.
CLARITY AND LEGAL
COMPLIANCE
Countries do not have blank slates, but instead
accumulate a great many rules and commitments
that define the extent of the “policy space” within
which they operate. These include some domestic
instruments that may be considered permanent
(especially its constitutional arrangements) and the
commitments that it has made to its partners in
multilateral and regional trade agreements; others
are subject to periodic revision and adjustments (e.g.
annual budgets). A TPF should clearly identify all
relevant commitments,
be equally explicit about the
types of laws and agreements that it advocates, and
ensure that any new initiatives that it proposes are
permissible within the existing legal obligations of the
country.
The term “treaty” is formally defined in article 2.1(a) of
the Vienna Convention on the Law of Treaties as “an
international agreement concluded between States
in written form and governed by international law,
whether embodied in a single instrument or in two or
more related instruments and whatever its particular
designation,” but it might alternatively and informally be
defined as an instrument by which countries mutually
agree to impose voluntary limitations on the exercise
of their sovereignty. This point is not unwelcome: It is
in the interests of all members of the trading system
that they operate within a body of well-understood
and enforceable rules, and those rules matter only if
they actually place constraints on countries.
Whether the agreements that they negotiate are
multilateral or regional, developing countries (other
than LDCs) are now expected to take on greater
66
TRADE POLICY FRAMEWORKS FOR DEVELOPING COUNTRIES: A MANUAL OF BEST PRACTICES
Box 9. Strategic vision presented in the trade policy framework for Namibia
In our view [import substitution] is not likely to succeed for the simple reason that economies of scale in the domestic
market are absent, but also because the likely targets for such a strategy favour location in South Africa and, by virtue of
relatively free trade within SACU, can service Namibian markets from their South African base. While a mix of incentives
could be put in place, combining them with coercive instruments is likely to repel, rather than attract, foreign investors,
particularly the lead firms central to the next strategy option we outline below. Hence the “coercive” strategy runs the risk
of penalizing the Namibian economy as a whole, and poor consumers in particular.
An alternative approach is available. This could be framed as a “niche” strategy, wherein Namibia accommodates to its
structural realities by targeting specific niches in regional and global value chains into which its domestic producers could
plug, with a view to upgrading over time. In this approach the government’s primary task is to facilitate entry into value chain
networks coordinated by foreign lead firms, incentivising those firms to upgrade the participation of local firms over time.
The policy package associated with this strategy is essentially one of transactions costs reductions, business environment
reforms, and putting in place institutional supports to local business to improve their attractiveness to the lead firms
targeted. The risk with this approach is that Namibia may not be able to do what is necessary vis a vis the SACU common
external tariff (CET), since the CET is predominantly determined by South Africa; a reality that is likely to endure given South
Africa’s much larger and more diversified economy. However, there is an opportunity to differentiate Namibia from South
Africa, as Botswana now seems to be doing, since South Africa appears set on an import substitution path and foreign
companies are responding by looking for alternative investment locations in the region.
A hybrid approach is also conceivable. So, the Namibian government could decide which sectors or niches it wishes to
condition foreign access to for purposes of economic empowerment and/or production capacity building and make its
intentions known to the international community. This is most likely to work in those sectors where Namibia has real market
power, notably in uranium and fisheries but perhaps in other sectors too. Then it could pursue a policy of openness and
transactions cost reduction in those sectors where, in its judgement, it is unlikely to succeed with such an approach. As
long as this is done in a transparent, predictable, and stable manner it could work.
Trade Policy Framework: Namibia (2016)
burdens than was previously the case. For the
multilateral system, that means ending the old practice
by which most developing countries were outside the
system and those that were in it opted not to sign
most agreements. Today nearly all countries are WTO
members, and all of them are obliged to adopt nearly
all agreements. At the bilateral and regional levels, that
means switching from arrangements by which they
enjoyed one-way, preferential access to the markets
of the industrialized countries to one in which they
make reciprocal commitments to open their markets.
