CHAPTER 2. BOTSWANA ¹

I. INTRODUCTION

The economy of Botswana is dominated by mineral and beef exports; mining replaced agriculture as the major contributor to GDP in the mid-1970s and by 1996 accounted for 36 percent of total GDP, while agriculture was a mere 3.4 percent. The cattle industry alone accounts for almost 70 percent of all agricultural exports (and 4 percent of total merchandise exports).

Botswana is a member of the Southern African Customs Union (SACU), along with Lesotho, Namibia, South Africa and Swaziland, and is also one of the 14 member States of the Southern African Development Community (SADC). The trade protocol signed by SADC members in 1996 envisages the establishment of a free trade area within eight years. In addition, Botswana is also a signatory of the Lomé Convention under which it receives preferential access to the EU market for a variety of products. Most domestic and trade policies have been influenced in one way or another by these arrangements, with the WTO Agreement providing the overall trade policy framework.

Botswana depends heavily on food imports as a result of various constraints on the expansion of production from arable land. Less than 5 percent of the total land area is cultivable, most of the soil is poor and there is inadequate rainfall. Moreover, the country is plagued by recurring drought and cattle disease outbreaks. The growth of population exceeds 3 percent per annum, and food import needs are projected to increase rapidly.

In 1985, Botswana adopted its National Food Strategy, which stressed the need for food self-sufficiency for food security. It was followed by a food policy strategy 1992-97 that introduced some revisions, the most notable being a switch away from the goal of food self-sufficiency to food security at the national and household levels. The policy was to promote food production where land, climate and markets are favourable and to meet shortfalls from commercial imports. The current strategy (1997-2002) has similar objectives.

The high dependency of the economy on one sector is considered to be a source of economic vulnerability, including the risk of food insecurity. It is also often stressed that income gains from diamond production do not get distributed as evenly as from sectors such as agriculture, and so do not contribute as much to poverty alleviation and food security. Even within the livestock sector, the ownership of resources is skewed: a small proportion of the population owns a large share of livestock and almost 60 percent of all households have no cattle of their own. Further challenges come from the fact that single-parent households, headed by the female, are predominant in rural areas and suffer the most in terms of food insecurity. For these reasons, Botswana has adopted a strategy of economic diversification, focusing on sectors other than mining, notably manufacturing, tourism and financial services.

II. EXPERIENCE WITH IMPLEMENTING THE AGREEMENT ON AGRICULTURE

2.1 Market Access

Because all SACU members apply the Union's Common External Tariff, there are few differences between Botswana and other SACU members with respect to trade measures such as tariffication under the AoA, customs valuation, local content requirements, rules of origin, anti-dumping and countervailing duties. In addition, reflecting the large size of its economy relative to other SACU members, the trade and domestic policies of South Africa are preponderant. Botswana's experience with the implementation of the AoA reflects this reality.

In the UR, all SACU members bound all their agricultural tariffs, except for a few lines related to eggs and tea. Also bound were "other duties or charges" on agricultural products. There are also specific rates, mixed duties and formula duties, but the bulk of the tariff lines are simple ad valorem rates. Mixed rates apply to 72 tariff lines, including prepared foods and agricultural products. Specific rates cover 227 lines, including food and agricultural products. Formula or compound rates apply to 34 lines, of which six are agricultural products. The system of SACU formula duties is outlined in Box 1.

Bound duties on agricultural products (HS Chapters 1-24) from zero to 400 percent, most chapters involving rates of 50-100 percent (Table 1). Apart from the 400 percent maximum rates for some spirits and beverage products (HS Chapter 22), "sensitive" sectors with high bound tariffs (100 percent or more) include meat, coffee, tea and sugar.

Table 1: The WTO bound rates of the SACU countries ¹

Bound rate	HS Chapter
Duty-free Less than 50% More than 100% 50-100%	Live animals (HS 01) and products of animal origin (HS 05) Fish (HS 03), Lac, gums (HS 13), Cocoa and preparations (HS 18) Meat (HS 02), coffee, tea (HS 09) and sugar (HS 17) All other agricultural products
1 Rates at the end of the UR implementation period. Source: WTO Trade Policy Review of Botswana, 1998, Table AIII.1

Applied tariffs on agricultural products, typically in the range of 0-35 percent with a simple average of 6 percent, are substantially lower than the bound rates. For example, tariffs on cereals range from zero on products such as rye, barley, oats, maize and rice to 25 percent on, inter alia, millet, while products of the milling industry attract tariffs up to 50 percent. Imports of canned fruit and vegetables are also subject to higher rates, with an average of 16 percent and a maximum of 55 percent. Applied rates on products that face specific, mixed and formula duties can reach higher levels when import prices decline markedly.

There are a number of minor differences between Botswana's tariff commitments and those of other SACU members. For example, Botswana has until 2004 to phase-in tariff reductions, etc. while the others have until 2000. Botswana has also somewhat higher bound tariffs on some food products, e.g. dairy products, wheat, maize, rice, groundnuts and sunflower seeds. Like other SACU members, Botswana has also access to the special safeguard (SSG) provision of the AoA for 374 tariff lines (38 percent of all agricultural lines), but has not so far made use of it.

In line with the SACU Agreement, Botswana can impose a ban on the import of "controlled" products whenever local production covered domestic needs for a certain period. The list of such products includes cabbage, fresh milk, milled maize, onions, oranges, potatoes, pulses, sorghum and sorghum products, tomatoes and wheat; their import is subject to a permit system.

As a member of SACU, Botswana is obliged to apply anti-dumping and other trade remedy measures imposed by South Africa. At the end of 1996, there were roughly 70 anti-dumping duty actions and 21 safeguard actions in progress, but all on non-agricultural products. It was reported that most of the goods involved were competing in the domestic market of South Africa and so these actions were not as relevant for Botswana. Indeed, some analysts considered that they were against the country's interest, since it made these non-competing but essential industrial imports more expensive.

Some specific issues and concerns raised from the perspective of Botswana have also been voiced. One, and of a more fundamental nature, was that the CET structure does not fully reflect the specific circumstances of Botswana, Swaziland, Namibia and Lesotho (e.g. "sensitivity" of import-competing sectors) as customs and excise duties are set by South Africa more in response to its own particular circumstances. Although Botswana has the right under the SACU Agreement to levy additional duties to protect infant industries, including protection from South African producers, their administration is complicated and so is a less satisfactory solution than setting the CET itself right.

Botswana has also faced difficulties in respect of customs valuation, in large part related to undervaluation of goods imported and the resulting tariff evasion through, inter alia, misclassification of goods. The four SACU members other than South Africa have also often expressed concern with the current formula for sharing SACU tariff revenues. South Africa has been moving closer to the Cairns Group that shares the vision of freer trade. As applied rates of CET are lowered, SACU tariff revenue will fall, adversely affecting other members in view of their high dependency on customs revenue (15 percent of total government revenue for Botswana, 58 percent for Lesotho). SACU members have been re-negotiating the modality and the formula for revenue sharing for some time. This issue also became prominent during the South Africa-EU free trade negotiations which would have similar effects as above. One proposal was for the EU to offset fully or partially the loss of revenue by other SACU members.

Perhaps the most negative experience Botswana had during the past five years was the stiff competition it faced in the South African market with imported beef from the EU following the lifting of import restrictions by South Africa with the entry into force of the WTO Agreement. According to one study, by 1996 frozen beef exports from Europe were clearing South African customs at prices less than half the wholesale price of frozen beef in South Africa.¹ The local industry blamed the EU for subsidizing the exports heavily. Countervailing duty actions were considered but not undertaken. For Botswana, this threat of "unfair" competition persists, since the AoA permits the EU and others to subsidize the export of substantial quantities of beef.

2.2 Domestic Support

In the UR, Botswana did not submit detailed commitments on domestic support measures on the implicit grounds that all such measures involved exempted categories of expenditure and/or fell within the allowed de minimis levels. Its notification for 1995/96 (see Table 2) provides some information on green box measures, which show that the total outlay was 32 million pula (about US$12 million), a mere 3 percent of the total value of agricultural production. Roughly 70 percent of the total outlay was for water development, under which livestock farmers are assisted with drilling and equipment grants for groundwater use, the other two areas for which outlays were reported being an animal disease programme and agricultural research and technology development.

No other studies available, official or other, measure the full range of support in favour of producers, and it is hence difficult to assess Botswana's situation as regards the general AoA rules and its own commitments. It is no doubt for that reason the matter has not been discussed in the Committee on Agriculture. The rest of this subsection is consequently limited to a more general review, based on such information as is available.

As regards trade-distorting measures (amber box measures), developing countries are permitted to grant subsidies to farmers up to 10 percent of the value of production of particular crops and up to 10 percent of the total value of agricultural production in the case of non-product-specific support measures, e.g. fertilizers. Computations for other countries show that these ceilings are generally generous, providing substantial scope for subsidization.

Table 2: Outlays on green box measures in 1995/96

Type of measure	Specific measure	Amount
		Outlay (million pula)	Share in total (%)
General services	Research and technology development Animal disease programme Ground water development Total	3.57 5.8 23.37 32.371	11 18 71 100
1 About US$12 million. Source: Notification to the WTO of April 1997.

Specifically as regards Botswana, with a total value of agricultural production in 1995/96 of about US$400 million, non-product-specific subsidies of up to US$40 million were allowable, corresponding to roughly 7 percent of the country's total development budget. For product-specific support, the subsidy for cattle farmers would also absorb a large share of the development budget. Rough calculations suggest that subsidies to this sector could reach US$14 million (10 percent of the value of production) without breaching Botswana's WTO commitment. The absolute value of permitted subsidies to the smaller sectors would be lower.

Even if the upper limits of subsidy were reached, much of the expenditure on non-product-specific subsidies could be transferred to the SDT category, inasmuch as they are directed to low-income and resource-poor farmers.

Overall, complying with the AoA rules (and Botswana's own commitments) on domestic support measures has thus not been an issue so far. However, since WTO commitments have a longer-term importance, it would be prudent to analyse the situation in some depth, to assess whether the AoA disciplines would constrain in any way the implementation of agricultural development measures. The important first step is to compute all these support measures, categorize them under the various AoA "boxes" and report to the WTO, thereby avoiding unnecessary questioning at the CoA. Rough as it is, the preceding analysis suggests that Botswana has considerable flexibility regarding domestic support measures.

A review of current agricultural programmes of Botswana gives a similar picture. The National Food Strategy laid down in 1985 was followed by a food policy strategy for 1992-97 that introduced some revisions, the most notable being a switch away from the goal of food self-sufficiency to food security at the national and household levels (as described in the introduction to this study). The key programmes identified in this strategy (and retained in the strategy for 1997-2000) included various investment and assistance measures (e.g. seed, credit, infrastructure) and measures for an enabling policy environment (e.g. domestic pricing policy to be based on import and export parity prices, removal of monopoly rights to import sorghum).² Most of these measures belong to the green box category and thus are not subject to reduction or other commitments. Some, however, include government grants and subsidies to farmers, and so may constitute trade-distorting measures. However, as noted above, the amounts involved are unlikely to come anywhere near the permitted ceilings.

2.3 Export Competition

In the UR, Botswana did not report any export subsidies for agricultural products and so cannot provide such subsidies in the future. In practice, this limitation is of little consequence, as the Government cannot afford such subsidies, nor is it in the country's interest to provide them. It remains free, as a developing country, to accord subsidies to reduce the cost of domestic marketing and international freight and could resort to this measure, if needed, on a limited scale for selected products.

Like many developing countries, the Government does apply some incentive measures aimed at export promotion, of the type listed in Annex I of the Agreement on Subsidies and Countervailing Measures. For example, exporters are entitled to a duty drawback on inputs imported for use in export production followed by re-export. Similarly, an Export Credit Insurance and Guarantee Company was created in 1996 aimed at providing export credit insurance to stimulate non-traditional exports and diversify export markets. However, given the general policy thrust and fiscal situation, the overall amount of subsidies granted through these schemes is unlikely to be be substantial. Moreover, it is not clear how the AoA rules apply to such subsidies.

Most exports from Botswana do not require permits, but there are several exceptions in agriculture, including hides and skins. In line with the SACU Agreement, Botswana can impose an export ban on agricultural products. Under the Controlled Goods Act of 1985, a number of agricultural products are classified as "restricted", including castor beans, groundnuts, maize and maize products, millet, millet products, pulses, sorghum and sorghum products. Since Botswana is not treated in the WTO as a regular exporter of these food products, paragraph 2 of Article 12(1) of the AoA is not applicable and accordingly it does not need to "give due consideration" to the effects of the ban on the food security of importing member countries.

III. EXPERIENCE WITH FOOD AND AGRICULTURAL TRADE

3.1 Agricultural Trade

Food accounts for a high share of both exports and imports of agricultural products (80-85 percent). The deficit in agricultural trade was about US$50 million in the early years of the period 1985-98, but has since risen sharply, to reach US$250 million by 1995-98. Meat products, mainly beef, account for 70 percent of all agricultural exports, followed by hides and skins (8 percent). The principal imports are cereals, sugar, fruit and vegetables, vegetable oils and dairy products.

Total agricultural imports increased rapidly during 1985-94, at the linear rate of US$ 25 million per year (Figure 1). They rose sharply (38 percent) in 1995 but declined slightly thereafter. As a result, the average value of imports in 1995-98 was 32 percent higher than in 1990-94 but 5 percent below the value derived from an extrapolation of the rapidly rising trend (Table 3).

Figure 1: Agricultural trade, 1985-98 (in million US$; thick lines are actual values, thin lines are trends for 1985-94 extrapolated to 1998)

Source: FAOSTAT

Table 3: Agricultural trade in 1990-94 and 1995-98 (average annual value, in million US$, and percentage change)

Period	Imports	Exports	Net imports
1990-94 actual (a) 1995-98 actual (b) 1995-98 extrapolated (c)1 (b) - (a)2 (b) - (c)2	281 371 389 90 (32%) -18 (-5%)	91 120 102 29 (32%) 17 (17%)	191 252 287 61 (32%) -35 (-12%)
1 Extrapolated value based on 1985-94 trend. 2 Numbers in parentheses are percentage changes over (a) and (c) respectively. Source: Computed from FAOSTAT data. Agriculture excludes fishery and forestry products.

Total agricultural exports also rose during 1985-94, but modestly. They surged by 37 percent in 1995 and then generally declined, nevertheless leaving their average value in 1995-98 32 percent higher than in 1990-94 and, perhaps more significantly, 17 percent higher than the extrapolated trend value. The net result was an agricultural trade deficit that widened markedly. In 1995-98 it was 32 percent higher than in 1990-94, though 12 percent lower than extrapolated trend value. In relation to the trend there was thus some improvement.

The rest of this subsection summarizes the trade experience for some major products (Table 4).

Botswana has preferential access for 19 000 tonnes of beef per annum to the EU market under the Lomé Convention, where it benefits from a rebate of 90 percent of the EU's previous variable levy (now 90 percent of the specific element of the "tariffied" component of the duty).³ Actual exports have often been lower than the quota. Meat and meat products (notably beef preparations, meat meal, dried meat and offal of cattle) are also exported to other markets, notably to other SACU countries. The trend in the export of all meat products during 1985-94 has been downward in terms of quantity but upward in value terms, as export prices increased strongly. The post-1994 experience has also been mixed. The average value of exports in 1995-98 was 28 percent higher than in 1990-94, but this was fully due to the 45 percent rise in prices as the tonnage exported fell by 12 percent. Since boneless beef and veal account for 90 percent of the total value of exports of all meat products, this experience almost fully reflects that of beef and veal. In relation to the trend, the 1995-98 experience was somewhat better, in that there was also an increase in the volume exported.

Table 4: Exports and export unit values of major agricultural products, 1990-94 and 1995-98 (annual average)

			Actual value			Trend value1	Percentage change
			1990-94		1995-98	1995-98	(b/a)	(b/c)
Product		Unit	(a)		(b)	(c)	(d)	(e)
Meat (mostly		million US$		64	82	65	28.3	25.7
beef)		000 tonnes		25	22	20	-11.6	9.3
		US$/tonne		2 538	3 681	3 202	45.1	15.0
Hides and skins		million US$		5.0	9.1	6.7	81.1	35.1
		000 tonnes		3.9	4.5	4.6	16.6	-0.7
		US$/tonne		1 293	2 009	1 477	55.3	36.0
Miscellaneous2		million US$		6.7	15.6	10.5	131.4	48.0
		000 tonnes		6.1	13.2	8.0	117.6	65.2
		US$/tonne		1 105	1 176	1 313	6.4	-10.4

¹ See note 1 to Table 3.

² Various food preparations (50% of the total value in 1995-98), sugar confectionery (32%); pastry (21%); cotton lint and sunflower seed.

Source: Computed from FAOSTAT data.

Hides and skins are also important export products. In 1995-98, of total exports of about US$9 million, some 80 percent consisted of cattle hides (wet-salted) and 20 percent of calves skins (wet-salted). In 1995-98, their total value was 81 percent higher than in 1990-94, largely because of prices, though volumes also increased, by 16 percent. Among the two products, there was a surge in the export of skins while that of hides declined. In relation to the trend, earnings in 1995-98 were 35 percent higher, entirely due to higher prices, as there was virtually no change in the volume exported.

Other prominent agricultural exports for which data are available include various food preparations (accounting for 50 percent of this sub-total), sugar confectionery (32 percent), pastry (20 percent), sunflower seed and cotton lint. Exports have been rising in recent years and in 1995-98 export revenue was 131 percent higher than in 1990-94, almost entirely due to increased volumes. The increase in quantities exported was 65 percent higher than the extrapolated trend figure and in export earnings 48 percent higher, despite a decline in export prices.

Further analysis would be required to identify particular factors underlying the evolution of trade since 1994 described above, and would be valuable for articulating market access negotiations in the new round of negotiations.

3.2 Food Trade ⁴

Since food dominates Botswana's agricultural trade, the evolution of trade in food is broadly similar to that of agricultural trade as a whole. Food imports during 1985-94 were on a strongly upward trend, rising at the linear rate of US$19 million per year (Figure 2). They surged in 1995 (by 37 percent) and fell slightly in the following three years, resulting in an average value of imports in 1995-98 37 percent higher than in 1990-94 and roughly equivalent to the extrapolated trend value (Table 5). Food exports also rose during 1985-94, but rather less than imports. Like imports, they also surged in 1995 (by 33 percent), generally falling thereafter. The value of exports in 1995-98 exceeded the 1990-94 average by 30 percent and the extrapolated trend value by 13 percent. In consequence, the deficit in food trade in 1995-98 was 42 percent greater than in 1990-94 and (as for net trade in total agricultural imports) lower than the extrapolated trend value by (7 percent).

Table 5: Food trade in 1990-94 and 1995-98
(average annual value, in million US$, and percentage change)

Period		Imports		Exports	Net imports
1990-94 actual (a) 1995-98 actual (b) 1995-98 extrapolated (c)1 (b) - (a) 2 (b) - (c) 2			211 290 291 79 (37%) -2 (-1%)	80 104 92 24 (30%) 12 (13%)	131 186 199 55 (42%) -14 (-7%)
	1 See note 1 to Table 3. 2 Numbers in parentheses are percentage changes over (a) and (c) respectively. Source: Computed from FAOSTAT data. Food excludes fishery products.

The rest of this subsection reviews the import behaviour of the major food products (Table 6). Six product groups accounted for some three quarters of the total food import bill in 1995-98: cereals (20 percent), fruit and vegetables (20 percent), dairy products (15 percent), sugar (12 percent) and vegetable oils (5 percent).

The total cereal import bill in 1995-98 was US$59 million, 52 percent higher than in 1990-94, due more to higher prices than to quantity. Rice accounted for 36 percent of this increase (due to both quantity and prices), wheat and wheat flour for 28 percent (fully due to price), maize for 25 percent (mostly due to price) and sorghum for 10 percent (entirely due to volume). The average value of cereal imports in 1995-98 was 17 percent higher than the extrapolated trend value, with increased quantities playing a somewhat bigger role than prices.

Figure 2: Food trade, in 1985-98 (in million US$; thick lines are actual values, thin lines are trends for 1985-94, extrapolated to 1998)

Source: FAOSTAT

Table 6: Imports and import unit values of major food products, 1990-94 and 1995-98 (annual average)

			Actual value			Trend value1	Percentage change
			1990-94		1995-98	1995-98	(b/a)	(b/c)
Product		Unit	(a)		(b)	(c)	(d)	(e)
Total cereals		million US$		39	59	50	52.0	16.8
		000 tonnes		129	154	142	19.7	8.3
		US$/tonne		300	381	353	27.0	7.9
Fruit and		million US$		41	55	60	33.0	-8.7
vegetables		000 tonnes		68	77	96	14.5	-19.5
		US$/tonne		608	707	622	16.2	13.5
Dairy products		million US$		32	43	45	35.0	-4.7
		000 tonnes		79	92	99	17.2	-6.6
		US$/tonne		404	465	456	15.2	2.1
Sugar		million US$		24	34	34	41.4	2.2
		000 tonnes		48	53	50	11.4	6.5
		US$/tonne		506	642	669	26.9	-4.1
Vegetable oils		million US$		7	15	8	123.8	82.5
		000 tonnes		5	11	5	128.3	122.4
		US$/tonne		1 363	1 336	1 628	-2.0	-17.9

¹ See note 1 to Table 3.

Source: Computed from FAOSTAT data.

Imports of fruit and vegetables rose rapidly over the 10 years 1985-94, at a linear rate of US$ 4.5 million per annum. In the following four years (1995-98) their average value was 33 percent higher than in 1990-94, due in equal part to volume and price, but was nevertheless 9 percent lower than the extrapolated trend value. Of the total increase between the two periods, 64 percent was on account of processed fruit and vegetables, followed by primary fruit (21 percent) and primary vegetables (15 percent). The increase for each of these three sub-products was similar to the average for the product group.

Imports of dairy products, which account for 15 percent of total food imports, have surged in recent years, to reach a level in 1995-98 that was 35 percent higher than in 1990-94, contributed evenly by prices and volumes.

There was a surge in sugar imports in 1995-98, to over 41 percent above the 1990-94 level, two thirds of which was explained by higher prices. Imports were also slightly higher than the extrapolated trend value.

During the 10 years 1985-94, imports of vegetable oils were on a modestly rising trend. Thereafter imports surged, reaching in 1995-98 an average value more than twice that of 1990-94, entirely on account of volume. They were also well above the figures derived from the extrapolated trend (83 percent higher in value and 122 percent in quantity).

Figure 3 shows how food imports have varied annually in relation to total agricultural exports. In 1985-87, the ratio was 1.2, i.e. food imports were 20 percent higher than agricultural export earnings. There was a strong and steady rise in the next seven years (1986-92), after which it fell markedly. As a result, it was on average only 5 percent higher in 1995-98 than in 1990-94, but 20 percent lower than the extrapolated trend value. In other words, while there was a slight deterioration in the balance between total food imports and total agricultural exports over the two periods there was a major improvement in relation to the trend.

Figure 3: Ratio of the value of total food imports to that of total agricultural exports, 1985-98

Source: FAOSTAT

IV. ISSUES OF CONCERN IN FURTHER NEGOTIATIONS ON AGRICULTURE

This section summarizes some of the issues of concern to Botswana in the light of its experience with the implementation of the AoA reviewed in section II above and with food and agricultural trade reviewed in the preceding section. In so doing, it draws attention to the main areas where further analytical work would be helpful as part of the preparation for new negotiations on agriculture.

Domestic policies and the AoA

Profound changes in agricultural policies have taken place within SACU, notably in South Africa, in the second half of the 1990s. Most agricultural marketing boards that regulated trade as well as domestic prices and markets were abolished (though only towards the end of 1997) and in several cases various regulations continue in force, reportedly as transitional measures. These reforms were in part motivated by the AoA or anticipation of its final provisions. As a SACU member, and a small economy relative to that of South Africa, Botswana is affected by all these developments.

The review in Section II showed that of the three main provisions of the AoA, Botswana was hardly concerned with export subsidies, which are neither granted nor considered desirable. On domestic support measures, it was concluded, from the limited information available, that Botswana had considerable flexibility in subsidizing domestic producer, if required. Moreover, it could transfer some of the expenditure involved to the SDT category, which is exempt from reduction commitments for developing countries. Thus, it is most unlikely that the AoA provisions have constrained domestic support policies. Nonetheless, it is desriable to compute current AMS levels carefully in order to assess the its situation vis-à-vis the AoA rules. Besides contributing to transparency, this would be helpful in articulating a negotiating position for the new round.

By contrast, a number of difficulties were noted in the case of border measures, although here too there was no real difficulty in complying with the AoA rules, i.e. living with a tariff-only regime and within the bound rates. In most cases, applied rates are considerably below the bound rates. Some WTO Members did comment that the CET of SACU was complex and lacked transparency, in view of the existence of mixed and formula duties. However, they apply to only a small number of agricultural products and in any event the simplification of the tariff structure was well under way. In contrast to many other developing countries, the reform process in SACU was started late, just prior to the implementation of the UR Agreements, and is still underway. This was a major factor behind the difficulties faced in adapting/adjusting policies along the lines envisaged by the AoA.

Botswana feels that the economic transformation required to cope with trade liberalization with minimum social costs cannot be achieved within a short period; accordingly, trade instruments, including safeguards, need to reflect this reality. In this regard, it is in a somewhat different situation from many other developing countries because these measures are applied at the SACU level, where South Africa takes the lead. While, thanks to South Africa, SACU has the necessary capability and institutions to resort to these measures, there is a feeling among other SACU members that both the CET and trade remedy measures often respond more to the particular needs of South Africa and are not necessarily to the advantage, or much less so, of other SACU members. Botswana has access to the agricultural SSG, which is considered to be valuable because of its simplicity.

Issues related to the Lomé Convention

Preferential trade agreements such as the Lomé Convention have been under critical examination since the establishment of WTO. Besides the question of WTO-compatibility, the erosion of preferential margins - as the MFN tariffs in the importing country are reduced - has compounded the issue of preferential treatment for countries like Botswana. It has now been decided that, following a transition period, the Lomé Convention will be replaced by reciprocal free-trade agreements with the EU. Several preferential-receiving countries have proposed in WTO that in the context of any new round of multilateral negotiations it would be necessary to ensure that: i) the Lomé arrangements are allowed to continue under a waiver for a period of 10 years; and ii) once granted, the waiver would not be challenged by any Member during the course of its validity. Thus, the main issue addressed was the need for some transitional period as the cost of sudden removal of preferences would be very high for these countries. The costs, as well as the benefits of the new arrangement, are yet to be analyzed. For Botswana, the dominant concern is with the beef sector (see below). In addition to these analyses, Botswana needs to join hands with other Lomé partners to ensure that the new agricultural negotiations do not result in a sudden loss of current benefits from the Convention, which would have high economic and social costs.

Commodity-specific concern - the beef sector

For Botswana, the future of the world beef market and its own export prospects are obviously the key issues of concern. A number of considerations are involved. First, the successor agreement to the Lomé Convention would affect market access terms in the EU, its main export market. Second, the extent to which EU's MFN tariffs and other access terms (e.g. tariff quotas) change following the new WTO negotiations will have a direct impact on Botswana's export prospects and export earnings. Third, in the context of the geographical diversification of exports, what happens to the world beef market as a whole is also relevant. Currently, both support to and protection of the beef sector in OECD countries are high: the OECD Producer Support Estimate is 34 percent of the value of beef production, while the nominal protection coefficient is 1.5 (i.e. the domestic price is 1.5 times the border price). If there is little prospect of preferential access, it would be in Botswana's interest to negotiate for the sharp reduction in current levels of support and protection in industrialized countries. Fourth, Botswana may also need to articulate a position on export subsidies. Under the AoA, WTO Members can still subsidize 1.3 million tonnes of beef annually, with an adverse impact on Botswana's exports. The experience of large-scale exports of EU beef to South Africa and other SACU countries in the mid-1990s, and the difficulties faced on that account by those countries are well known. Finally, how trade in beef is treated in the South Africa-EU agreement is of direct and immense consequence for Botswana.

Policy analysis for rationalizing border measures in the light of various regional agreements

Botswana is a party to several bilateral and multilateral trade agreements, notably, the SACU, SADC, the WTO and the Lomé Convention, and also has a bilateral agreement with Zimbabwe. The management of all these agreements, including tariffs, requires considerable technical expertise and an effective institutional capacity. The insufficiency of such expertise and capacity, including analytical studies and maintenance of necessary database, was highlighted in the course of this case study also. Putting in place the necessary institutions, with technical assistance from developed countries (see below) is obviously one of the issues to be addressed seriously.

Technical assistance

With increased globalization and the regulation of global and regional trade, the demand for analytical capacity, information and knowledge of markets and trade-related legal issues has increased considerably. While much needs to be done by the country itself, the WTO Agreements also contain various promises of technical assistance. Developing countries feel that these promises have scarcely been fulfilled and many of them look forward to the new WTO negotiations on agriculture to ensure their effective implementation. Two particular aspects of technical assistance may be stressed here. First, there is a tremendous need for assistance to upgrade SPS standards. Second, assistance is required on the administration of agricultural policies, notably to adapt/adjust border measures in the new trading environment, including dealing with regional trade agreements as noted above.

1 Based on a background study prepared for the FAO Commodities and Trade Division by Angela Lusigi, Gaborone.