EPZ STRATEGIES IN THE CONTEXT OF REGIONAL COOPERATION AND DEVELOPMENT, AND A GLOBALISED ECONOMY ¹

By Dot Keet
Centre for Southern African Studies, University of.the Western Cape ²

Export Processing Zones (EPZs), under a variety of designations, are in the process of being introduced, or are already operating, in at least six of the twelve members of the Southern African Development Community (SADC). The more advanced of the new EPZ projects are in Namibia and Zimbabwe; although there are longstanding EPZ programmes in Mauritius and Zanzibar.

Such 'special' or 'free' industrial investment zones are also now on the drawing boards, or enshrined in legislation in Mozambique and Malawi. They are also being proposed from a number of different quarters and under various designations within South Africa - particularly by some of the provincial administrations, such as the Western and Eastern Cape, and by provincial and local authorities in Gauteng. (Business Day, 21121 96; Business Report, 2217/96). What is less well known is that EPZs have been under discussion in South Africa since the early 1980s and according to trade unionists - have been experienced in a very particular form in the homelands/bantustans under apartheid 'industrial decentralisation' incentive programmes (Jauch, Keet and Pretorius, 1996, 3438).

The recent study on EPZs commissioned by SATUCC the (Southern African Trade Union Coordination Council) (Jauch et al 1996) illustrates how employment, labour rights and conditions, and broader social, economic, and environmental effects of EPZs in Third World economies are well documented. On all these scores the picture is complex (Abate, 1996), and contradicts the superficial claims made in support of EPZs even in the case of the much vaunted Mauritius 'success story' (Nababsing, 1996) ³ . As devices for national economic development, EPZs are problematic (Jauch et al, 1996, 47-52), but other fundamental economic, social and political problems are evident when EPZs are assessed in relation to prospects for regional cooperation between the countries of Southern Africa, and in the context of the globalised world economy.

It is agreed by a wide range of forces in Southern Africa that development of closer cooperation between the countries cooperation between the countries of this part of Africa is simultaneously:

• a recognition of the existing operational/technical interdependence, and the high degree of de facto (if not yet de jure) functional integration of the economies of the region;
• a necessity, in order to begin to alter the inherited disparities and inequities towards more balanced development across the region - for the progress, stability and security of all the countries in the region;
• a possible - and probably the only - effective basis for the countries of Southern Africa, including even South Africa to respond to challenges of the new global economic order.

It is in this context that EPZs assume a broader significance. Some governments in the region are adopting EPZs as part of national liberalisation programmes to open up and integrate their economies directly into the global economy. They are seen to be devices to turn countries away from inward looking import substitution industrialisation (0) towards export-led growth. This is the argument of the World Bank (1991), and it would seem to be the position, for example, of the Zimbabwe government (Jauch et al, 1996, 30). If this is the case for other governments, as well, it clearly carries implications for their national development programmes. It also carries negative implications vis-a-vis regional programmes or more strategically conceded joint approaches by the countries of Southern Africa to achieve more advantageous (or even merely less disadvantageous) interactions with, and positioning in, the liberalised economy.

If governments of the region are deliberately opting for unilateral national liberalisation approaches, it reflects negatively on their (official) commitment to multilateral approaches to the challenges facing the region. Of course, regionally based joint approaches to development and security cannot preclude or disregard the reality of nationally based and more narrowly conceived national policies. At this early stage of cooperation towards the integration of Southern Africa, the respective governments still have specific responsibilities and problems to respond to within their national economies and societies. It is also entirely to be expected that there will be a range of issues on which competing and even conflicting national interests will emerge and have to be accommodated - as is inherent in such integration processes everywhere. However, the creation of EPZs could exacerbate such tensions by fostering narrow national approaches and competitive relations between members of SADC. Such actively divisive policies are qualitatively different to the kind of interim measures that take on board inherited differences and divisions - but with a view to reducing and removing them.

On the other hand, EPZs seem to have been approached by some governments in the region as something of an ad-hoc and 'crisis management' device. In this approach, EPZs may not be viewed as the beginning of a broad process of export-led growth and generalised liberalisation of their economies - the way the World Bank views it (World Bank, 1991). Although the Bank promotes EPZs as one of the instruments for the integration of African economies into the global economy, some governments in Southern Africa seem to be utilising EPZs simply as an interim, supplementary measure to deal. with some immediate problems - particularly pressing unemployment crises - while they wait to see what the promise of a broader integrated regional economy will deliver. Alternatively, governments in countries that have failed to attract foreign investment through national investment promotion plans, resort to the creation of EPZ enclaves with the argument that even such foreign investment, despite the limited returns, is preferable to even lower levels ... or none at all. Unfortunately, such short term measures are also short-sighted and could impact negatively upon, and even pre-empt, the longer-term, more fundamental regional development processes.

in the context of current programmes and future prospects for Southern African economic cooperation and integration, there are three main areas of complication and even potential conflict posed by the creation of EPZs. And, in this context, EPZs are invariably the less propitious of the trade, investments and industrialisation options facing the governments of the region.

1. Unilateral free trade enclaves - or a multilateral regional trade strategy?

It is evident that the facilitation and active promotion of trade provides an important stimulus to existing productive activities but also opens up possibilities for higher levels of economic development and diversification - if located within an appropriately designed policy framework. Within such a framework, trade stimulates greater production and higher productivity and is expanded in return, in an integrated development dynamic.

Increasing and improving trade between the countries of Southern Africa would be:

• an expression of their existing close economic interactions and infrastructural linkages, and the comparative advantages over external traders to be gained from their proximity to each others markets;
• an opening up towards greater economic production and productivity through the mutual stimulation provided by both competitive and cooperative cross-border transactions in goods and services;
• the basis for a greater degree of self-sufficient and self-sustaining economic development and diversification; while simultaneously a basis also for more soundly-based and less vulnerable external trade strategies.

Such intra-regional trade facilitation requires the rapid removal of non-tariff barriers (NTBs), such as uncoordinated standards and procedures, cumbersome and unnecessary bureaucratic processes, corruption and inefficiencies (especially in customs services), inadequate financial facilities, transport and other physical infrastructures and so on. But the encouragement of trade, production and economic diversification will also certainly require the reduction and eventual removal of tariff barriers between the countries of the region, particularly where they act as protection on inefficient industries in some countries to the direct detriment of more efficient industries in others.

The simple and simplistic - neo-liberal argument is that such protection are distortions or impediments to the free operation of market forces based on the respective efficiencies and profitability in competing industries, or the comparative advantages within of Southern African should rapidly create a full free trade agreement in the region and allow the operation of market forces to determine which areas or industries should survive and develop, or not.

A more strategic development approach, while encouraging efficiency aims, and recognising comparative advantages goes beyond simple commercial criteria and narrow business profitability. Development strategies have to take on board wider economic and social considerations, and counter or compensate for the economic inefficiencies or waste, social costs, and environmental damages that accompany the functioning of market forces. Specific economic, social and security considerations - in identified cases and for defined periods and purposes -have to be factored in. This would include, for example, the temporary application of tariff regulations and the utilisation of other financial, legal and technical instruments to promote certain economic regions, economic or social sectors, or even specific industries.

Complex processes of analysis and negotiation are underway between the countries of Southern Africa on the facilitation and promotion of intra-regional trade within a multilateral regional trade strategy (SADC 1995). The aim and end product of trade negotiations is seen to be the eventual creation of an integrated free trade region. However, how this process proceeds will depend upon the accommodation and coordination of a variety of national and sub-national interests, existing agreements and differing government policies and approaches towards both intra-regional and international trade. Some countries have already adopted far-reaching liberalisation policies: within their domestic economies, in their cross-border regional relations, and in their international trade and investment strategies ⁴ .

In the context of the need to encourage the respective countries towards expanded forms and higher levels of cross-border trade and development, and - to prevent the aggravation of existing imbalances between them; the facilitation and active encouragement of intra-regional trade entails:

• the accommodation of different and sometimes conflicting national economic interests and policies between the participating governments;
• the incorporating of the many existing (and possibly even some new) bilateral trade agreements between specific pairs of countries within the region;
• the integration of existing subsets of countries or economic agreements, such as the Southern African Customs Union, into the broader Southern African multilateral trade framework; and
• effective responses to demands for interim exemptions and protection for specific products or industries in various of the member countries -without, in the process, entrenching fixed and unsustainable protectionism.

All the above points to the necessity for transitional and variable preferential trade arrangements between the countries of Southern Africa; with the prospect and longer term aim of moving - as rapidly and smoothly as the separate and common interests allow - towards a regional free trade area, possibly surrounded by a common external tariff. ⁵ There is some urgency in the matter, however, as the new WTO rules make such preferential intra-regional trade arrangements difficult to defend unless the regional grouping has been formally registered with the WTO under the special provision for LDC (least developed countries) regional integration. ⁶

The creation of EPZs could pre-empt and will certainly complicate the creation of such a multilateral intra regional trade integration and promotion process.

1.1 At the very least, EPZs with provisions for partial trade access to their respective host markets, and with inevitable 'leakages' of goods out of the enclaves into local or regional markets, create possibilities - legal and illegal - for breaches of the trade and tariff regimes of both the host country as well as other members of a joint trade area.

1.2 More importantly, there can be no doubt that many foreign companies will be attracted to EPZs in Southern Africa as platforms from which to export not only into international markets but also into the common regional market created by trade integration - thereby undermining the benefits of proximity that is one of the few advantages that local producers have within the region.

1.3 Above all, the existence of free trade zones within a number of the SADC countries will complicate the creation of an intra-regional free trade area in Southern Africa. At worst, where EPZs are adopted as part of an externally oriented, general liberalisation strategy, an effective regional economic grouping, with or without a common external tariff system, will be seriously prejudiced if not totally pre-empted ⁷ without such a regional framework agreement, South Africa which is under pressure to extend existing, and enter into new bilateral trade agreements with its neighbours, could find itself required - under WTO 'non-discrimination' principles - to extend the same preferential terms to other countries in the same category.

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2. Competing foreign investment schemes - or coordinated regional investment strategies?

Other important aspects of regional economic cooperation and development lie in the direction of the integration of the financial markets of Southern Africa. Research and discussions are already under way to remove procedural, bureaucratic, physical infrastructural and personnel/capacity impediments to efficient cross-border financial operations in the region (SADC, 1995b).

Full macro-economic alignment, and regional financial integration is a long-term prospect but, as with process towards trade integration, here too transitional measures and the negotiation of multilateral arrangements will be required. In addition to the kind of technical requirements indicated above, more effective cross-border financial operations and regional investment promotion would include:

the facilitation, and possibly the eventual full liberalisation of cross-border investment capital flows and currency movements between SADC member states;

the creation of regional financial instruments, such as targeted investment and development funds, to encourage more geographically balanced patterns of investment between member countries, into priority sectors, and even into more deprived regions;

the encouragement of joint regional investment programmes involving both public and private capital and from different member states towards combined and mutually beneficial development;

and the creation of foreign investment promotion schemes and coordinated strategies, or common investment codes, with respect to foreign investment.

The adoption of EPZ programmes offering competing packages - incorporating customs exemptions, locational and operating subsidies, tax holidays, generous profit repatriation and other financial inducements - to attract foreign investors (Jauch et al, 1996 6-7) stands in contrast to such important collaborative strategies in Southern Africa on three main grounds.

2.1 The first is that the preoccupation with attracting foreign investment, reflected in the recourse to EPZ schemes, detracts attention and efforts away from the mobilisation of internal investment resources. What is more, EPZs often actually function to the detriment of local enterprise by offering preferential conditions and a host of subsidies to (otherwise uncompetitive or even non-viable) foreign companies, subsidies that are under liberalising structural adjustment programmes - normally denied to (uncompetitive,/ non-viable) local companies.

2.2 The second and even more serious problem arises from the downward pressures exerted on investment terms and other conditions in the EPZs, as countries underbid each other to attract foreign companies. This becomes particularly pronounced with the capacity and preparedness of footloose EPZ companies to undertake rapid relocations from one such EPZ to another offering more attractive terms. In this situation, the tactic of playing countries off against one another becomes a deliberate part of the business strategies of such companies. ⁸

2.3 By contrast, coordinated and comprehensive regional investment strategies between a number of cooperating countries could create the scale and sophistication of investment projects to attract more worthwhile, longer-term foreign investment, and within which could be incorporated more favourable terms - such as skills and technology transfers. It is essentially such sizeable and more stable foreign investment that can be utilised to produce some advantageous effects within national and regional development programmes - in contrast to the quick-profit operations of fly-by-night EPZ outfits.

EPZ investment schemes reverse what should be the relationship between domestic development and foreign investment. National economic and social development potential and priorities should shape appropriate investment - including foreign investment -programmes. It should not be the aims and interests of foreign investors that decide - on the basis of their own profit (and sometimes other) considerations -which, or which directions, specific enterprises, industries and even entire countries will develop (or not).

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3. Monoculture enclaves - or diversified and integrated production economies

The fundamental purpose of national and regional trade and investment strategies should be the development and diversification in all economic sectors within and across the countries of Southern Africa. Programmes of research and analysis in this direction are underway and some are quite well advanced within the SADC framework? ⁹

These include perspectives and plans for:

• joint research and development programmes in key production sectors, such as energy and water resources development, forestry and fisheries protection, agricultural and minerals benefication, and a host of others;
• combined and complimentary production ventures in specific sectors between a number of cooperating enterprises in the different countries, such as iron and steel, motor vehicle, agricultural and mining machinery and other complex manufacturing processes;
• integration of the comparative advantages of the respective participants in complimentary production reflecting their various strengths, - such as food production and security programmes combining the respective land and climatic conditions, scientific and agricultural research capacities and inputs (chemical fertilisers and agricultural machinery) available from a number of countries, instead of being focused only in one or two.

Multifaceted and multilateral strategies reflecting and reinforcing the relative strengths and needs of the different countries - and even the more depressed areas within the respective countries - are the most effective way to produce transformative, (re) balancing and stabilising development between all the countries and sub-regions of Southern Africa. It is also an important basis upon which to achieve economies of scale and greater international competitiveness.

In comparison to such potential, EPZs appear to be a very piece-meal, hit-and-miss device. The type of production fostered in EPZs stands in contrast to such a comprehensive and integrative approach on three main grounds.

3.1 The first is the very narrow range of low technology, low value-added industries based mainly on simple assembly-type operations typically attracted to EPZs. As has been noted in most EPZs there is very limited industrial diversification within such enclaves, let alone into the rest of the host economies. They are rightly called 1ndustrial monoculture enclaves"(] L0/UNCTiC, 1988,109).

3.2 EPZ operations do not necessarily reflect or feed into actual and potential strengths in the host economies. They are notoriously ineffective in creating backward and forward linkages, or technology and skills transfers (Jauch et al, 1996,1922). Nor do they respond to the need to overcome the 'enclave' nature of industrial development in most of the countries of Southern Africa. In fact they will, by their very nature, reinforce the tendency for the industrial sectors to be unconnected to and turned outwards and away from the agricultural and even the mineral resource bases of these countries. EPZs are essentially physically located upon or artificially grafted onto the host economies. They do not develop organically out of the resources and needs of such economies.

3.3 The creation of EPZs as a device to encourage countries to turn outwards with so-called exported growth raises further problems. The first is that such production is turned away from meeting domestic needs towards production for foreign markets. Yet such EPZ exports bring in very limited foreign exchange gains - due to the generous transfers of profits and other financial inducements accorded to such companies. At the same time, EPZs are also ineffective in creating production and export linkages with domestic companies. A further question accompanying export led growth strategies is the superficial and sweeping dismissal of 'import substitution industries supplying domestic markets and in the case of Southern Africa -the regional markets. ¹⁰

There is a particular, potential problem for South Africa per se in the creation of EPZs in various of its neighbouring countries. The new South Africa is already facing serious difficulties in persuading local business towards industrial restructuring and transformation more in tune with the economic demands and social needs of the post-apartheid era. The accessibility of EPZs, not far from the borders of South Africa, offering various investment inducements and subsidies, and 'favourable' and other conditions, could be an active dis-incentive to South African business to rise to the challenges of industrial restructuring at home. They would be encouraged to evade new regulations in South Africa, including the new labour relations system; and yet be able to use such EPZs as their production bases and platforms for exports back into South Africa. This would prejudice industrial development and employment creation within South Africa - and yet with very limited gains accruing to their host countries. Once again, compared to the potential in comprehensive national and regional programmes, EPZs are a most inadequate device for industrial development.

In the case of the proposed EPZs or "special export zones" within South Africa itself, it could be that they will be based on different labour rights, standards and regulations than obtain the rest of South Africa - given the new tendencies towards a more 'flexible' labour market in this country. The other major issues is the kind of investment incentives, subsidies, and other financial rights and privileges that usually characterise such enclaves - and the implications of these for companies operating in the rest of the country. Furthermore, the direct costs of such subsidies to the public purse, national and/or provincial, and the indirect financial losses through tax concessions, and through the expatriation of profits, or forex transfer rights raise other questions. It is, however, once EPZs are located within the globalisation framework and viewed within the context of the broader liberalisation programmes being promoted in Southern Africa, that further and fuller problems and insufficiencies become evident.

4. Direct national integration into the global economy - or regional strategies towards globalisation?

If the introduction of EPZs by various of the countries of Southern Africa reflects an acceptance of the World Bank view such free trade and deregulated zones are an ' interim measure through which national economies are directly integrated into the globalised economy, then this has implications for the full potential and global location of both the individual countries and the entire Southern Africa regional integration project.

In an era in which the integration of all countries within a globaiising economy is being promoted through national, regional and international liberalisation programmes of many kinds, EPZs are, in fact, one of the weaker devices. Other more sweeping liberalisation processes are also being promoted in Southern Africa:

• IMF/World Bank structural adjustment programmes (SAPs) promote radical liberalisation of investment and trade policies. SAPs have already had pronounced effects in opening up national economies to international trade penetration. They also encourage uncoordinated and sometimes deliberately competing trade and financial measures amongst, neighbouring countries such as frequent/extensive currency devaluations that exacerbate trade competition and complicate cross-border transactions.
  
• The regional Cross-Border Initiative (CBI), promoted by the World Bank in conjunction with the ADB and the European Commission, aims to reinforce and extend SAPs by encouraging unilateral cross-border trade and investment liberalisation by governments within the Southern African region, and pointing them towards "generalised" external liberalisation. This is in order to ensure that if a regional grouping does emerge in Southern Africa it will be under internal as well as external pressures to be externally open to international trade, services and investment (Keet, 1994).
  
• A more recent strategy pursued by the European Commission is to prevent South Africa from joining its fellow SADC members in Lome. Instead, the EC is encouraging Pretoria into a bilateral reciprocal free trade agreement with the European Union. This has other serious implications for preferential trade and other multilateral economic agreements between South Africa and the other countries of SADC (Davies, 1995).

Relatively weak as they are, EPZs are part of such broader liberalisation endevours to encourage countries to integrate their economies directly into the global economy. All such programmes undermine the possibilities for the countries of Southern Africa to unite in order to be able to deal more effectively with what is a hostile global environment. Globalisation is not some neutral or 'natural' process that has somehow emerged spontaneously from the technical demands increasingly complex production processes and the development of technology. The globalisation of production has certainly benefited from, and contributed towards, such technical/technological processes. It is, however, fundamentally the result, and expression, of the drive by transnational corporations (TNCs) to carry out their international production and investment under optimal conditions to maximise their profitability, competitiveness, and power relative to each other, and to the governments, and other economic agents they deal with.

Starting from the horizontal extension and integration of production operations across the world, globalisation is now also characterised by the vertical integration of related production processes within the same TNCs (UNCTAD, 1995). ¹¹ Furthermore, on the basis of the internationalisation of their production activities, in search of the most favourable material resources, labour, skills and markets, the TNCs need greater freedom to locate, integrate or relocate all factors of production . ¹²

Corporate production strategies demand the liberalisation, or increasingly free movement of investment capital, capital equipment and goods, and technological/communication and other services. The vast scale of production of such TNCs demand integrated global markets. The unfettered and optimal operation of TNCs also require the reduction or removal of regulatory conditions or 'interventions' by governments around labour, social, health and safety standards, environmental controls and so on. Such deregulation then provides an even more favourable environment for further globalisation; hence the close identification and inter-dependence of globalisation and liberalisation. Globalisation is the substantive integration of economic processes, economic processes, economic sectors and all economies; and liberalisation provides the policy oils to smooth the functioning and advancement of that process (Keet, 1996).

Thus the world is now characterised by the integration of production processes, economic sectors and economies into a new internationalised economy. Of course, powerful governments and companies still use their national bases and political leverage to promote their strategic or economic interests. This is evident in the way in which the United States government protects its weaker industries/sectors by various protectionist devices, and through the creation of the North American economic block. ¹³   However, for weaker countries, liberalisation erodes or severely narrows the policy-making space for national governments. National economic sovereignty is reduced.

The basis or space is severely narrowed for national governments to formulate appropriate and differentiated national economic policies and enter into truly inter-national relations. Globalisation sweeps over and requires the sweeping away of - national economic over and requires the sweeping away of national economic boundaries. Thus, the integration of what is a fundamentally inter-dependent world is not coming about through negotiated agreements on mutually beneficial terms between nations and peoples. In fact, globalisation could be described as the transnationalisation of the world economy because it is essentially created by the demands and in the interests of the TNCs.

The other corollary to the globalisation of the world economy is the so-called marginalisation of weak economies, and on the continent of Africa in particular. This term and process also require closer analysis. What marginalisation usually refers to is the difficult access of such countries to international investment and technology and their limited participation in international trade. Africa receives a minute 1.4% of direct international investment (FDI) - and most of the US$3.1 billion in FID1 that flowed into Africa in 1994 went to half a dozen (mainly oil producing) countries. Of the total world FD1 flows of some US$224 billion in 1994, a mere US$ 1.8 billion came to sub-Saharan Africa, (UNCTAD, 1995). Similarly, Africa's share in international trade has been steadily declining from about 3% in the early 1970s to little more than 1% of world trade in the early 1990s (Coote, 1992). This is anticipated to worsen still more as the negative impact of the new post-Uruguay multi-lat eral trade regime causes Africa to suffer further US$ 2.6 to 3 billion losses by the end of the century. ¹⁴

The desirable and necessary alternative then proposed for African countries is better integration into the international economy. However, closer examination of the way in which this is being promoted shows it to be not about Africa being integrated into but simply opening itself up to international trade and investment (World Bank, 1988). What Africa needs is integration in the sense of more favourable term of participation in, and access to, the global economy (Coalition for Africa, 1992). What is at issue is not integration per se but the aims, policy instruments and time-frames for that integration - and where the main benefits will accrue. Africa needs the space to develop its own modalities for 'strategic integration'. However this demand change - not only within Africa but in the policies of the rich industrialised countries, particularly in opening up their markets. And it requires changes in the international trade system which is biased towards the rich and powerful economies and companies.

Marginalisation is not, as depicted by the World Bank and other such institutions, merely the result of 'deficiencies' within African countries and cultures, or the 'fault' of African governments themselves - although there is certainly truth is some of these assertions. More fundamentally, marginalisation is the more extreme form of the polarisation that neo-liberal policies impose on weaker companies ... or regions ... or entire countries. This is the essence of the functioning of free market economies. The effects of a survival-of-the-fittest system are also evident in the increasing marginalisation and subordination of disadvantaged individuals, communities, and sectors of populations within the rich industrialised countries of the North as much as in the polarisation between rich countries of the North and poorest countries of the South. Marginalisation and polarisation are inherent in the functioning of the liberalised 'free market' system, or (as it was once known) capitalism. ¹⁵

And finally, the most extensive programme to liberalise interactions in all sectors, between all the countries of the world is now being enshrined in the post-Uruguay multilateral system of trade rules under the supervision of the World Trade Organisation (WTO). This new regulatory trade regime is about much more than just international trade relations. Trade is important in itself, but it is also being used as the instrument by which to ensure compliance with liberalisation of other international economic transactions and operations. Retaliatory trade sanctions can be authorised by the WTO if member countries are found to have infringed any of the sub-arrangements coming under WTO regulation. Trade in goods is being liberalised through GATT - although the accommodation of the particular needs of the strong economies is the immediate outcome, while responses to the needs of the weak economies is only a long term prospect.

In the meantime, the opening up of all countries to the operations of service enterprises (transport, telecommunications, insurance, banking, financial and others) is to be served through the General Agreement on Trade in Services (GATS). On the other hand, TRIPS (Trade Related Intellectual Property Rights) will protect the patented inventions, processes, trade marks and related rights of the powerful corporations and cutting edge industries such as the new information and bio-engineering industries. The demands and interests of international investors are to be provided for through Trade Related Investment Measures (TRIMS) and the proposed Multi-lateral Investment Agreement (MIA). ¹⁶

The post-Uruguay trade regime is ostensibly designed to ensure that all countries abide by the same and regulations and compete on level playing fields. However, the global economy of gigantesque TNCs - many times richer and more powerful than entire poverty-stricken and dependent Third World countries is not a 'level playing field'. In such a grossly imbalanced world, the new international system reflects and reinforces the advantages of the rich and powerful countries and is designed to secure the free and unfettered functioning of transnational corporations.

Furthermore, there are indications that powerful countries are continuing to operate according to their own unilateral rules with little concern that trade sanctions could be imposed upon them. ¹⁷ Weaker countries could, however, find themselves suffering under insupportable trade sanctions should they be judged to have broken WTO rules.

5. Some Conclusions

These new globalisation-liberalisation programmes seriously limit the possibilities for governments to create and shape their own economic policies in terms of their particular needs and the balance of interests within their societies. By extension, this poses new challenges to national interest groups and social movements in influencing - or pressurising - their governments to adopt appropriate policies. This is a serious erosion of the sovereign powers of governments and the democratic rights of peoples. Countries have to create the space and re-establish the right to shape appropriate national policies, and to enter into regional and international relations and institutions without their hands firmly tied.

Governments non-govern mental forces in Africa, above all, need to strength their bargaining base in this difficult international environment. As members of an integrated regional economy the countries of Southern Africa could be much more effective players in this new global environment. As members of stronger economic blocks countries have greater possibilities to negotiate better terms for their international relations. This is evident even to much stronger economies such a Brazil (through its regional grouping MERCOSUR) or Malaysia (through its promotion of EAEC). it is equally important for weak and vulnerable economies such as those of Southern Africa - including even South Africa.

It is ill-conceived and self-defeating for any countries in today's world to be pursuing 'solo' integration through national liberalisation programmes into a global economy where countries are increasingly organising themselves into regional blocks. It is, furthermore, not only the 'emerging' economies of the South that are now working towards creating their own regional groupings. As is frequently observed, even the most powerful economies of the world, in North America and Europe have created their own powerful regional economic blocks, the North American Free Trade Area (NAFTA) and the European Union (EU) respectively. What is more, there are competitive neo-mercantilist battles emerging between these blocks which would completelyswamp any small individual players.

The overall strategic need for weaker countries to band together into regional groupings are multifold but there are two key advantages.

• In the first place, more comprehensive regional resource bases, economies of scale in infrastructural investment and production, and larger internal markets provide them with a programmes, as well as more competitive and effective interactions with the international economy.
  
• But equally importantly, it is on such bases and in alliance with other similar groupings, especially amongst the countries of the S outh - that effective can then be made to challenge and change the new liberalised global order that carries such dangerous implications for the weaker economies and peoples of the world - and, indeed the very stability and security of the world itself.

The ultimate paradox of various governments in Southern Africa trying at this late stage, to use EPZs as a device for dealing with their economy problems is also two-fold.

• On the one hand, they are entering a highly competitive - in fact ruthless - field in which there is really little prospect for any of the Southern African countries being able to offer the kind of terms, facilities, resources and prospects that will really attract international investment of the type and on a scale needed to make the kind of impact they are supposed to produce.
  
• Secondly, such countries are entering the field late in the day, in which EPZs are being superseded by other more sweeping and favourable liberalisation prospects for international investors. Serious investors do not need small export processing enclaves when they can, nowadays, have access to the labour, resources and markets of extensively liberalised economies throughout the world.

Rather than competing with each for the crumbs to be gained from dubious EF`Z ventures, governments in Southern Africa should cooperating and combining together to create effective strategies that respond to the real needs on the ground in their countries and build upon the real potential in their human and physical resources. Furthermore, rather than, 'adjusting' and subordinating their countries and peoples to the inequities of the new liberalised global order, the governments of Southern/Africa should be focusing their attentions and combined efforts on creating strategic programmes to secure more favourable or simply less unfavourable - interactions with the global economy ¹⁸ .

ENDNOTES

¹ Based,on a paper ~resented at an 11.0 sponsored workshop on WZs with the Sowhern African Trade Union Coordination Counci , (SATUCC in Harare 28-30 March 1996).  Back to text

² The writer is at present undertaking a broader research project on 'labour perspectives on regional cooperation and development between the states of Southern Africa', with the support of a research grant from the MacArthur Foundation. Back to text

³ Which has proven to be much more variable and problematic in its effects than usually acknowledged by enthusiastic EPZ promoters; see presentation by Prof Vidual Nababsing, University f Mauritius (ILO 1996).   Back to text

⁴ Zambia is probably the most extreme current case in Southern Africa but others, such as Malawi, have also gone far in liberalising trade and foreign investment policies.  Back to text

⁵ Although the terms of the post-Uruguay multilateral rules based trade system make such arrangements difficult to create which is precisely the type of international problemAhat only joint approaches would be able to deal with.  Back to text

⁶ Or, as it is often termed, ECDC - economic cooperation between developing countries.  Back to text

⁷ Under GATT Article XXIV new tariffs agreements between a number of countries have to be based upon a weighted average of th, respective external tariff regimes in operation - which means that individual countries with very low external tariffs create down ward pressures on any putative common external tariffs; see D Keet '7he neoliberal challenge to prospects for development cooperation and integration in Southern Africa", Occasional paper # 11, IFAA, December 1994.  Back to text

⁸ As is already becoming evident in Southern Africa as companies 'hop' from one EPZ/country to another.  Back to text

⁹ See also the African Development Bank's 1993 study on "Economic Integration in Southern Africa" for interesting proposals in these directions.  Back to text

¹⁰ The problematic experience with import substitution industrialisation (IS1) in Africa has resulted in a superficial and sweeping dismissal of ISI per se. Whereas it has actually and almost invariably been a significant initial or transitional phase, and integral part of the industrialisation strategies of the much praised newly industrialised countries - such as Brazil or developed ISIs to move towards production for export as well.  Back to text

¹¹ UNCTAD's World Investment Report (1995) calculates that movements of goods and service transactions within and between Ms accounts for about two thirds of world trade in goods and services.  Back to text

¹² But not an eouivalent free movement of labour.  Back to text

¹³ At the same time as it pressurises the rest of the world to open up to the operations of its powerful TNCs.  Back to text

¹⁴ 0ECD and World Bank estimate quoted in Third World Economics #88/89, 10 May 1994.  See also UNCTAD "Ad-hoc Working Group on Trading Opportunities in the New International trading Context".    Back to text

¹⁵ The gains and the challenges or risks of globalisation were the main focus of the debates during UNCTAD IX - with the USA as the most energetic defender of the challenges euphemism over the more problematised risks approach. What was also manifest, however, was that polarisation within and between nations is becoming a source of widespread concern, and the hegemony of simple free market policies was constantly questioned from a very wide range of participants and in a number of directions.  Back to text

¹⁶ With proposals from the OECD, in general, and the EU in particular, to create the right of entry and operation of investment capital anywhere in the world.  Back to text

¹⁷ The United States is, to the contrary, trying to impose its own trade and investment regulations on the rest of the world when it judges necessary.  Back to text

¹⁸ "Mercado do Cono do Sur" - Market of the Southern Africa (of Latin America) East Asian Economic Caucus.  Back to text

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