MAKING HASTE SLOW: HARMONIZATION OF ECONOMIC LAWS INTHE SADC REGION AND THE IMPACT OF THE PROPOSEDTRIPARTITE FREE TRADE AREA (T-FTA) FOR SADC, COMESAAND EAC.

Dr. Zolomphi Nkowani

Ministry of Justice

Private Bag, 333

Lilongwe 3

MALAWI

E: Zolomphi@yahoo.co.uk

LL.B (Hons), Mlw, LL.M (IEL), Warwick, ICSA (Cand), (UK), PhD, Salford (UK),Pg. Cert, (DSU), Dip, F.R.S.A, F.R.S.PH (UK), Chief State Advocate, Adjunctlecturer in law, University of Malawi. Formerly Lecturer in law, University ofSalford (UK), Lancashire Law School, University of Central Lancashire, (UK)and Research Fellow, Universities of Liverpool and Manchester (UK),Consultant to the China-Africa Trade Partnership and editor of the Malawi LawJournal. The interpretations, conclusions, views and opinions expressed hereare mine and should not be attributed in any way to any institution with I amassociated or any other agency or individual. I am indebted to all those thatread the original draft of this paper for their useful comments. I remainsolely responsible for all errors. The law in this paper is stated as it stoodon 21st June, 2013.

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Paper presented at the 3rd International Conference onIntegration and SADC Law Conference, University ofSouth Africa (UNISA), 9-10th July, 2013.

Abstract

The Southern African Development Community (SADC) is an inter-governmental organization comprising Angola, Botswana, Lesotho,Malawi, Mauritius, Mozambique, Namibia, South Africa, Swaziland,Tanzania, Zambia and Zimbabwe. It was established by Treaty in19921 and seeks to foster closer economic and political relationsamong its membership as a step towards the creation of aneconomic community. SADC understands that the goal of regionalintegration is open regionalism, i.e. outward integration to theglobal economy and as such it must strive towards regionalcompetitiveness2.SADC has a heterogeneous mix of bothdevelopmental levels and legal traditions. Member states are atvarying levels of human and economic development with South

1The SADC Treaty is the founding document for the establishment of theSouthern African Development Community (SADC). In pursuance of the principlesof Towards a Southern African Development Community, a declaration was made bythe Heads of State or Government of Southern Africa, at Windhoek, Namibia, inAugust 1992 affirming their commitment to establish a Development Community inthe region vide www.sasdc.int (Accessed 21 June,2013).

2Klaus Schwab of the World Economic Forum in Christopher Clapham, Greg Mills,Anna Morner and Elizabeth Sidiropoulos (eds) ‘Regional Integration in SouthernAfrica: Comparative International Perspectives’, South African Institute ofInternational Affairs has argued that in the global economy, regional strengthis paramount. Whilst Moeletsi Mbeki argues that regional integration isgenerally accepted as a stepping stone to wider global economic involvementand competitiveness. It offers better global market access at a lower cost,due to improved economies of scale.

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Africa being the most developed economy. As for legal traditions,at least four traditions can be identified. These are: the Commonlaw, Roman-Dutch law and Civil law tradition and a hybrid of;civil and common law traditions. For instance South AfricaLesotho, Zimbabwe, Namibia and Swaziland have a Roman-Dutchsystem, Angola and Mozambique have a Civil Law system, Malawi,Zambia, Tanzania have a Common Law system whereas Mauritius has ahybrid of Civil and Common law systems.

Besides this mix there is also a challenge of overlappingmemberships to other Regional Economic Communities (RECs). Forinstance with the exception of South African all members of theCommunity are members of the Common Market for East and SouthernAfrica (COMESA). SADC’s objective is regional integration throughelimination of Non-Tariff Barriers to trade (NTBs)3 andinvestment in the region. The process of tariff negotiation andelimination of NTBs require normative rules to implement agreeddecisions. The achievement of several objectives of the Treatyrequires legal measures to eliminate customs duties and adoptionof a common external customs tariff and to eliminate NTBs4. Theeconomic case for legal harmonization is based on the cost oflegal uncertainty on cross-border trade and investment. Legaluncertainty may also lead to trade diversion and negation ofdeeper integration5. This is complemented by the operative3 Generally see Viljoen, W. 2011. ‘Non-tariff barriers affecting trade in theCOMESA- EAC-SADC Tripartite Free Trade Agreement’, Working Paper, Trade LawCentre for Southern Africa.4 NTBs must be interpreted broadly to include all policy measures affectingeconomic incentives, especially those that unnecessarily raise costs andotherwise cause harm to the investment environment.5 At present for instance in agriculture 90% of its agricultural tradeis with the west and only trade 10% among its members. The regionneeds to trade more within than it is doing at the moment. Africa imports morethan 90 percent of her goods from outside the continent, despite resourceendowments which provide the potential to supply her own import needs. Onaverage, only about 10 to 12 percent of African trade takes place amongstAfrican nations.(This can be attributed partly to the slow implementation ofregional integration agreements designed to eliminate tariff and non-tariffbarriers (Economic Commission for Africa, 2010). See also Frank Flatters(2001), The SADC Trade Protocol: Impacts, Issues and the Way Ahead.

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principle in SAD which is subsidiarity and variable geometry. Theoverlapping web of rules and regulations and their interpretationcreates legal uncertainty with attendant transactional costs onintra-state and international economic relations6.SADC’s modusoperandi for achieving its objectives is cooperation in priorityareas that are seen as integration enablers. These are containedin Article 21of the treaty. These are: (a) food security, landand agriculture; (b) infrastructure and services; (c) industry,trade, investment and finance; (d) human resources development,science and technology; (e) natural resources and environment;(f) social welfare, information and culture; and (g) politics,diplomacy, international relations, and peace. The list does notinclude legal harmonization. However law is a critical factor forthe construction of economic space and an environment foreconomic exchange.

The treaty in Article 5 (2) (a, d and g), provides forharmonization and elimination of obstacles to the movement offactors of production. The limitation is that the treaty is weekon institutional mechanism for achieving this. For instanceSADC’s paradigm for integration is linear market integration butboth the treaty and the protocol on trade do not provide detailsfor achieving it. The details are articulated in the RegionalIndicative Strategic Development Plan of 2003, which is notlegally binding. The RISDP articulates the roadmap for SADC’sintegration and provides for the establishment of a free trade

http://qed.econ.queensu.ca/faculty/flatters/writings/ff_sadc_impacts.pdf(accessed 21st June, 2013). Deeper integration in the context of African regionalintegration usually means progress from a free trade area to a customs unionand beyond to eventual political union. This contrasts with the use of theterm deeper integration to refer to the inclusion of behind the border issuessuch as services, investment and competition policy on the regionalintegration agenda.6Christopher Clapham, Greg Mills, Anna Morner and Elizabeth Sidiropoulos (eds)‘Regional Integration in Southern Africa: Comparative InternationalPerspectives’, South African Institute of International Affairs, Kwame Opoku,"Legal Pluralism and Conflicts of Laws", The Law of Marriage in Ghana a Study in LegalPluralism,(1976), p. 1; Antony Allot, New Essays in African Law, (1970); and LawrenceChurch, "The Common Law in Zambia", in Law in Zambia, edited by MunaNdulo,(1984).Lesotho Law Journal,(1987)p.

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area by 2008, a customs union in 2010, a common market in 2015,monetary union in2016 and the introduction of a single currencyin 2018.Although the treaty in Article 10 itprovidesforSummit toadopt measures for implementing it, in Article 21 it provides forprotocolsas the only means for implementation7. This limitsoptions the Community can deploy for harmonization and legalintegration. For example Memoranda of Understanding (MoUs),Charters, Declarations, Decisions, Regulationse.t.c, are allvehicles for achievingcomplementarity between nationalandcommunity policy and legalframeworks.

In contrast the treaty of COMESA has an elaborate scheme forcooperation, harmonization and approximation of laws to create anenabling environment for cross-border and domestic trade andinvestment (See Chapter 3 of the Treaty) in of Member States.Unlike SADC, the Treaty of COMESA provides institutionalmechanism for harmonization on the template of the Europeanregulatory model. For instance in Article 9 it provides for acouncil of ministers with mandate to make regulations, issuedirectives, take decisions, make recommendations and giveopinions in accordance with the treaty, (Article 9 (d) ). Ofcritical importance is the harmonizing effect of dialogue betweenCommon Market institutions such as Council and the Court,national institutions and the Court on interpretation andapplication of the Treaty. Sadly for SADC the Tribunal has beensuspended and its jurisdiction been ‘renegotiated’8. Whereasunder the COMSA Court all persons, legal or natural havestanding, personal jurisdiction under the SADC Tribunal may belost. Trade is about the movement of factors of production thatincludes natural persons and shutting the door on them does notassist the process of integration. The common assumption forregional integration is of common political institutions and7Although SADC has concluded MoUs,Charters, Declarations, some members feelthat only protocols are the only instruments under thetreatyforimplementingit. The issue arose during the finalization and adoption the SADC RegionalAgricultural policy however some member states rejected an MoU as alegal means for implementing the policy.8 There are strong indications that personal jurisdiction before the Tribunalmay be lost altogether.

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legal frameworks. For co-operation to succeed there has to be abasic level of political agreement and a common set of liberaldemocratic institutions and the rule of law9. The proposedTripartite Free Trade Area (T-FTA) comprising the East AfricanCommunity, (EAC), COMESA and SADC, the Community offer a solutionto the problem of overlapping membership and an opportunity forgreater and deeper legal integration of the region10. The T-FTAwill be catalyst for harmonization of economic laws. The positiveaspect of the COMESA Euro-formula is the direct application ofsome of the devices for harmonization such as regulations,decisions and declarations. Regulations and decision are directapplication on all member states while directives are binding onthe state to which it is directed. It also makes recommendationwhich aim at harmonizing and approximating laws regulations for afunctional Common Market. An important aspect is that they do notrequire ratification by member states thereby enhancing legalintegration. SADC seeks to achieve this through the use ofprotocols that require ratification by member states and this issubject to political will and national priorities in memberstates. This presents challenges for harmonization and results inslowing down the process that should be hastened, thereby ‘makinghaste slow’.

In this paper I submit a case for harmonization of economic lawsin the region as a catalyst for deeper and functionalintegration. I maintain that the T-FTA though not a panacea ofthe institutional challenges to integration SADC faces, it willaccelerate the process of legal integration and harmonization. Ihold that SADC needs to put in place institutional mechanisms forapproximation and harmonization of economic laws that will9Collier, P. and Venables, T. 2008. “Trade and economic performance: DoesAfrica’s fragmentation matter? Annual Bank Conference on DevelopmentEconomics, Cape Town, South Africa, June 9-11.10A tripartite summit of the Heads of State and Government of COMESA, SADC andEAC countries was held in Kampala, Uganda on 22 October 2008. The Summitapproved the expeditious establishment of a free trade area encompassing themember states of the three RIAs. Integrating the three regional communities isseen as an important step in building the African Economic Community envisagedin the Abuja Treaty.

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enhance economic exchanges and raise living and working standardsin the region.

View Point

One positive aspect of colonial confrontation in Africa11 is thatit strengthened bonds of brotherhood, solidarity and cooperationin fields of politics, commerce and security12. African stateshaving seen the benefits of cooperation sought to build on theirsuccess by cooperating in economic and commercial matters foreconomic reconstruction13. The preferred mode has been

11 The Scramble for Africa was the invasion, occupation, colonization, andannexation of African countries by the European imperial powers during theNew Imperialism (1870–1914) period, effected between 1881 and 1914.Consequent to the political and economic rivalries among the Europeanempires, in the last quarter of the 19th century, the partitioning ofAfrica was how the Europeans avoided warring amongst themselves overAfrica. The last 59 years of the 19th century featured the transition from"informal imperialism" (hegemony) by military influence and economicdominance, to the direct rule of colonies.Education Support Network “TheScramble for Africa” http://esnet.oneworld.net/sections/the-scramble-for-africa/(accessed January, 2013).

12 Paragraph 1 of the Constitutive Act of the African union begins withan exhortation of the … “ the noble ideals which guided the foundingfathers of our Continental Organization and generations of Pan-Africanists in their determination to promote unity, solidarity,cohesion and cooperation among the peoples of Africa and African States.Anonymous “the Constitutive Act of the African Union”http://au.int/en/sites/default/files/ConstitutiveAct_EN.pdf(accessedJanuary, 2013).

13 See Article 3 (l) of the AU Treaty. Generally for the need forharmonisation of economic law in the SINO-SADC economic relations; seeparagraphs 15 and 16 the Beijing declaration of the Fifth MinisterialConference of the Forum on China-Africa Cooperation. The Ministry ofForeign Affairs of the People’s Republic of China “Beijing Declaration ofthe Fifth Ministerial Conference of the Forum on China-AfricaCorporation” http://www.fmprc.gov.cn/eng/zxxx/t953958.htm(Accessed 10September, 2012). The FOCAC is a collective consultation and dialogue mechanism betweenChina and African countries launched in 2000.

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continental integration to be achieved through deeper regionalintegration on the altar of trade and investment.

One of the challenges has been geography and the size of nationalmarkets. Most of the national markets are small and a number ofthe countries are landlocked14. To overcome these challengesthere has been a temptation to conclude number of regionalintegration arrangements across the continent, in some cases withsignificant membership overlaps in a move to improve theireconomic competiveness through economies of scale15. This hasbeen a challenge for regional arrangements. The historicalcontext in which most of the RECs were founded presents a furtherchallenge. They set out as political institutions with the goalof independence from colonial occupation. After independence orin periods after independence the newly independent states had todeliver economic prosperity16.The challenge has been intransforming institutions and infrastructures hanging over fromindependence movements into economic tools for economicreconstruction. For instance SADC has it origin the FrontlineStates Movement from which the South African DevelopmentCoordinating Conference (SADCC) (The conference) was formed. TheConference’s goal was development and not market integration17.It is only in 1992when SADC was formed that the region adopted amarket integration paradigm18.

14TrudiHartzenberg, ‘Regional Integration in Africa’, WTO, Staff Working PaperERSD-2011-14.www.wto.org/english/res_e/reser_e/ersd201114_e.pdf15Erasmus, G. 2011. ‘Deeper Regional Integration in SADC. Will EPAs undermine the process?’ Working Paper, Trade Law Centre for Southern Africa.16See,PascalLamy ‘The Challenge of Integrating Africa into the World Economy’,in Christopher Clapham, Greg Mills, Anna Morner and Elizabeth Sidiropoulos (eds) ‘Regional Integration in Southern Africa: Comparative International Perspectives’, South African Institute of International Affairs,17 For the history of SADC see www.sadc.int18McCarthy, C.. 2007. Is African economic integration in need of a paradigm change? Thinking out of the box on African integration.In: Bösl, A. et al. (eds.), Monitoring Regional Integration inSouthern Africa, Yearbook Vol. 6 – 2007. Stellenbosch: Trade Law Centre for Southern Africa.

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Regional Economic Communities (RECs)such as SADC19,COMESA20 andEAC21have been the preferred building blocks for continentalintegration22 as spelt out in the Lagos Plan of Action and theFinal Act of Lagos of April 1980, the Treaty establishing theAfrican Economic Community (AEC)23and the Constitutive Act (theAct) of the African Union24. Success or failure of such schemesdepends on the extent to which individual RECs facilitate tradeand investment flows25. Central to this is a legal framework thatconstructs a level economic space for growth and development26.Such a framework reduces legal uncertainly, transactional costsand costs of inter-state dispute settlement. It is a harmonizedand rationalized legal framework27.

SADC faces both challenges and opportunities for harmonizationand rationalization of its economic and business laws. Theserange from multiple memberships, lack of harmonization mechanismsuch as directives or common frameworks like the EU’s CommonFrame of Reference for Contract law28or Uniform Acts in the case19 See www.sadc.int.20 See www.comesa.int.21 See www.eac.int.22 Art. 28 of the AEC Treaty; Art.3 of the AU Act.23 Organisation of African Unity (OAU) “Treaty Establishing the African

Economic Community”http://www.africa-union.org/root/au/Documents/Treaties/Text/AEC_Treaty_1991.pdf (accessed...).

24 See Art.3 (l) of the Act; the African Union “Banjul Declaration” athttp://www.fasngo.org/assets/files/resources/Banjul_Declaration_june_06.pdf.

25 Anonymous “The New Partnership for Africa’s Development (NEPAD)”http://www.nepad.org/system/files/framework_0.pdf (accessed 10 September,2012).

26 Pascal Lamy ‘The Challenge of Integrating Africa into the World Economy’, South African Institute of International Affairs on 21 June.27 Stefan Vogenauer and Stephen Weatherill “The Harmonisation of European

Contract Law: Implications for European Private Laws, Business and LegalPractice” (2006), p. 50.

28 The Common Frame of Reference (CFR) is a long-term project which aims atproviding the European Legislators (Commission, Council and EuropeanParliament) with a "toolbox" or a handbook to be used for the revision ofexisting and the preparation of new legislation in the area of contractlaw. This toolbox could contain fundamental principles of contract law,

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of OHADA29. There are also institutional weaknesses such as lackof policy direction, duplication, poor policy coordination anddifferent levels of judicial activism30.

On 12th June 2011 COMESA, SADC and EAC31 launched negotiations fora Tripartite Free Trade Area (T-FTA) among the three RECs32. Thiswill establish an integrated market of 26 countries with acombined population of nearly 600 million people and a totalGross Domestic Product (GDP) of approximately US$1.0 trillion33.The T-FTA is an acknowledgement that an internal market cannot be

definitions of key concepts and model provisions. Council of the EuropeanUnion “Draft report to the Council on the setting up of a Common Frame ofReference for European Contract Law”http://ec.europa.eu/consumers/rights/concl_JHAC_0408_en.pdf(accessedMarch, 2013).

29 OHADA is an international organisation that was created by a treaty on17th October, 1993 signed at Port-Louis (Mauritius) by 16 African States(the membership is growing with more countries such as DRC Congo andGhana expressing interest to join. The membership is predominantly Frenchspeaking). It seeks to strengthen the African Legal system by enacting asecure legal framework for the conduct of business which essential to thedevelopment of the continent. The Principal aim of OHADA (art.1 of thetreaty) is to unify business law across the membership and to promotearbitration as a means of settling contractual disputes. Part II,Articles 5-12 of the treaty on the harmonisation of business law inAfrica. OHADA “Treaty on the Harmonisation of Business Law in Africa”http://www.jurisint.org/ohada/text/text.01.en.html (Accessed 20 may,2012). See also Boris Martor, Nanette Pilkington, David S. Sellers andSebastienThouvenot “Business Law in Africa: OHADA and the HarmonisationProcess” (2007) at 1-3.

30 The role of dispute settlement mechanism in providing orderly, timely andeffective resolution of disputes, Interpretation of obligations in aninternal market needs no emphasis. It is a catalyst for deeperintegration and facilitates cross border economic exchange. Thedominating argument here is that legal uncertainty represents aninvestment risk for both domestic and foreign investors. Legaluncertainty can be caused not only by imperfect national legal systems,but also by the different natures of legal systems in the internationalspectrum. Helmut Wegner “Legal Uncertainty: Is Harmonization of law theRight Answer? A ShortOverview”http://www.fernuni-hagen.de/FBWIWI/forschung/beitraege/pdf/db444.pdf.

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functional without rationalization and harmonization of economicpolicies and regulatory frameworks34.The objective of the T-FTAis strengthening and deepening economic integration of the regionthrough the establishment of a larger market, with a singleeconomic space35. This would be achieved through variousinitiatives aimed at harmonizing policies and programmes of thethree regional economic communities (RECs) in the areas of trade,customs and infrastructure development, and implementing these ina coordinated manner, and wherever possible jointly36.

31 The East African Community (EAC) is the regional intergovernmentalorganization of the Republics of Burundi, Kenya, Rwanda, the UnitedRepublic of Tanzania, and the Republic of Uganda, with its headquartersin Arusha, Tanzania. The Treaty for Establishment of the East AfricanCommunity was signed on 30 November 1999 and entered into force on 7 July2000 following its ratification by the original three Partner States –Kenya, Tanzania and Uganda. The Republic of Rwanda and the Republic ofBurundi acceded to the EAC Treaty on 18 June 2007 and became full Membersof the Community with effect from 1 July 2007. See East African Communitywebpage http://www.eac.int/index.php?option=com_content&view=article&id=1&Itemid=53.

32 See SADC webpage at http://www.sadc.int/news/communique-of-the-second-comesa-eac-sadc-tripartite-summit/.

33 COMESA, EAC and SADC “Communiqué of the Second COMESA-EAC-SADC TripartiteSummit” (2011)http://www.comesa-eac-sadc-tripartite.org/sites/default/files/documents/Communique%20of%20the%202nd%20Tripartite%20Summit%20-%20English%20-%2012.06.2011.pdf( accessed 1October, 2011).

34 Ndulo, Muna, "Harmonisation of Trade Laws in the African EconomicCommunity" (1993). Cornell Law Faculty Publications. Paper65.http://scholarship.law.cornell.edu/facpub.

35 COMESA, EAC and SADC “Communiqué of the Second COMESA-EAC-SADC TripartiteSummit: Focal Area 1: The Tripartite Free Trade Area (FTA)” (2011)http://www.comesa-eac-sadctripartite.org/intervention/focal_areas/tripartite_fta.

36 COMESA, EAC and SADC “Communiqué of the Second COMESA-EAC-SADC TripartiteSummit” (2011)http://www.comesa-eac-sadc-tripartite.org/sites/default/files/documents/Communique%20of%20the%202nd%20Tripartite%20Summit%20-%20English%20-%2012.06.2011.pdf( accessed 1October, 2011).

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The (T-FTA) seeks among others harmonization and improvement offunctionality of regional trading arrangements and programmes,including establishing a Tripartite Free Trade Area as a steptowards the African Economic Community. Some of the benefits ofthe T-FTA will include enhancement of trade facilitation toimprove the flow of goods along transport corridors by loweringtransit times and the cost of trading. Joint planning andimplementation of infrastructure programmes which mainly compriseof surface (road, rail, border posts, and seaports) and airtransport, ICT and energy. Enhancing physical interconnectivitythrough infrastructure development and improving operationalefficiencies of border crossings and seaports are importantfactors f or a functional internal market. The T-FTA will alsoenhance the free movement of factors of production.

The Tripartite also addresses challenges of overlappingmembership through harmonizing programmes across the three RECs.In the context of harmonization; the T-FTA will play a vital rolein internal market harmonization37. Legal harmonization can behorizontal or vertical. Opinion is divided on the impact ofregional initiatives on vertical (domestic) harmonization. Onestrand is that as a regional process it is of little value tovertical harmonization38. This cannot be particularly true. This37 Harmonization is often confused with unification or standardization.

Harmonization is procedural while unification is substantive, relativeand specific and usually hard to achieve in a regional membership with asdiverse legal traditions and developmental stages as SADC.

38 Generally see M. Faure ‘Towards a Maximum Harmonization of ConsumerContract Law?’ (2008) Maastricht Journal of Transnational and International Law, 440;P. Rott and E. Terre, ‘The Proposal for a Directive on Consumer Rights:No Single Set of Rules’ (2009) Festschrift fürEuropäischesPrivatrecht, 460; H. W.Micklitz and N. Reich ‘CrónicadeUnaMuerteAnunciada: The CommissionProposal for a Directive on Consumer Rights’ (2009) Common Market Law Review471; S. Whittaker ’Unfair Contract Terms and Consumer Guarantees: TheProposal for directive on Consumer Rights and the Significance of FullHarmonization’ (2009) European Review of Contract Law 223; C. Twigg-Flessner andD. Metcalfe ‘The Proposed Consumer Rights Directive-Less Haste, MoreThought?’ (2009) European Review of Contract Law 368; J. Smits, ‘FullHarmonization of Consumer Law? A Critique of the Draft Directive onConsumer Rights’ (2010) European Review of Private Law 9; G.Low ‘The(ir)relevance of Harmonization and Legal Diversity to European Contract

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position ignores the vertical relationship or interface ofregional and domestic laws. These are mutually reinforcing.Regional standards set benchmarks against which domestic laws aremeasured for compliance. This is the case of the EU where forexample in the case of the UK, under Section 4 of the HumanRights Act 199839, UK courts can make a declaration ofincompatibility if a state measure or decision is in conflictwith Convention Rights40. The same position obtains under Article10 of the OHADA treaty. This position was confirmed by the CommonCourt for Justice and Arbitration (CCJA)41 in its advisoryopinion on 30thApril 2001, sought by Cote dIvoire in relation tothe direct applicability of the treaty and the interpretationwhere domestic legislation is in conflict with the treaty. Thecourts position was the effect of Article 10 was to abrogate andprohibit a national legislative or regulatory provision that has

Law: A Perspective from Psychology’ (2010) European Review of Private Law 288;M. Ebers ‘De la armonizaciónmínima a laarmonización plena. La propuestade Directivasobrederechos de los consumidores’ (2010) InDret 2/2010athttp://www.indret.com/pdf/732_es.pdf (accessed 25 January 2011); M.Loos ‘Full Harmonization as a Regulatory Concept and its Consequences forthe National Legal Orders. The Example of the Consumer Rights Directive’University of Amsterdam, Centre for the Study of European Contract Law, Working Paper 2010/03.

39 Section 4 of the Human Rights Act applies in any proceedings in which acourt determines whether a provision of primary legislation is compatiblewith a Convention right. If the court is satisfied that the provision isincompatible with a Convention right, it may make a declaration of thatincompatibility.http://www.legislation.gov.uk/ukpga/1998/42/section/4. See also (on the application of SylvianePierrette Morris) R v WestminsterCity Council & First Secretary of State 2005 (No. 3)(Court of Appeal EWCA Civ 1184;14 October 2005), R (on the application of Alconbury Developments Ltd.) vSecretary of State for the Environment, Transport and the Regions(Administrative Court; [2001] HRLR 2; 13 December 2000), R (on theapplication of H) v Mental Health Review Tribunal for the North and EastLondon Region & The Secretary of State for Health (Court of Appeal;[2001] EWCA Civ 415; 28 March 2001).

40 European Court of Human Rights “European Convention on Human Rights”http://www.echr.coe.int/NR/rdonlyres/D5CC24A7-DC13-4318-B457-5C9014916D7A/0/Convention_ENG.pdf(accessed 20 January, 2013).

41 Established under article ………It has two types of function i.e.,judicial (Article 14) and arbitral (Article 35 of the Uniform Act onarbitration law.

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the same purpose as the Uniform Acts42. This has a harmonizingeffect across the membership.

The importance of legal harmonization (harmonization) infacilitating economic exchange needs no emphasis. As a processharmonization requires consensus building over priorityareas43that are ripe for harmonization and its scope44. There isneed for the region to decide whether it is opting for full,partial or incremental or optional harmonization45.In view of theheterogeneous levels of economic development of member states,incremental harmonization would be a feasible option. The regionneeds to settle these questions as they impact on harmonizationmethodologies and approaches. It is also important to buildconsensus and common approach to the process46. The absence of aharmonizing mechanism is a major challenge for legal integrationin SADC.

Regional cooperation promotes complimentary and sustainabledevelopment in member states47 through the reinforcement ofregional infrastructures. It also reinforces an efficient paymentsystem, greater access to credit and a more interrelatedinstitutional system48. Further cooperation engenders greater

42 Boris Martor, Nanette Pilkington, David S. Sellers and SebastienThouvenot(2007) “Business Law in Africa: OHADA and the Harmonisation Process”, GMBPublishing Ltd (London) at 9-12.

43 For instance see, article 28 (2) of AEC treaty. 44 The treaty of SADC talks of priority areas for cooperation in Article 21.

The treaty lists such areas that include trade and investment. As theregions attains deeper integration this will b extended to moreareas.

45 Fernando Gomez and Juan Jose Ganuza “An economic analysis ofharmonization regimes: Full Harmonization, Minimum Harmonization orOptional Instrument?”http://ec.europa.eu/justice/news/consulting_public/0052/contributions/166_en.pdf(accessed 19th February, 2013).

46 See Pascal Lamy ‘The Challenge of Integrating Africa into the World Economy’, South African Institute of International Affairs on 21 June2000.47 Malang, Z. S ‘Economic Integration in the Asian Region: Harmonization of

Law’ (2007) Mindanao Law Journal 1, 34-53. 48 As above note, n.9, OHADA Treaty.

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mutual awareness among economic agents in member states andthrough technical complementarities and integration of theproductive sectors across the membership that is critical toharmonization and deeper integration of regional economies49.

The rationale for legal harmonization is that it facilitates themovement of factors of production50through legal rules that aresimple, modern and adaptable51.The economic case forharmonization is the reduction of legal instability,uncertainty52of cross-border transactions and litigation costs53.This facilitates economic exchange and enhances living andworking standards54 through job creation and widening economicchoices55.SADC as a region seeks to promote sustainable andequitable economic growth56 and socio-economic development57 that

49 Ndulo, Muna, ‘Harmonisation of Trade Laws in the African EconomicCommunity’ (1993). Cornell Law Faculty Publications.Paper 65http://scholarship.law.cornell.edu/facpub, p.104.

50 Helmut Wagner “Legal Uncertainty – Is Harmonization of Law the RightAnswer? A Short Overview” (2009)http://www.fernuni-hagen.de/FBWIWI/forschung/beitraege/pdf/db444.pdf.

51 See also Paragraph 5 of the preamble to the OHADA Treaty, as above,note n.952 Legal uncertainty always occurs when individual actors are uncertain of

the effects of the provisions of the dominant legal system on the resultsof their actions. In the wider sense, the term covers both “subjective”and “objective” legal uncertainty

53 G. Wagner ‘The Economics of Harmonization: the Case of Contract Law’(2002) Common Market Law Review 39, 995; M. Faure ‘How Law and Economics MayContribute to the Harmonization of Tort Law in Europe’.

54 Art.5 (a), Art.21 (2) and (3) of SADC Treaty, Arts.3 (i) and (j) of AUAct);See also Green Paper from the European Commission on policy optionsfor progress towards a European ContractLaw for consumers and businesses, of 1 July 2010 (COM (2010) 348 final).

55 Fernando Gomez and Juan Jose Ganuza ‘An economic analysis ofharmonization regimes: Full Harmonization, Minimum Harmonization orOptional Instrument?’

56 Member states make this common commitment in paragraph 4 of thepreamble to the Declaration and Treaty ofSADC.http://www.sadc.int/english/key-documents/declaration-and-treaty-of-sadc/#preamble

57 See Article 5 (1) (a) of the Treaty. See also Article 3 (c ) and Article3 (j) of the AU Treaty.

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ensures poverty alleviation and reduction. It seeks to enhancethe standard and quality of life of the people in region58 and tosupport the socially disadvantaged through regionalintegration59.It seeks to achieve this through cooperation60 andharmonization of political and socio-economic policies in theregion61.Realization of these goals depend on institutionalframeworks anchored on a legal framework that is modernized,adaptable, predictable and facilitates economic exchange62.

Law is an integration enabler and SADC needs to considerchallenges and opportunities for harmonization andrationalization in the region if it is to realize it objectivesof deeper integration63. There is a strong economic case forharmonization of economic laws in the region as it will reducelegal uncertainly and facilitate trade and investment in theregion through reduction of transactional costs. The proposed T-FTA will partially resolve the issue of overlapping membershipand greater avenue and scope for legal harmonization64. Finallyinstitutional weaknesses and corporate governance challengesacross the region accounts for limited integration need to beaddressed.

Purpose: To critically review the economic case for harmonizationof economic laws in the SADC region and how the current state ofplay fits into the proposed T-FTAmatrix.

Findings: Law is a critical factor in the creation of economicspace. However its efficacy in a single or common market dependson the level of harmonization and rationalization of the legal58 Article 5 of the treaty.59 Article.5 (1) (a) of the Treaty as read with Article 3 (l) of the AU

Treaty. See also Article…...of the SADC Charter of Fundament al SocialRights. These goals are also shared with both COMESA (Article…) and theEast African Community (Article … of the EAC).

60 Article 21 of the treaty.61 Article.5 (2) (a).62 Article.4 of AEC Treaty.63 Institutional frameworks such as AU, AEC, SADC, COMESA, OHADA seek legal

harmonisation as a critical factor in economic integration, See notes 10,28 and 29 above.

64 Article 5 (1) (a) of the treaty as amended.Page 16 of 46

framework. Harmonization facilitates deeper integration througheffective dispute resolution, business forecast and reduction oftransaction costs through simpler, modern and adaptable rules forconducting business. SADC needs to adopt a legal harmonizationmechanism that will aid approximation of its economic laws andimprove the region’s international competitiveness for trade andinvestment.

Originality/Value: For functional regional integration or T-FTA,harmonization of social and economic policies is a criticalfactor. Both the AU65 and OAU envision continental integrationanchored on harmonization and rationalization66. SADC providesthis in Article 5(1) (a) of the treaty.

Methodology: Social economic analysis of law.Relevance: The paper contributes to the debate onharmonization of economic laws in the region and itscontribution to the construction of economic space for deeperglobal economic integration.Keyword: Economic law, legal harmonization, governance, regionalintegration, Zolomphi Nkowani.

Introduction

The landscape for business is replete with efforts at harmonizinglaws and policies for the conduct of business and commerce bothdomestic as well as global. There is global consensus thatburdensome regulatory rules area burden on business67and a65 Ministry of Home Affairs of the People’s Republic of China 15 and 16 the

“Beijing declaration of the Fifth Ministerial Conference of the Forum onChina-Africa Cooperation” Par 15 and 16http://www.fmprc.gov.cn/eng/zxxx/t953958.htm (Accessed 10September,2012).The FOCAC is a collective consultation and dialogue mechanismbetween China and African countries launched in 2000

66 See paragraph 7 of the Preamble to the Constitutive Act of the AfricanUnion as read with 67 Doing Business “Smarter Regulations for Small and Medium-Size

Enterprises” http://www.doingbusiness.org/~/media/GIAWB/Doing%20Business/Documents/Annual-Reports/English/DB13-full-report.pdf

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constraint on the movement of factors of production68.Withefforts for legal harmonization69, as evidenced by law reform andreview programs across the membership70and internationally71asevidenced by increasing number of model laws and Unified Acts inthe field of economic law both regionally and internationally.For instance in the area of International Sales Law, UnitedNations Convention on Contracts for the International Sale ofGoods(CISG, Vienna Convention)72is one example of internationalharmonization, supplemented by initiatives on transnational law,such as the UNIDROIT Principles of International CommercialContracts 200473. In the area of Contract Law, efforts at

(Accessed, 10th January, 2013).68 The Word Bank and European Union have supports national programmes for

the strengthening of business environment through the BESTAP programs. Inthe case of Malawi see,http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/AFR/2013/01/06/090224b0818648da/1_0/Rendered/PDF/Malawi000Busin0Report000Sequence010.pdf(accessed 10th January, 2013).

69 See note n.12 supra.70 In the case of Malawi visit the Malawi Law Commission webpage atwww.lawcom.mw.71 See for instance the New York Convention Guide athttp://www.newyorkconvention1958.org.72 United Nations Convention on Contracts for the International Sale of

Goods, Vienna, 11 April 1980, S.Treaty Document Number 98-9 (1984), UNDocument Number A/CONF 97/19, 1489 UNTS 3. The full text of the CISG isavailable in pdf format athttp://www.uncitral.org/uncitral/en/uncitral_texts/sale_goods/1980CISG.htmlat 22 December 2007.

73 See Unidroit webpage athttp://www.unidroit.org/english/principles/contracts/main.htm The newedition of the UNIDROIT Principles consists of 211 Articles (as opposedto the 120 Articles of the 1994 edition and the 185 Articles of the 2004edition) structured as follows: Preamble (unchanged); Chapter 1: Generalprovisions (unchanged); Chapter 2, Section 1: Formation (unchanged),Section 2: Authority of agents (unchanged); Chapter 3, Section 1: Generalprovisions (containing former Articles 3.1 (amended), 3.2, 3.3 and 3.19 (amended)),Section 2: Ground for avoidance (containing former Articles 3.4 to 3.16, 3.17(amended), 3.18 and 3.20, and a new Article 3.2.15), Section 3: Illegality (new);Chapter 4: Interpretation (unchanged); Chapter 5, Section 1: Content(unchanged), Section 2: Third Party Rights (unchanged), Section 3:Conditions (new); Chapter 6, Section 1: Performance in general(unchanged), Section 2: Hardship (unchanged); Chapter 7, Section 1: Non-

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European level are ongoing, with the Consumer Acquis, thePrinciples of European Contract Law (PECL)74and the Draft CommonFrame of Reference (DCFR)75.In the cse of the USA the UniformCommercial Code (UCC)76 has achieved harmonization to a largeextent in the U.S.Onthe AfricansceneOHADAprovides a fittingexample77. At continental and regional levels wehaveorganizationssuch as ACP78, COMESA and SADC as institutional examples. TheChina-Africa partnership on trade is another opportunity forSouth-South harmonisation of economic laws as the region expandsits trade and business relations eastwards79.

performance in general (unchanged), Section 2: Right to performance(unchanged), Section 3: Termination (containing former Articles 7.3.1 to 7.3.5, 7.3.6(amended) and a new Article 7.3.7), Section 4: Damages (unchanged); Chapter 8:Set-off (unchanged); Chapter 9, Section 1: Assignment of rights(unchanged), Section 2: Transfer of obligations (unchanged), Section 3:Assignment of contracts (unchanged); Chapter 10: Limitation periods(unchanged); Chapter 11, Section 1: Plurality of obligors (new), Section2: Plurality of obligees (new). See the UNIDROIT “Principles ofInternational Commercial Contract” athttp://www.unidroit.org/english/principles/contracts/main.htm.

74 Commission on European Contract Law “The Principles of European ContractLaw”http://frontpage.cbs.dk/law/commission_on_european_contract_law/Skabelon/pecl_engelsk.htm (accessed...).

75 Study Group on a European Civil Code and Research Group on EC Private Law(Acquis Group) “Draft Common Frame of Reference (DCFR)”http://ec.europa.eu/justice/contract/files/european-private-law_en.pdf(accessed 20 June,2013 )

76 The Uniform Commercial Code (UCC or the Code), first published in 1952,is one of a number of uniform acts that have been promulgated in conjunctionwith efforts to harmonize the law of sales and other commercial transactionsin all 50 states within the United States ofAmerica.Seehttp://www.law.cornell.edu/ucc/. (Accessed 21June, 2013)77 See note n.10supra.78 The African, Caribbean and Pacific Group of States (ACP) is a group of

countries in Africa, the Caribbean, and the Pacific that was created bythe Georgetown Agreement in 1975. The group's main objectives aresustainable development and poverty reduction within its member states,as well as their greater integration into the world's economy. All of themember states, except Cuba, are signatories to the Cotonou Agreement withthe European Union.

79 Ministry of Foreign Affairs of the People’s Republic of China “theBeijing declaration of the Fifth Ministerial Conference of the Forum on

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Increasedinternationalcommerce requires a system of harmonizedrules for the conduct of business and settlement of trade andinvestment disputes. At a global level is aided by the globaltrading rules as administered by the WTO to which most partiesare members80. This offers a template that can be adapted todomestic needs81. The need for investors to undertake riskassessment before choosing an investment destination coupled withthe need for clear, modernized and predictable rules for theconduct of international commerce makes harmonization andrationalization of economic laws an imperative82.

The SADC FTA creates a regional market worth US$360 billion witha total population of 170 million and includes economies growingby up to 7% a year. Angola and Congo DR are set to join the FTAadding a further US$71 billion and 77 million people to the SADCmarket83. SADC’s externaltrade relations alsooffer andopportunity andimperativefor legal harmonisation andrationalization84.

China-Africa Cooperation” http://www.fmprc.gov.cn/eng/zxxx/t953958.htm(Accessed 10 June, 2013).The FOCAC is a collective consultation anddialogue mechanism between China and African countries launched in 2000.

80 Generally visit www.wto.org for a list of member states and the varioustrade agreements, rules and procedures. Though bilateral and plurateraltrade and investment agreements are allowed, there is a requirement thatthey must be consistent with the members obligation under the WTO andcovered agreements. This has a harmonizing effect.

81 In the case of SADC see the preamble to the Consolidated protocolon Trade n the need to mindful of international obligations inparticular the WTO.

82 G Wagner ‘The Economics of Harmonization: The Case of Contract Law’(2002) Common Market Law Review995-1023; L.E. Ribstein and B. H. Kobayashi‘An Economic Analysis of Uniform State Laws’ (1996) Journal of LegalStudies131-199.

83 SADC Trade Database “Southern African Trade Database: 2006 country tradedata” http://www.sadctrade.org/tradedata(Accessed 10 June, 2013).

84 For example financial and non-financial investments relations betweenSADC and China are growing at a rapid pace, with China’s footprint in bothfinancial and non-financial investments in the region reaching nearly US$15billion in 2011See AfriqueJet News Informations athttp://www.afriquejet.com/financial-investments-2012021333223.html.

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Before we explore whether there is an economic case for legalharmonization; we need to understand what is meant by ‘legalharmonization85’ and ‘economic law’. Legal harmonization refersto cooperation between governments to make laws more uniform andcoherent86. It is a policy device that seeks to achieveuniformity in laws of member states to facilitate trade andsocio-economic development. As a process it ascertains admittedlimits of international unification but does not amount touniformity87. It is a process towards unification and isrelatively partial88, systematic and specific89. Member states mayonly seek to harmonize in specific agreed areas and only to anagreed extent90. It seeks to ‘effect an approximation or co-ordination of different legal provisions or systems byeliminating major differences and creating minimum standards91.It allows for coherence in diversity92.It is synonymous withconvergence of law however it is usually associated with activepursuit through enacting legislation. Convergence on the otherhand is associated with a passive approach such as naturalconvergence of law through custom and frequent use ofharmonizedprinciples.Harmonisationallows for better regulation,85 S Vogenauer and S WeatherillThe Harmonization of European Contract Law Implications

for European Private Laws, Business and Legal Practice (2006) at 49.86 F. Gomez The Economics of Harmonized Law-Making in Private Law: Mechanisms, Modes and

Standards in R. Brownsword, H ,Micklitz L Niglia S WeatherillFoundations ofEuropean Private Law (2010).

87 Supra at 49.88 Supra at no.5.89 Fernando Gomez and Juan Jose Ganuza “An economic analysis of

harmonization regimes: Full Harmonization, Minimum Harmonization orOptional Instrument?http://ec.europa.eu/justice/news/consulting_public/0052/contributions/166_en.pdf (accessed....).

90 BusinColombiCiacchi, A. “Non-Legislative Harmonisation of Private Lawunder the European Constitution: The Case of Unfair Suretyships”,(2005).13 “European Review of Private Law’’ page 285.

91 H Wegner ‘Legal Uncertainty: Is Harmonization of law the Right Answer? AShort Overview’ (2009) Discussion PaperNo.444http://www.fernunihagen.de/FBWIWI/forschung/beitraege/pdf/db444.pdf(accessed March, 2011).

92 An example of harmonization in international law is UNCITRAL (UnitedNations Commission on International Trade Law).

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stimulate competitiveness, and improve the functioning of aninternal market93.

Economic law on the other hand is a legal theory and system underwhich economic relations are a legal discipline independent ofcriminal and civil law94. It is a field of law that regulates thebehavior of states, international organizations and transnationalCorporations (TNCs)95 operating in the international arena. As asub-discipline of international law, subsumes the following93 G Wagner (2002) ‘The Economics of Harmonization: The Case of Contract

Law’ (2002) Common Market Law Review 39, 995-1023; Ribstein, L. E. and B. H.Kobayashi ‘An Economic Analysis of Uniform State Laws’ (1996) Journal of LegalStudies, 25 (1), 131-199.

94 Legal Information Institute “International Economic Law”http://topics.law.cornell.edu/wex/international_economic_law(Accessed 10June, 2013).

95 Any corporation that is registered and operates in more than one countryat a time; also called a multinational corporation. A transnational, ormultinational, corporation has its headquarters in one country andoperates wholly or partially owned subsidiaries in one or more othercountries. The subsidiaries report to the central headquarters. Thegrowth in the number and size of transnational corporations since the1950s has generated controversy because of their economic and politicalpower and the mobility and complexity of their operations. Some criticsargue that transnational corporations exhibit no loyalty to the countriesin which they are incorporated but act solely in their own bestinterests. Corporations have various motives for establishing a corporatepresence in other countries. One possible motive is a desire for growth.A corporation may have reached a plateau meeting domestic demands andanticipate little additional growth. A new foreign market might provideopportunities for new growth. Other corporations desire to escape theprotectionist policies of an importing country. Through direct foreigninvestment, a corporation can bypass high tariffs that prevent its goodsfrom being competitively priced. For example, when the European CommonMarket (the predecessor of the European Union) placed tariffs on goodsproduced by outsiders, U.S. corporations responded by setting up Europeansubsidiaries. Two other motives are more controversial. One is preventingcompetition. The most certain method of preventing actual or potentialcompetition from foreign businesses is to acquire those businesses.Another motive for establishing subsidiaries in other nations is toreduce costs, mainly through the use of cheap foreign labor in developingcountries. A transnational corporation can hold down costs by shiftingsome or all of its production facilities abroad. See http://legal-

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fields: Regional economic integration agreements, Internationallaw and development; International intellectual property law;International business regulation; International trade andAspects of law. It deals with legal issues arising from theglobalization of the world economy. It examines both the widerissues of governance of the world economy and the specific legalissues arising from various types of international businesstransactions such as dispute settlement.

For a discussion on harmonization of economic laws96it isimportant to explore whether there is an economic case forharmonization97 of laws generally98and economic laws inparticular99. Professor MunaNdulosetsus out well on this point inhis article"Harmonisation of Trade Laws in the African EconomicCommunity"100, where he states that a programme of regionaleconomic integration harmonization of economic laws and

dictionary.thefreedictionary.com/Transnational+Corporation

96 Unlike unification which contemplates the substitution of two or morelegal systems with one single system, harmonization of law arisesexclusively in comparative law literature, and especially in conjunctionwith inter-jurisdictional, private transactions. See Kamba (1974) 23 ICLQ485, 501, also de Cruz P. (1999). Comparative Law in a Changing World (1999).

97 Harmonization is synonymous with convergence of the law howeverharmonization is usually associated via active pursuit through enactinglegislation whereas convergence is generally associated with a passiveapproach such as a natural convergence of law through custom and frequentuse of harmonized principles. The most prominent example of harmonizationin international law is UNCITRAL (United Nations Commission onInternational Trade Law).

98 Malang, Z.S. ‘Economic Integration in the Asian Region: Harmonisation ofLaw’ (2007) Mindanao Law Journal 1 34-53.

99 Wegner H. ‘Legal Uncertainty: Is Harmonisation of law the Right Answer? AShort Overview’ (2009) Discussion PaperNo.444http://www.fernuni-hagen.de/FBWIWI/forschung/beitraege/pdf/db444.pdf(accessed 17 November, 2010).

100 Ndulo, Muna ‘Harmonisation of Trade Laws in the African EconomicCommunity’ (1993). Cornell Law Faculty Publications. Paper65.http://scholarship.law.cornell.edu/facpub.

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commercial practice is a vital component of the agenda101.Economic integration requires a legal framework to foster andsupport it. A harmonized legal framework is vital for the reasonthat divergences and conflicts arising from laws or legalframeworks of different states in international trade, not onlyare they Non-Tariff Barriers to Trade (NTB)102 but also anobstacle to economic relations103. Economic and social integrationdemands an application in the member states of economic laws thatare simple, modern and clearer and adaptable104. It is essentialthat this law be applied with diligence in such conditions so asto guarantee legal stability and encourage investment105.Law is anecessary factor in the construction of economic space106 andlegal diversity negates the harmonizing effect of economicintegration. Consumers as well as producers tend to refrain fromcontracts in foreign legal systems if the costs of information101 Supra.102 Article 1 of the SADC Protocol on trade Non-Tariff Barrier as any barrier

to trade other than import and export duties. Export duties are definedas any duties or charges of equivalent effect imposed on, or inconnection with, the exportation of goods from any Member State to aconsignee in another Member State. Import duties are defined as meansCustoms duties or charges of equivalent effect imposed on, or inconnection with, the importation of goods consigned from any Member Stateto a consignee in another Member State; Seehttp://www.sadc.int/files/6213/2808/8365/CONSOLIDATED_PROTOCOL_ON_TRADE_vers_30-01-2012.pdf

103 See “Progressive Development of the law of International Trade: Report ofthe Secretary General: Official Records of the General Assembly, twenty-first Sessions, Annexes agenda item 88, docs.A/6396Add 1an d2. See alsosee Ndulo, Munasupra.

104 See Preamble to the OHADA Treaty on the Harmonisation of business Laws inAfrica. http://www.jurisint.org/ohada/text/text.01.en.html.

105 Supra also see F. Gomez ‘The Harmonization of Contract Law throughEuropean Rules: A Law and Economics Perspective’ (2008) European Review ofContract Law 89; F. Chirico, ‘The Function of European Contract Law: AnEconomic Analysis’ 2008 Tilburg Institute of Law and Economics Working Paper ; W. H.van Boom, ‘Harmonizing Tort Law: A Comparative Tort Law and EconomicAnalysis’ (2008) Rotterdam Institute of Private Law, Working Paper Series athttp://papers.ssrn.com/sol3/papers.cfm?abstract_id=1156739.

106 North, D. C ‘Economic Performance through Time’ (1994)American EconomicReview, 84 (3), 359-368; Malang, Z. S. ‘Economic Integration in the AsianRegion: Harmonization of Law’ (2007) Mindanao Law Journal, 1, 34-53.

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(about the law, about administrative procedures, about competentlegal advice) and/or the costs of enforcement (by way oflitigation or alternative forms of dispute resolution) seem toohigh or unpredictable107. This unpredictability or uncertaintyabout the costs of cross-border transactions may stem from thediversity in the formal legal system or diversity in judicialadministration across the individual member countries108.

Literature indicates that legal diversity increases transactionalcost and lowers trade and welfare109by creating legaluncertainty110. Legal uncertainty occurs when individual actorsare uncertain of the effects of the provisions of the dominantlegal system on the results of their actions. This covers both“subjective” and “objective” legal uncertainty111.Legal diversityincreases the cost of cross-border transactions112, discouragesconsumers, limits choice113 and discourages small entrepreneursfrom engaging in intra-state economic activities114.

107 Wegner, H.. ‘Legal Uncertainty: Is Harmonisation of law the Right Answer?A Short Overview’ (2009) Discussion Paper No.444 1 http://www.fernuni-hagen.de/FBWIWI/forschung/beitraege/pdf/db444.pdf (accessed 17 November,2010).

108 See Carbonara, E. and F. Parisi ‘The Paradox of Legal Harmonization’(2007) Legal Studies Research Paper No. 07-14, University of Minnesota Law School.

109 European Commission (EC) (2008) White Paper on Damages for Breach of theEU Antitrust Rules.COM (2008) 165 final (02.04.2008) http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:52008DC0165:EN:NOT.

110 Gilles Cistac,. ‘The harmonisation of national legal and RegulatoryFramework as a Strategy to fast track the mainstreaming of regionalIntegration in National Development Plans’ Presented at the Second InternationalConference on Regional Integration and SADC Law, Maputo, 9—11 November, 2010.

111 H. Wagner, ‘Costs of Legal Uncertainty: Is Harmonization of Law a GoodSolution?’ (2007) University of Hagen Department of Economics, Working Paper 3

112 Kneller, R., M. Pisu and Z. Yu ‘Overseas business Costs and Firm ExportPerformance’ (2008) Canadian Journal of Economics 41, 20,639-669.

113 EC “Green Paper on Damages for Breach of EU Antitrust Rules”. (2005)http://www.hg.org/articles/article_1489.html( accessed 12 September,2012).

114 Wagner H. Economic Analysis of Cross-Border Legal Uncertainty: the Example of the EuropeanUnion, in Jan Smits (ed), the Need for a European Contract law. Empirical and Legal Perspectives(2005) See also Cistac G. Below.

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ECONOMIC FOUNDATIONS OF THE SOUTHERN AFRICAN DEVELOPMENTCOMMUNITY (SADC)115

In order to understand SADC’s economic foundations116one needsreflect on its history117. Our first port of call is its treaty118.SADC’s objective is to promote sustainable and equitable economicgrowth and socio-economic development in the region119 throughefficient productive systems120, deeper co-operation andintegration121, good governance and durable peace and security122.The understanding is that through this formula the region wouldemerge as a competitive and effective player in the globaleconomy123. The attainment of these objectives is premised onprinciples of sovereign equality of member states, solidarity,peace and security, human rights, democracy, rule of law andpeaceful settlement of disputes among others124. In furtherance ofthese goals SADC focuses on key enablers for deeper regional115 For a historical development of SADC visit www.sadc.int116 See President Armando Emilio Guebuza’s forward to the revised strategic

indicative plan II for the organ athttp://www.sadc.int/files/7013/5427/5235/SADC_SIPO_II__Final.pdf pp5-6.

117 Independence, security, regional solidarity and the fight againstapartheid were the original motives for the Southern African DevelopmentCommunity (SADC). SADC seeks to form common political interests andsupport greater trade and investment flows between members. See alsoNkowani, Z. ‘The SADC Finance and Investment protocol and the ProposedFinancial services law for Malawi: Reflections in Retrospect’ (2009)Malawi Law Journal [ISSN 1996-7675]. http://www.lawjournal.mw .

118 Available athttp://www.sadc.int/key_documents/treaties/sadc_treaty_amended.php(accessed 18 February 2009).

119 Article 5 (1) (a) of the Declaration and Treaty as amended ( the Treaty).120 See article 2 of SADC Protocol on Trade121 Article 2 of the Trade protocol seeks to further liberalize intra-

regional trade in goods and services on the basis of fair, mutuallyequitable and beneficial trade arrangements, complemented by

122 Article 5 (1) (a) of the Treaty.123 Z Nkowani ‘When elephants dance, FDI and the SADC charter of fundamental

social rights; A beacon of hope or confusion compounded?’Commonwealth LawBulletin, Volume 33, Issue 1 (2007) 41.

124 Article 4 of the Treaty. The ongoing boarder dispute between Malawi andTanzania is a litmus test on the region’s capacity and resolve forpeaceful resolution of disputes between states in the region.

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integration125such as public and corporate governance126. There isa shared understanding that the convergence of the region'seconomies and deeper integration will not be attained in theabsence of sound macroeconomic management; transparent publicfinancial management, first-class banking supervision andeffective financial regulation127 as well as harmonisation andrationalization of socio-economic policies128. To attain thisregion has a business plan in the form of a Regional IndicativeStrategic Development Plan (RISDP) adopted in 2003129. Onecritical area for functional regional integration is trade,finance and investment. In the area of finance and investment theRISDP sets out specific targets to be achieved such as creationof a Free-Trade Area (FTA) which came into effect on 1st January2008, a Customs Union (CU) by 2010, a Common Market by 2015, aMonetary Union by 2016 and single currency by 2018. This is abroad and ambitious vision conditioned on structural reforms inintegration enabling areas such as trade, finance and capitalmarkets.

Article 5 (1) (a), article 5 (i) and Article 5 (2) (g) of thetreaty provides a foundational base for financial servicesregulation. The treaty places co-cooperation at the heart of itsmethodology130. Member states are to coordinate, rationalize andharmonize their macro-economic policies, strategies, programmesand projects131. The treaty sets out priority areas for

125 The importance of financial service to poverty eradication is reiteratedin the recent SADC Declaration on Poverty Eradication and SustainableDevelopment. In particular paragraphs 2(iii) and2(vii).http://www.sadc.int/conference/content/english/SADC%20Declaration%20on%20Poverty%20Eradication%20and%20Sustainable%20Development.pdf(accessed 18 February 2009).

126 Article 5 (2) (g) of the Treaty.127 SADC MOU on macro-economic convergence at

http://www.sadc.int/files/6513/5333/7917/Memorandum_of_Understanding_on_Macroeconomic_Convergence2011.pdf.

128 Article 5 of the treaty129 Supra.What is the RSIDP? Explain it130 Article 21 of the Treaty.131 Article 5 (2) (a) and (d)

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cooperation that include infrastructure, services132, trade,industry, finance and investment133. The treaty is implemented byProtocols134 and for trade and investment; the first package comesunder the Consolidated Protocol on Trade (1996)135 (theprotocol).Article 3 of the Protocol Article 22 of the tradeProtocol encourages member states to facilitate cross borderinvestment. Under article 23 of the trade Protocol membersrecognize the central role of financial services in the region.Member states further commit to adopting policies in line withtheir multilateral obligations such as under the WTO’s GeneralAgreement on Trade in Services (GATS) with a view to liberalizingservice sectors such as financial services136. Article 23 presentsanother avenue for harmonisation i.e. both regional andinternational aspects of regulation need to inform domesticpolicy both in terms of content and application. GATS defineservices trade in four ways known as ‘modes’. Of relevance to ourdiscussion is ‘Mode 3’, also referred to as ‘commercial presence’.Two fundamental principles of the global trading system are; (1)Most Favored Nation Treatment (MFN)137 and (2) National Treatment(NT)138. The former applies at the border and the later appliesinside the border. As a general rule under an MFN clause, eachmember of the WTO has to accord immediately and unconditionallyto services and service suppliers of any other member statetreatment no less favorable than that it accords to like servicesand service suppliers of any other country139.

132 Article 21 (3) (b) of the Treaty.133 Article 21 (3) (c) of the Treaty.134 Article 22 of the Treaty.135 See SADC webpage at

http://www.sadc.int/files/6213/2808/8365/CONSOLIDATED_PROTOCOL_ON_TRADE_vers_30-01-2012.pdf (accessed 18 February 2009).

136 Article 23 (2).137 Article I of GATT 94 , Article I of GATS and Article 4of the TRIPsAgreement138 Article Article III of GATT 94 ,Article XVII of GATS and Article 3 ofthe TRIPs Agreement139 Article II (1) of GATS

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The SADC Treaty (The Treaty)140 and its antecedent Protocols suchas the protocol141provides an all-encompassing framework142, forcountries in the region to coordinate, harmonize andrationalize143 their socio-economic policies144 and facilitate themovement of factors of production across the membership145.Thetreaty commits member states to fundamental principles ofsovereign equality of members146, solidarity, peace andsecurity147, human rights, democracy and rule of law148, equity,balance and mutual benefit149 as well as peaceful settlement ofdisputes150.

SADC's objectives151 include the achievement of development andeconomic growth, alleviation of poverty, enhancement of thequality of life of the peoples of Southern Africa152 and to

140 A copy of the Treaty and Declaration as amended is available athttp://www.sadc.int/index/browse/page/120 (Accessed 31 October, 2010).

141 The definition of "protocol" in Article 1 of the Treaty refers to aprotocol as an instrument of implementation of the treaty, having thesame legal force as the treaty.Seehttp://www.sadc.int/files/6213/2808/8365/CONSOLIDATED_PROTOCOL_ON_TRADE_vers_30-01-2012.pdf ( accessed 12 September, 2012)

142 Article 1 of the Treaty.143 Article.21 (2).144 Chengetai C Madziwa ‘Social Charter: Towards people-centered

development’ SADC Today Southern African Development Community Vol. 6No. 4 October 2003 p.10.145Article 5 (1) of the Treaty. One instrument made hereunder forimplementation is the SADC Charter of Fundamental Social Rights (theCharter), which spells out SADC’s social policy. The charter embodiesrecognition by stakeholders in the region of the universality andindividuality of basic human rights proclaimed in instruments such asthe United Nations universal declaration of human Rights, The AfricanCharter on Human and People's Rights, the Constitution of the ILO, thePhiladelphia .See Article 3 of the Charter.

146 Article.4 (a)147 Article.4 (b)148 Article.4 (c)149 Article.4 (d).150 Article.4 (e)151 Generally contained in Article 5 of the treaty.152 Article 5 (a) of the treaty as read with Article 11 of the Charter.

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support the socially disadvantaged153 through regionalintegration154. The ultimate objective of SADC (the Community) isto build a region with a high degree of harmonization andrationalization155 enabling pooling of resources to achievecollective self-reliance156 in order to improve the livingstandards157 of the people of the region158.

Despite such initiatives and the community’s drive for freemovement of capital and labour, goods and services and of thepeople159of the region160, it would be difficult to describe SADCas a supra-national institution161 such as the EU, at least atthis stage of its development162. This flows from the fact thatthe community is based on the principle of the sovereign equalityof all Member States163 and from the description of SADC as an

153 Article 5 (a) of the treaty as read with Article 10(2) of the Charter.This Article provided for social security for persons that have beenunable to re-enter the labour market and have no means of subsistence.

154 Similar objectives are aspired to by COMESA to which a majority of SADCstates are members. See Article. 3 of the Treaty of COMESA, Below.

155 Article.5 (2) (a).156 Article.5 (d).157 The Social Charter contains the region’s blue print on social policy

designed to improve living and working standards of people in theregion.

158 Marius Olivier ‘Social Security for Migrants: Does the EU frameworkprovide Lessons for Developments in SADC?’ sub-theme: ‘immigration andpromoting social security abroad’ Paper presented at symposium in the Hague,Netherlands (2001).

159 Progress has been slow on the SADC Protocol on the Facilitation ofMovement of Persons that is yet to enter into force. The apparentreluctance to open borders may be indicative of the members fearsof uncontrolled immigration and surrender of sovereignty overimmigration.

160 Article 5(2) (d).161 Doris Leno, (2010). Is there need for a uniform Commercial law approach

in the Southern Region? Presented at the Second InternationalConference on Regional Integration and SADC Law, Maputo, 9—11November , 2010.

162 See generally Olivier, M.P. &Kalula, E.R. et al (eds) ‘The extension ofsocial security protection in Africa: a legal inquiry’ (2001) Cape Town:Siber Ink at1-268.

163 Article 4(a).Page 30 of 46

international organization164. SADC structures and instrumentssuch as protocols, present one with a more or less embryonicpicture of a regional system.

The treaty of SADC is implemented through protocols165,declarations, Charters, memoranda and such other instruments madethere under166. These provide a road map or guidelines forimplementation. Yet the landscape of implementation of theseinstruments presents an unattractive picture. By way ofillustration I will reflect on Malawi as a microcosm of SADC.Although the conclusion reached may not be preventative ofthe region on account of the heterogonous levels ofdevelopment of the membership, they are a fair representationof the state of play in the realm of economic law in theregion.

A point of departure

SADC’s Regional Integration167programme is riddled with problemsranging from multiple membership in regional organizations, lackof a legal framework for harmonization168, absence of monitoringprocesses, other than country feedback through reports. Lack of athink tank which means that the secretariat acts both as a thinktank and secretariat as well as absence of a compensation scheme

164 Article 3 (1).165 Article 1 of the treaty as amended.166 See generally www.sadc.int

167 Regional integration is the process of overcoming, by common accord,political, physical, economic and social barriers that divide countriesfrom their neighbours, and of collaborating in the management of sharedresources and common. regional goods. See definition athttp://europa.eu/legislation_summaries/development/general_development_framework/dv0002_en.htm

168 Gilles Cistac ‘The harmonisation of National Legal and RegulatoryFramework as a Strategy to fast track the mainstreaming of regionalIntegration in National Development Plans’ (2010) Presented at the SecondInternational Conference on Regional Integration and SADC Law, Maputo.

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as incentives for those that lose throughimplementation169.Besides lack of institutional capacities atregional and national level; fragmentation of regional markets;insufficient economic diversification; poorly interconnectedinfrastructures; the need for effective regional policies toaddress common challenges related to development compound thechallenges. Absence of a compensation scheme for those that looseout in the process liberalization has affected the rate of legalharmonisation and integration170. Lack of respect for rule of lawin the region is one challenge as lack of respect for rule of lawat national level correlates well with the level of disrespectfor international law171. Like most developing countriesgovernance issues are a serious challenge to the process ofintegration. The heterogeneous levels of development172of memberstates and multiple memberships to regional organizations ofmembership173add to the source of complexity for rationalizationand harmonization of economic laws in the region174.

Though SADC is a regional organization175 implementation of itsprogrammes is national, yet with the exception of Zimbabwe andRwanda that have ministries of regional integration, in mostmember states there is no lead ministry or department forregional integration. What one finds are SADC focal pointswithout political and civic leadership vis-a-visregionalobligations.

169 Ibid.170 For instance countries like Malawi rely on import revenue and as a

requirement for the SADC Free Trade Area (FTA); it has to liberalize itstariff lines by 85%. Yet there is no compensation for this in the shortand medium term

171 Bonita Meyersfield, Institutional ‘Investment and the Protection of HumanRights; the developing regional and international legal framework’.(2010)Presented at the Second International Conference on Regional Integration and SADC Law, Maputo

172 SADC “Sixth United Nations Conference to Review All Aspects of the Set ofMultilaterally Agreed Equitable Principles and Rules for the Control ofRestrictive Business Practices” 2010.Available athttp://www.unctad.org/sections/wcmu/docs/tdrbpconf7_s2_SADC.pdf(accessed25th November, 2010)

173 Op.cit. No.38174 Cistac, G (2010), op.cit.no.29175 Article 3 (1) of the Treaty

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Thus at national level each implementing ministry implementsregional commitments, uncoordinated and unharmonised. Thusimplementation is fragmented and uncoordinated leading toduplication wastage of resources.

The treaty base for harmonization and rationalization of economiclaws for SADC is article 5 (l) of its Treaty as read with Article4 of the Protocol on Trade. SADC’s objective is to promotesustainable and equitable economic growth and socio-economicdevelopment that ensures poverty alleviation and improvement ofthe standard and quality of life of the people in the regionthrough regional integration176. The modus operandum has beenthrough harmonization of political, social and economic policiesin the region177. This is implemented through various sector basedProtocols, declarations, charters and memoranda of understanding(MoU)178. Policy instruments for financial services include theTrade Protocol, the Memorandum of Understanding on Macro-EconomicConvergence and the Finance and Investment Protocol (FIP). Theregion’s programme of action has been to establish a Free TradeArea (FTA) by 2008 (successfully), a Customs Union by 2010, acommon market by 2015, a monetary union by 2016 and a singlecurrency by 2018179. This requires harmonization andrationalization of social and economic policies and legalframeworks across the region in tandem with SADC business plan.

SADC’s approach to regional integration has been to identifyintegration enabler areas such as commerce, trade andinvestment180. Yet there is no uniform approach to commercial andbusiness laws on the model of the European Union Common Frame of

176 Article 5 (1) (a) of the Treaty.177 Article 5 (2) (a) of the Treaty.178 Article 22 of the Treaty.179 See SADC webpage at http://www.sadc.int/key_documents/risdp/chapter3.php(accessed 19 February 2009)180 Nkowani Z. ‘The SADC Finance and Investment protocol and the Proposed

Financial services law for Malawi: Reflections in Retrospect’ (2009)Malawi Law Journal [ISSN 1996-7675]. http://www.lawjournal.mw .

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Reference181, UNCITRALmodellaw182, UNIDROIT model law183orOHADA184unified approach to commercial and businesslaw.Theproblemis acerbated by multiple memberships as well asdivergent legal traditions within the membership, withsomeSACU185members following Roman-Dutch, whileMalawiand Zambiahave common law traditions, while Mozambique and Angola have acivil law tradition. These diversities are the reason d’être forharmonization andrationalization of economic laws in theregion186.

COMESA-EAC-SADC TRIPARTITE FREE TRADE AREA (T-FTA)181 See, F. Gomez ‘The Harmonization of Contract Law through European Rules:

A Law and Economics Perspective’ (2008) European Review of Contract Law, 89; F.Gomez ‘The Empirical Missing Links in the Draft Common Frame ofReference’ in F. Cafaggi and H. W. Micklitz (eds.)(2009) European PrivateLaw after the Common Frame of Reference101.

182 The United Nations Commission on International Trade Law (UNCITRAL) wasestablished by the General Assembly in 1966 (Resolution 2205(XXI) of 17December 1966). In establishing the Commission, the General Assemblyrecognized that disparities in national laws governing internationaltrade created obstacles to the flow of trade, and it regarded theCommission as the vehicle by which the United Nations could play a moreactive role in reducing or removing these obstacles. The General Assemblygave the Commission the general mandate to further the progressiveharmonization and unification of the law of international trade. TheCommission has since come to be the core legal body of the United Nationssystem in the field of international trade law. See Uncitral webpage athttp://www.uncitral.org(Accessed 23rd August, 2010).

183 Generally see Unidroit webpage athttp://www.unidroit.org/english/modellaws/main.htm (accessed 23rdSeptember, 2010).

184 OHADA is a system of business laws and implementing institutions adoptedby sixteen West and Central African nations. OHADA is a French acronymefor "Organisation pour l'Harmonisation en Afrique du Droit des Affaires".See OHADA webpageatwww.ohada.com (accessed 23rd September, 2010).

185 See SACU webpage at http://www.sacu.int/186 See SADC “Regional Workshop on Harmonisation of Standards and Technical

regulations” (2000) http://www.sadc.int/amlibweb/webquery.html?v1=pbBS&v20=MarcList&v24=6330&v25=HARMONISATION&v27=7007&v35={]0[}{]0[}{]0[}{]0[}&v46=53857

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Background

As indicated one of the challenges most Regional EconomicCommunities (RECs) face is multiple membership. This posesserious challenges to harmonisation of rules and polices acrossmemberships. This is particularly true for SADC and some of itsmemberssuchasMalawithat belong to more than one REC in theconfiguration. One possible solution is to have atripartiteFreeTrade Area among the RECs.The Heads of State andGovernment of the Common Market for Eastern and Southern Africa(COMESA), the East African Community (EAC) and the SouthernAfrican Development Community (SADC) (the RECs) met on 12 June2011 and launched negotiations for the tripartite free trade, (T-FTA) with the aim of widening and consolidating existing cross-cutting regional integration processes.TheT-FTA would have anintegrated market of 26 Countries with a combined population ofnearly 600 million people and a total Gross Domestic Product(GDP) approximately US$1.0 trillion. This comes against abackdrop of a continental vision of establishing the AfricanEconomic Community envisioned in the Lagos Plan of Action187 forthe Economic development of Africa188 and the Final Act of Lagosof 1980 Abuja Treaty of 1991189 as well as the resolution of theAfrican Union Summit held in Banjul the Gambia in 2006190 thatdirected the African Union Commission and the Regional EconomicCommunities (RECs) to harmonize and coordinate policies andprogrammes of RECs as important strategies for rationalization;

187 See Article II of the Plan athttp://www.uneca.org/itca/ariportal/docs/lagos_plan.PDF (Accessed 1st

October, 2011).188 Organization of African Unity “Lagos Plan of Action for the Economic

Development of Africa” http://www.uneca.org/itca/ariportal/docs/lagosplan.PDF (accessed...).

189 Article 28 (2) of AbujaTreaty.http://www.uneca.org/itca/ariportal/abuja.htm#4(Accessed 1st October,2012).190 Paragraph 4 of the Decision on the Moratorium on the Recognition of

Regional Economic Communities (RECs), Doc. EX.CL/278 (IX) athttp://www.oecd.org/dataoecd/36/55/40011981.pdf (Accessed 1st October,2012)

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and to put in place mechanisms to facilitate the process ofharmonization and coordination within and among the RECs191.

The rationale for RECs is the promotion of collective,accelerated, self-reliant and self-sustaining development ofMember States; co-operation among these States; and theirintegration in the economic, social and cultural fields192. Theestablishment of anT-FTA will bolster intra-regional trade193 bycreating a wider market, increase investment flows, enhancecompetitiveness and develop cross-regional infrastructure194. Thisis the tripartite flagship approach to the African EconomicCommunity195. The summit also adopted a road map and a

191 Generally see various OAU Resolutions and Declarations stipulating thatthe economic development and integration of the African continent are anessential condition for the achievement of the objectives of the OAU,particularly those formulated in Algiers (September 1968), Addis Ababa(August 1970 and May 1973) and Libreville July 1977on the adoption of theKinshasa Declaration of December 1976 establishing an African EconomicCommunity in successive stages.

192 For SADC see Article 5 (1) (a) and Article 5 (2) (a), for COMESAsee 193Naumann, E. 2011. Tripartite FTA Rules of Origin – Reflection on the statusquo and the challenges ahead. In Cape to Cairo Making the Tripartite FTAWork.Hartzenbergetal.Stellenbosch: Trade Law Centre for Southern Africa.194 The Summit noted that the region makes up half of the African Union

(AU) in terms of membership and just over 58% in terms of contribution toGDP and 57% of the total population of the African Union

195 Intra-regional trades in the EAC and SADC regions have been on rapidrelative growth in the past decade. In the EAC, total intra-regionalexports increased from around US$500 million in 2000 to more than US$2.36billion in 2010, an increase of almost four folds. During the sameperiod, EAC’s total exports to the world grew at a slightly slower pace,increasing from US$2.67 billion to 11.35 billion. As a result, the shareof intra-EAC exports in the region’s total exports actually increasedfrom 18.7% in 2000 to 20.8% in 2010.possibly suggesting that regionalintegration in the EAC has had a positive effect on intra-EAC exports.Similarly, total exports from the SADC countries to the world increasedfrom around US$38.4 billion to nearly 96.9 billion in 2010, with the peakreaching over 100 billion in 2008. During the period, between 4% and 5.7%of these exports went to South Africa, the region’s largest economy. The

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developmental approach to the Tripartite Integration processanchored on (i) Market integration based on the Tripartite FreeTrade Area (FTA); (ii) Infrastructure Development to enhanceconnectivity and reduce costs of doing business and (iii)Industrial development to address the productive capacityconstraints196. This presupposes that there would be harmonisationand rationalization of social economic policies in theregion.Theroad map itself is laudable , but there the roadwould be a winding one if the individual RECs do not speed uptheir internal process of harmonisation. Effectiveharmonisation will needtobe ushered from within and not fromoutside197.This would have effectsfor wider economic relation onthe continent as well as in the region’s economicrelations withChina. The China-Africa partnership envisages increase trade andlevel of harmonisation and rationalization of trade rulesbetween the two partners.

Challenges

The disconnect between pronouncements at regional level andaction taken at national level suggests that the road tointegrationandharmonisationis riddled with challenges. The mainchallenge is the strength of politicalandeconomicnationalisminthe region198.Member statesare more inward looking and whereregional and national interests conflict,nationalintereststakeprecedence. Member states are willing to

share of total intra-SADC exports in the region’s total exports, however,remained quite stable between 2000 (15.3%) and 2010 (18%), although itpeaked at 18% in 2006. See http://www.trademarksa.org/news/trends-trade-flows-countries-eac-sadc-and-perspectives-tripartite-free-trade-area(accessed 11th January, 2013).

196 See SADC webpage at http://www.sadc.int/news/communique-of-the-second-comesa-eac-sadc-tripartite- summit/

197 Freyhold, H. von, V. Gessner, E.L. Vial and H. Wagner (eds.) Cost ofJudicial Barriers for Consumers in the Single Market’ (1995) a Report forthe European Commission (Brussels:DG XXIV; AO-2600/94/00103).

198TrudiHartzenberg, ‘Regional Integration in Africa’, WTO, Staff Working PaperERSD-2011-14.www.wto.org/english/res_e/reser_e/ersd201114_e.pdf

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harmonize only in those areas that do not affect nationalagendas. Regionalism or multilateralism implies ceding somemeasure of sovereignty including that of law making to regionalstructures199. For instance by joining the WTO, memberstates agreethatsovereign right or not, they will nottakemeasuresinconsistentwiththe WTO obligations. If they dotheywould be forced to comply with their WTO obligations. Thisproblem is not unique to SADC but is a commonproblem forRECs.This does not assist the process of integration and is achallenge for harmonisation.

The other challenge is lack of coordination. In the absence of aharmonizing template and suspension of the tribunal despitewillingness by member states, nationalstandardspermeate theprocess leading to mushrooming of laws based on nationalstandards across the region200. This is costly as such laws willhave to be reviewed and aligned to regional standards at somepoint. The apparent lack of a unified approach to business andeconomic laws in the region presents aproblem for harmonisation.

Weak national institutional mechanisms for implementation ofregional obligations are another challenge for integration andharmonisation in the region.This refers to government or statemachinery for the implementation of regional obligations. Thesecould be ministries or departments that oversee regionalinitiatives. There is apparent lack of coordinationbetweenvariousimplementing ministries or departments with no clear leaddepartment. For instance in the case of Malawi,regionalintegration falls under Ministry of Foreign affairs andinternational Cooperation.Articulation of these falls to Ministryof Justice. Domestication lies with the legislature. Unless thereis coordination not much will be achieved.199Afadameh-Adeyemi, A &Kalula E. 2011. SADC at 30: Re-examining the Legal andInstitutionalAnatomy of the Southern African Development Community, In: Bösl, A. et al.(eds.), Monitoring Regional Integration in Southern Africa, Yearbook Vol. 10 – 2010.Stellenbosch: Trade Law Centre for Southern Africa.200 Nkowani, Z ‘The SADC Finance and Investment protocol and the Proposed

Financial Services law for Malawi: Reflections in Retrospect’ (2009)Malawi Law Journal [ISSN 1996-7675]. http://www.lawjournal.mw.

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Lack of awareness at local level of regional and what they seekto address isa serious challenge for most counties inthe region.The need to give visibility to these instruments is long overdue.This leads to general apathy and ambivalence by much of societyfor initiatives for implementation. Since one of the effectivetools to effect change is to have a critical mass of publicsupport, this aspect of the integration agenda cannot be ignored.

The slow process of change is another challenge for mainstreamingregional frameworks into domestic frameworks. The slow process ofdomestication is another challenge. This is particularly true atlegislative and policy levels. Different countries have differentlegal regimes. Generally countries that have inherited the Frenchlegal system have some advantage over those that have a commonlaw tradition that requires a two-step process (ratification andlegislative action).

Governance Challenges is another factor that accounts for theslow pace of domestication of regional and internationalcommitments201. A number of SADC states come from a background ofrepressive regimes and a culture of non-respect for the rule oflaw and constitutionalism. What this mean is that there is abacklog of laws that are competing for limited resources forreview and reform with international instruments fordomestication. Failure to promote a culture of constitutionalismand respect for the rule of law has implications fordomestication202. There is a correlation between failure ofgovernments to respect the rule of law and human rights ofcitizens and the extent to which they respect internationallaw203. As governments subvert constitutions and compromise therule of law in order to entrench their power bases, regional andinternational commitment receive minimal attention.

201 Infra..202 Sarah Mukasa, Programmes Manager for the East and Horn of Africa at AkinaMama.203 Erasmus, G. 2011. Deeper Regional Integration in SADC. Will EPAsundermine the process? Working Paper, Trade Law Centre for Southern Africa.

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The growing marginalization of Africa as a result ofglobalization fuelled by market led growth strategies is anotherchallenge. Africa’s size in global market share is shrinking. Theinequitable competition for market share means that Africa willcontinue its downward slide in gaining access to westernmarkets204. Weak state structures, with reduced revenues,especially in the law and order sector are less able to addressthese needs. Given that considerable investments are required forthe effective harmonisation this is a cause of concern205. Finallyglobal politics has become highly militarized, and the subtext tothis shift is that harmonisation of economic laws may at times becompromised in the interest of fighting global terrorism.

Opportunities

The challengesdiscussed are also an opportunity for improvementand reassessment of the region’s approach to integration. Theproposed Tripartite Free Trade Area (T-FTA) is an opportunity forthe harmonisation of economic law in the region. The proposed T-FTA will be anchored on harmonized legal frameworks and thisprocess will accelerate legal integration across the region. Allmembers of the T-FTA are members of other multilateralinstitutions such as theWTO.Such membershipprovidesbenchmarks forlegal harmonisation.As the T-FTA re-aligns itself to the WTOregulatory regime, the process will have a trickle-down effect onindividual RECs206.

204 See paragraphs 10 and 11 the Beijing declaration of the Fifth MinisterialConference of the Forum on China-Africa Cooperation athttp://www.fmprc.gov.cn/eng/zxxx/t953958.htm (Accessed 10September,2012).

205Genrally see McCarthy, C.. 2007. Is African economic integration in need ofa paradigm change? Thinking out of the box on African integration.In: Bösl, A.et al. (eds.), Monitoring Regional Integration inSouthern Africa, Yearbook Vol. 6 – 2007. Stellenbosch: Trade Law Centre forSouthern Africa.206Hartzenberg, T. &Kalenga, P. 2007. A Deeper Regional Integration Agenda forSADC.In: Bösl,A. et al. (eds.), Monitoring Regional Integration in Southern Africa, Yearbook Vol. 6 –2007.Stellenbosch: Trade Law Centre for Southern Africa.

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The region’sglobaleconomic relations present another opportunityfor legal harmonization. For instance for the SINO-SADC economicrelations, the China–Africa partnershipsprovides in the Beijingdeclarationan opportunity for legalharmonisation that wouldfacilitate trade and investment between the two partners.SADCneed to take a leaf from regional schemes such as COMESA and theEast African Community thathave achieved fair level ofharmonisation in specific areas of interest to regionalintegration.Regional integration needs a harmonized legalframework to achieve its objectives which are : (1) politicalstability as a pre-requisite for economic development; (2)economicdevelopmenti.e. in larger, harmonized markets, the freemovement of goods, services, capital and people enables economiesof scale and stimulates investment.(3) Finally “regional publicgoods”. Only cooperation between neighboring countries canaddress trans-national challenges such as food security,preservation of biodiversity, terrorism and tackling climatechange207.

The OHADA208 template for harmonisation of commercial and businesslaws offers SADC a useful point of departure. The UNCITRAL209 and

207http://europa.eu/legislation_summaries/development/ general_development_framework/dv0002_en.htm .also McCord, G., Sachs, J.D. &Wing, T.W. 2005. Understanding African Poverty: Beyond the WashingtonConsensus to the Millennium Development Goals Approach.InTeunissen, J.J.&Akkerman, A. (eds.), Africa in the World Economy – The National, Regional and InternationalChallenges.The Hague: FONDAD.208 Op.cit, no.209 The United Nations Commission on International Trade Law (UNCITRAL) was

established by the General Assembly in 1966 (Resolution 2205(XXI) of 17December 1966). In establishing the Commission, the General Assemblyrecognized that disparities in national laws governing internationaltrade created obstacles to the flow of trade, and it regarded theCommission as the vehicle by which the United Nations could play a moreactive role in reducing or removing these obstacles. The General Assemblygave the Commission the general mandate to further the progressiveharmonization and unification of the law of international trade. TheCommission has since come to be the core legal body of the United Nationssystem in the field of international trade law. Seehttp://www.uncitral.org(Accessed 23rd August, 2010).

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UNIDROI210 model laws on commercial laws would equally be helpfulas a moderating medium for legal harmonisation in the region.

The other opportunity that flows from SADC’s heterogeneousdevelopmental level of the membership is that progress isdependent on regional consensus through identification of areasthat are ripe for harmonization. This strengthens coordinationand promotes cost sharing through the pooling of resources andskills. In view of the institutional constraints of the regionthis would be a positive contribution towards the progress ofharmonization.

The involvement of academic and research institutions in theprocess compensate for the absence of a think tank for SADC andbridges the gap for policy, its measurement and articulation.Curriculum development in the law and businessschoolsmustencourage regional thinking and regional goals. Thoughcurriculum is local; it ought to be outward looking in focus andapplication. This requiresacademiccollaborations in the region inareas relevant to integration and harmonisation.

The presence of SADC Tribunal211 is a milestone for harmonization.Not only is SADC a creature of law, but also that pursues itsaims exclusively through the rule of law212. As an Internationalorganization213it has its own body of law that is independent,uniform in all the member states, separate yet superior tonational law and much of its provisions are directly applicablein member states.Like any true legal system, the community needs an effectivesystem of judicial safeguards and dispute resolution214. The210 Generally see

Unidroitwebpgaehttp://www.unidroit.org/english/modellaws/main.htm(accessed 23rd September, 2010).

211 SADC “Protocol on Tribunal and Rules of Procedure Thereof” (2002)http://www.sadctribunal.org/docs/Protocol_on_Tribunal_and_Rules_thereof.pdf

212 Article 4 (c) of the Treaty.213 Article 3 (1) of the Treaty.214 The Summit in Maputo in August, 2012 decided the fate of the SADC

Tribunal; at least as far as individual complaints against governmentsPage 42 of 46

Tribunal, as the judicial organ of the Community is the backboneof that system of safeguards. Its Judges ensure that the law isnot interpreted and applied differently in each Member State,that as a shared legal system, it remains a Community system andthat it is always identical. Through interpretation andapplication of the Treaty215, the tribunal creates communityjurisprudence as benchmark for law reform, content andapplication in member states216. Courts must be encouraged tointerpret harmonized laws in manner that fosters integration217.Whilst respecting the principle of complementarity in article 14,article 16 (2) of the protocol on the Tribunal218provides foradvisory opinions on questions of interpretation, application orvalidity of the provisions of the treaty and instruments madethere under. Reference for advisory opinion can be made by memberstates. This fosters dialogue between the Tribunal and domesticcourts legal and judicial organs and has a harmonizing effectacross the membership. Further article 20 also provides foradvisory opinions to the summit or council of ministers. This isan effective harmonizing device that needs to be utilized. Thechallenge is for national legal and judicial bodies to seize onthis device. The current suspension of the tribunal is a reversalof progress219. It is hoped that sooner than later it will

for human rights violations are concerned. The SADC political leadershiphas decided that the region will not have a regional human rights court.This is a very unfortunate development and a blow to the rule of law inthis part of the world. The Tribunal is not off the agenda. There is anopportunity now for revisiting its jurisdictional powers in order to givethe region an institution for ensuring rules-based trade and integration.Elements of the rule of law can be retained and be improved. This effortshould include arrangements for the protection of the rights of naturaland legal persons involved in cross border business.

215 Article 14 (a) of the Protocol on the Tribunal.216 Article 14 (b), Above.217 MunaNdulo, (1993), p.118, as above.218 Amended by Article 7 of the Agreement Amending the Protocol on theTribunal of 3 October, 2002.219Following a decision by the Tribunal that Zimbabwe was in breach of Article6 of the SADC Treaty, Zimbabwe expressed its dissatisfaction with thedecision, and as a result, at the August 2010 Summit, the SADC Tribunal wassuspended (Afadameh-Adeyemi&Kalula 2011).

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be up and running and play its role in the integrationmatrix.

The other opportunity for harmonization flows from thecommunity’s programme of integration. SADC in its RegionalIndicative Strategic Development Plan (RISDP)220 articulates itsvision, mission and common agenda221. It also spells out priorityintervention areas, focus areas, strategies and targets as wellas timeframes222. The RISDP identifies priority areas forintervention and lists good economic and corporate governance asone set of enablers that are essential for the realization ofdeeper integration and poverty eradication in the Region223. Thereis shared understanding that unification of the region'seconomies through the SADC Free trade Area (FTA) and the quest toachieve deeper levels of integration will not be realized in theabsence of good economic and corporate governance224. This entailsharmonization of economic laws and provides a fertile seed bedfor deeper legal integration and harmonisation of economic lawsin the region.

Conclusion and way forward

Regional Integration must be seen in a global context as a meanstowards global economic integration. As regulation ofinternational economic relations converges through the process ofharmonization, regional structures need to adapt to the processthrough open regionalism. SADC’s integration agenda is laudable,though its implementation is riddled with difficulties rangingfrom institutional weakness, philosophical and policy gaps aswell as structural problems. Integration requires a legalframework to anchor it and excluding legal harmonization orintegration as priority for cooperation in Article 21 of thetreaty is an unfortunate oversight. At institutional level the220 See SADC webpage at http://www.sadc.int/index/browse/page/107221 See Chapter I of RISDP at SADC webpage

http://www.sadc.int/index/browse/page/107 (Accessed December, 2010)222 See note n.193 supra223 Supra.224 The Cotonou Agreement as a well as the SADC Finance and Investment

Protocol emphasizes good governance as Key to economic development. Page 44 of 46

range and scope of tools for achieving harmonization need tothe expanded along the COMESA Euro-formula. The current inwardstrategy limits the pace of legal integration as it subjectsharmonisation to national priorities. As a community SADC needsto embrace open regionalism and the T-FTA is a first step in theright direction. However SAD needs to overcome its in-housestructural and institutional challenges if it is to be ameaningful partner. At state level some of the constraints canbe overcome by adopting a multi-dimensional approach toimplementation, by encouraging domestication of regional andinternational agreements in member states. As the SADC treaty ispeople centered225 there is need for public awareness, advocacyand research as an aid to domestication. Besides civil society,the academia has a crucial role to play in providing research andpolicy dissemination. There is need for member states to haveregional integration policies and departments tasked to deal withissues of integration. Integration is not an aside affair anymore. It is real and should be accorded the priority it deserveson national platforms.

The economic case for harmonisation of economic laws in theregion arises from the fact that Legal diversity entails legaluncertainty and a rise in transaction costs to an enterprise.This is so as legal diversity may imply (i) - Additional costsfor acquiring information needed to write a particular contractin other legal areas, (ii) - Higher costs for litigating issuesunder various contracts governed by different legal regimes,(iii) - Costs of instability due to the fact that severalcontracts are subject to subsequent changes in the law and (iv) –the plurality of legal traditions and diversity in judicialadministration within member states in SADC. A harmonized legalframework for the region needs a harmonizing framework which is amissing link at the moment and the need for one is long overdue.As SADC is a rule based organization governed by internationallaw, it can take leaf from other multilateral harmonizingframeworks in the field of international business and economic

225 See paragraph 7 of the Preamble to the Treaty and Declaration.Page 45 of 46

law as a starting point. The current paralysis of the SADCTribunal is a setback to legal harmonisation of in the region.

The proposed T-FTA is an opportunity for the region to fast tractits process of legal harmonisation. Law as a critical factor inthe construction of economic space and harmonisation will enhancethe attractiveness of the region as an investment destination.This will not only reduce transactional costs, but will alsopromote intra-regional trade. Though harmonisation of economiclaws is not a panacea for the region’s challenges, it is one ofthe critical factors for a functional economic and socialintegration of the region. For SADC to fully access the benefitsof the proposed T-FTA it needs to rethink its strategy forachieving its objectives. For as long as trade and investmentare the preferred means for regional integration legalharmonisation, in particular of economic laws remains acatalyst for deeper and functional integration.

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