experienced in implementing their WTO's obligations.  In this
regard, he applauded the sensitivity and the help which South Africa had shown to the concerns of
less developed countries in the region.
210. He expressed his sympathy to the exceptional steps which had been required within South
Africa to make a success of the transition.  To narrow the gulf between the developed and the
deprived within that country, between the privileged and the under-privileged, the reforms of the pastfour years had been profound and they had been a testament to the democratic process.  However,
South Africa still had a long way to go as a profound transition took many years.
211. He turned to the distinction between South Af rica and the other countries under review.  It
was reasonable to expect compliance and implementation from South Africa as a sophisticated
country, which it would not be reasonable to expect from Lesotho, as a least-developed country, orSwaziland, as also a relatively poor country.
212. On the renegotiation of the SACU Agreement, he noted that it was reassuring hearing from
the representative of South Africa that he saw no uncertainty about the future revenue income of the
BLNS States from SACU.  He noted that during the meeting, several concerns had been raised in this
area.   In Swaziland, for example, such revenues accounted for some 50% of government revenue.  Healso noted that the meeting had given some impetus to the process of the renegotiation of the SACU
Agreement.
213. The representative of Japan welcomed South Africa's comment that the SADC free-trade
agreement would be in conformity with the WTO Agreements.  Furthermore, Japan expected the
formation of the SADC free-trade agreement, as well as the result of the renegotiation of SACU,would result in the promotion of investment and tr ade, not only in SADC or SACU countries, but also
with third countries.
214. The representative of the United States was encouraged by the steps that South Africa was
taking to ensure that its agreement with the European Union and SADC countries would not have an
adverse impact on other SACU countries.  On th e proposed European Union/South Africa free-trade
agreement, she noted that WTO rules stipulated that  the agreement must cover substantially all trade
in all sectors.  Nevertheless, the negotiation excluded almost 40% of South Africa's agriculturalgoods;  she encouraged South Africa to keep this in mind.  In concluding, she underscored the
commitment of President Clinton to assist the SACU  countries, as well as all the African countries,
specifically in the area of institutional capacity building.
215. The representative of the European Union expressed his gratitude to the delegation of South
Africa for having clarified the objective of the ongoing negotiations between South Africa and the
European Union.  The European Union was fully confident that this agreement would conform with
their WTO obligations.  In this regard, he stressed that the current European Union offer in the
agriculture sector covered more than 50% of agricultural imports from South Africa.  The negotiating
directives envisaged the exclusion of a number of highly sensitive agricultural products representing
no more than 6% of total South African exports to the European Union.  He also took note of theexpressed concern by other SACU members concerning the possible negative impact of this
negotiation on their countries.  He stressed that this was a dimension which was given all due
attention on the European Union side.WT/TPR/M/34, WT/TPR/M/35,
WT/TPR/M/36, WT/TPR/M/37,
WT/TPR/M/38
Page 36
XII. CONCLUDING REMARKS BY THE CHAIRPERSON
216. Over the past three days the TPRB has conducted the first group review of the members of the
Southern African Customs Union (SACU), Bots wana, Lesotho, Namibia, South Africa and
Swaziland;  this has also been the second Review of South Africa.  These remarks, prepared on my
own responsibility, are intended to summarize the main points of the discussion and not to be a full
report.  Details of the discussion will be reflected in the Minutes of the Meeting.  The SACU members
provided written replies in the context of the meeting and have undertaken to supply further details as
necessary.
217. The discussion developed under three themes:  (i) the macroeconomic and structural
environment;  (ii) trade policies and sectoral issues;  and (iii) trade agreements.
(i) Macroeconomic and structural environment
218. Members commended the SACU countries for th e fundamental economic reform that they
were undertaking;  they had moved away from import-substitution to more outward-oriented policiesand were adjusting to the political transformation of South Africa as well as to the fast changing
environment of globalization.
219. Members welcomed South Africa's pursuit of structural adjustment and its reintegration into
the world economy.  Members emphasized that the reform and its continued pursuit, including
substantial trade liberalization, would contribute to further diversifying South Africa's exports awayfrom their dependence on mineral products, particularly gold, and would help to attract foreign direct
investment.  Noting in this context the role of the Growth, Employment and Redistribution (GEAR)
framework, Members sought clarification on its coherence as a macroeconomic and structural
strategy, comprising elements such as wage policy and incentives schemes geared at capital intensive
sectors, with the objectives of job creation and an improvement in competitiveness.  Some concernwas expressed about the perceived slowdown in privatization;  and there was a certain worry that, as
the region's largest economy, South Africa might divert resources from neighbouring countries and
make it difficult for them to compete.  Some Members also asked about the effects of the east-Asian
crisis on the SACU economies.
220. Members commended Botswana on its recent economic performance;  they asked about the
coordination of its monetary and trade policies, with Botswana not a signatory to the Multilateral
Monetary Agreement linking the other SACU members.  It was emphasized that further liberalizationunder SACU would help diversify the Botswana economy away from its dependence on diamonds
and meat, and create employment.
221. Members recognized that Lesotho's status as a least developed country posed special
challenges.  They noted that Lesotho was heavily dependent on SACU revenues and asked about
efforts to widen and improve the fiscal base;  this question applied equally to Swaziland and, to acertain extent to Namibia.  It was further noted that these revenues could decline as SACU further
liberalized its trade regime.  They added that Lesotho's market-oriented reforms, and trade
liberalization under SACU, should help to dive rsify the economy away from its dependence on
remittances from migrant workers.
222. Participants congratulated Namibia on its efforts since independence in 1990 to restructure
and diversify its economy, including its export base, away from mining and agricultural and fisheries
production;  combined with further trade liberalizat ion under SACU, the reforms should help to create
a free-market environment and contribute to meeting objectives such as job creation.WT/TPR/M/34, WT/TPR/M/35,
WT/TPR/M/36, WT/TPR/M/37,
WT/TPR/M/38
Page 37
223. Members asked about Swaziland's development plan.  Noting that investment, mainly in the
industrial sector, had stagnated since the political transformation in South Africa, some participants
stressed that a free-market environment should contribute to attracting foreign capital to Swaziland.
224. In reply, the representative of South Africa said that coherent macroeconomic policies had
resulted in an unprecedented stability in South Africa's national accounts and in improved business
confidence;  this, and the ongoing restructuring of the productive base, constituted a strong platform
from which future targets could be reached.  On employment, he indicated that South Africa had a
multifaceted strategy to promote labour-intensive sectors in manufacturing and to increase value-
added in capital intensive sectors.  He contested the suggestion of any slowdown in privatization;
rather an overall strategy was being followed that would lead to improved efficiency and
competitiveness.  He added that in moving to ward a free-trade area in the Southern African
Development Community (SADC), South Africa would li beralize more rapidly than its partners, so as
to allow them a longer adjustment period;  in addition, South Africa was convinced of the need to
promote investment in the smaller economies in order to help accelerate their development process.
225. The Botswana representative noted that his country's currency was fully convertible and that
international reserves were the equivalent of 30 months of imports.  She added that the Government
had established a task force for privatization, which was seen as an important element in liberalizing
and diversifying the economy.  Both the representatives of Botswana and Namibia indicated that the
east-Asian financial crisis would affect their economies, particularly through the slowdown in the sale
of gem diamonds.
226. The representative of Lesotho stated that his country's Structural Adjustment Plan had been
implemented since the late 1980s and was improving Lesotho's economic performance, thus helping
to reduce reliance on remittances from migrant workers.  The new Lesotho Highlands Water Project
had also made a significant contribution.
227. The representative of Namibia said that the planned introduction of a value added tax (VAT)
in 1999 should help diversify the revenue base and lessen the impact of any changes in the SACU
regime.  Namibia believed that the ongoing commer cialization of public enterprises would put them in
a better position for successful privatization.  He added that Namibia had embarked upon a process of
industrial development and export diversification supported by a tax-based incentive scheme and an
export processing zone regime.
228. The representative of Swaziland noted that his auth orities were also considering the introduction
of a VAT, which together with improved tax administration, should improve the revenue base and
reduce reliance on SACU customs duties.  To promote investment, the Government had recently
launched a one-stop shop for investors and an Investment Act had been finalized.WT/TPR/M/34, WT/TPR/M/35,
WT/TPR/M/36, WT/TPR/M/37,
WT/TPR/M/38
Page 38
(ii) Trade policies and sectoral issues
(a) Trade policies
229. Members welcomed the recent changes in the trade policy of SACU members and the
adoption of more outward-oriented trade practices.  However, some Members considered that SACU's
existing tariff structure might not be completely  appropriate for the smaller economies.  Moreover,
some import prohibitions and controls were maintained.  Overall, the trade regime still appeared to
show a certain anti-export bias.  Members welcomed the Tariff Rationalization Process, but a rather
complex tariff regime remained, which lacked a certain transparency and stability.  Some sectors wereprotected behind high and escalating tariffs.  One Member expressed concern about the recent tariff
increases on dairy products.  Several Members inquired about proposed tariff increases on certain
electronic and agricultural products.  Members enco uraged SACU countries to further simplify the
tariff and reduce the rates.
230. Questions were raised about rules of origin.  Some Members questioned South Africa's VAT
regime on imports, and raised concern about the implementation of the WTO Customs Valuation
Agreement by SACU countries.
231. Some Members sought information on efforts to restructure South Africa's trade remedy
regime, expressing some worry about the application of anti-dumping measures.  Questions were also
asked about the use of local content requirements in industries such as motor vehicles andtelecommunications.  Some Members thought that certain technical standards were unnecessarily
stringent and cumbersome.  Questions were raised on government procurement, including as to
whether South Africa intended to join the Government Procurement Agreement.
232. On intellectual property, concerns were expressed about certain aspects of South Africa's
TRIPS legislation, including its application to pharmaceuticals.  South Africa was encouraged tomodify its TRIPS legislation and thus provide a model on intellectual property protection to other
SACU members.  Information on the status of the various TRIPS-related bills was requested.
233. Members welcomed South Africa's removal of the General Export Incentive Scheme, but
drew attention to the wide variety of export incentive schemes that still remained.
234. Speaking on behalf of its SACU partners, South Africa noted that the perceived anti-export
bias in its trade policy instruments was not simply related to the tariff structure but to a complex set of
factors.  In this respect, it was essential to examine specific trade matters as part of the integratedapproach South Africa had adopted on trade, industrial, investment and competition policy matters.
Industrial and trade policies aimed at accelerating industrial restructuring and raising competitiveness.
To achieve such restructuring, legitimate industr ial instruments and export promotion measures were
being used.
235. The representative added that the tariff structure was not complex, except perhaps with
respect to textiles.  The ongoing tariff restructuring, which had incorporated a downward trend in
rates, would continue reducing the number of tariff bands.  Moreover, South Africa was committed to
a structure of ad valorem  tariffs and, excluding some agricultural products, this would be achieved by
1999.  The still frequent tariff changes were mainly linked to the restructuring process.  Strict
guidelines were used to consider tariff increases;  thus while policy had at times been selective,changes were made in transparent manner.  Compound and formula tariffs applied to only a few
items.  South Africa would allow formula tariffs to lapse by January 1999.  Tariff phase-down
schedules had also been published for major sectors such as textiles, clothing, and motor vehicles.WT/TPR/M/34, WT/TPR/M/35,
WT/TPR/M/36, WT/TPR/M/37,
WT/TPR/M/38
Page 39
236. Remaining quantitative import restrictions were not a significant trade barrier with almost all
such restrictions having been removed.  Restrictions on black tea would be tariffied and local content
requirements on this product removed within the next few months.  Licensing was used on anon-restrictive basis.  Import restrictions on used goods would remain in order to protect against
disruptive prices.  Most export controls were not applied restrictively and were to be removed.  The
representative of Namibia added that his Government was in the process of reviewing Namibia's
import and export licensing regime, to assure full conformity with WTO rules.
237. The representative of South Africa noted that while it would be a  major challenge to
streamline the rules of origin in existing and futu re trade agreements, and in the Lomé Convention,
such rules were, by the nature of customs unions, not an issue for SACU itself.
238. South Africa applied trade defense measures in accordance with WTO rules and legislation
was being amended to reflect this.  He added that given South Africa's short experience with such
measures, further experience and capacity would be  required to cope with the growing number and
complexity of investigations.
239. The South African representative noted that South Africa's approach to government
procurement was based on the desire to employ it  as an instrument to achieve socio economic
objectives without forfeiting good financial manage ment.  The representatives of the SACU members
provided details on their standards and technical requirements.
240. On intellectual property, the South African repr esentative said that his country was the only
developing country to have assumed full and immediate obligations under the TRIPS Agreement. Tobring domestic legislation into line with interna tional rules, several legislative amendments had been
enacted over the last five years.  The representative of Botswana gave details on the Copyright and
Neighbouring Rights Bill that was expected to be tabled in Parliament in July 1998.
(b) Sectoral issues
241. Expressing full appreciation for the progress made by South Africa in liberalizing its
agricultural sector, Members inquired about plans for the abolition of the remaining control boards;
some participants expressed concern about the evolution of tariffs on agricultural products, including
for wine and dairy items.  Questions were raised about trade policy instruments in manufacturing,
including in  the motor vehicle sector.  Questions were also asked about the gold tax formula, and
about further liberalization and privatization in services, particularly in the telecommunications,
transport and financial areas.  Similar questions on services were addressed to the other SACUmembers and Lesotho was also asked about self-sufficiency in agriculture and outward processing in
clothing.
242. The representative of South Africa indicated that his Government had been engaged in an
agricultural policy reform process that would result in a White Paper for agriculture by end 1998.  In
line with such reform, all agricultural marketing boards had been phased out in 1997 and exportcontrols on agricultural products had either been removed or were not applied restrictively.  Price
controls had also been eliminated, except on sugar.  Reform of the marketing of wine and sugar was
under way.
243. He added that the industrial subsector was being restructured, with an emphasis on the use of
supply-side measures.  In addition, reforms were also under consideration in telecommunications andin transport.WT/TPR/M/34, WT/TPR/M/35,
WT/TPR/M/36, WT/TPR/M/37,
WT/TPR/M/38
Page 40
244. The representative of Botswana noted the liberalization already achieved in telecommunications
in her country, and the representative of Lesotho indicated that steps were being taken to promote
tourism.  He added that his Government had removed distortions caused by the agricultural
self-sufficiency policy followed in the 1980s;  policy was now geared to exploiting Lesotho's
comparative advantage in the production of high  value crops.  In manufacturing, Lesotho was
committed to maintaining the momentum achieved in the past decade, including in clothing, with an
export-led growth strategy.  The representative of Namibia added that Namibia was committed to
liberalizing its service sector and that it would pa rticipate in the next WTO round of negotiations on
trade in services.  The representative of Swaziland not ed that liberalization of telecommunications in his
country was under consideration.
(iii) Trade agreements
245. Members took note of the importance attached by SACU countries to their participation in the
multilateral trading system and of their determination that their regional agreements would conform
with the rules of the multilateral system.  Certain SACU countries still faced some challenges inreviewing their domestic legislation to ensure conformity with multilateral rules.  Some SACU
members might also need to strengthen their institutional capacity to implement their individual WTO
rights and obligations;  the WTO could provide technical assistance for this.
246. Several WTO Members highlighted the interlinkage among Southern African countries,
which collaborated closely through an elaborate network of regional agreements including SACU,SADC, and COMESA.  Details were requested on the status of the renegotiation of the SACU
Agreement and the implementation of the SADC Trade Protocol.  The matter of a possible free-trade
agreement between South Africa and the European Union was raised, and some Members stressed the
requirement that it apply to substantially all trad e.  Members inquired about the notification to the
WTO of the regional arrangements.
247. Members noted that for the countries under revi ew, SACU was the focal point of their trade
policy regime.  It was recognized that the network of agreements in which these countries participated
facilitated economic exchange.  However, this network may have complicated trade relations and
perhaps created certain conflicts between national and collective interests.
248. The representative of South Africa, speaking on behalf of the other SACU members, stated
that their countries were engaged in efforts to foster economic growth and balanced development
through cooperation and integration.  Regional integration would help build a competitive regionaleconomy that would provide a basis for more effective integration into the world economy.  Given the
disparity of economies involved, this process would require strategies to boost supply capacity in the
smaller SACU economies.  Measures would also be needed to ensure that these countries did not
suffer sudden reductions in SACU revenue.  The representatives of Botswana and Namibia
 stressed
that their Governments sought to make SACU more democratic.
249. With regard to the SADC Trade Protocol, the South African representative indicated that
SACU partners would make a comprehensive offer at  the soon to be held SADC Ministerial meeting.
The ratification of the SADC Trade Protocol was progressing and concerns about delays were
premature.  It would be notified to the WTO following the conclusion of the substantive agreement
and its ratification.
250. Negotiations were still in progress on a comprehensive trade, cooperation and development
agreement between South Africa and the European Union.  Both parties desired to conclude those
negotiations by June 1998.WT/TPR/M/34, WT/TPR/M/35,
WT/TPR/M/36, WT/TPR/M/37,
WT/TPR/M/38
Page 41
251. Overall, Members welcomed the collective participation by Botswana, Lesotho, Namibia,
South Africa and Swaziland in the review process.  Members appreciated the recent measures taken
by them towards economic reform and market opening.  Members also emphasized the importance ofthe continued pursuit of these policies, both to increase market access and to improve the stability and
transparency of the SACU trade regime.  I wish to emphasize that the thrust of the discussion was
supportive of the underlying direction of economic and trade policies in Southern Africa during a
period of sharp transition in that region.  Members offered strong encouragement to the five countries
reviewed to consolidate and build on the achievements of recent years.
__________