The nuts and bolts of trade agreements

Free Trade Zone: This relates to designated areas that are established within a single customs authority or country. Amongst others it encompasses the infamous Export Processing Zones (EPZ) as well as bonded warehouse which are used for the customs duty free importation of goods for outward processing. The South African government is in the process of drafting legislation for the introduction of Industrial Development Zones (IDZs). The IDZ differs from the traditional EPZs in a number of ways, most notably in respect of the labour dispensation. Free Trade Area: Over the past couple of years the press has extensively covered SA’s negotiations on Free Trade Agreements with the EU and SADC. To avoid confusion the Free Trade Area (FTA) is created as a result of the successful negotiation of a Free Trade Agreement. In effect an FTA is little more than the initial stage of economic integration in that it allows for the customs duty free movement of goods between contracting parties. In South Africa’s instance an FTA was established on 1 January 2000 with the 15-member EU (which has grown to 27 members), while the Government envisages an FTA with the 14-member SADC becoming operational towards the latter part of this year. South Africa also concluded an FTA with the 4-member Efta on 01 May 2008.