Indian Ocean Rim Association: briefing

Meeting report

FOREIGN AFFAIRS PORTFOLIO COMMITTEE
8 February 2000
INDIAN OCEAN RIM ASSOCIATION FOR REGIONAL CO-OPERATION

Documents handed out:
Briefing on Indian Ocean Rim Association for Regional Co-operation (See
Appendix)

Relevant websites:
www.chogm99.org
www.unctad-10.org
www.thecommonwealth.org
www.tcol.co.uk

Chairperson: Ms N Magazi

MINUTES
Mr A Minty, the Department's Deputy Director: General Multilateral Desk, gave a briefing on the Indian Ocean Rim Association for Regional Co-operation (IOR-ARC).

At the chairperson's request, he also gave a briefing on the Tenth United Nations Conference on Trade and Development (UNCTAD 10) meeting and the Commonwealth Conference and CHOGM [full details of these meetings are available at their websites].

UNCTAD is a knowledge-based institution that does research on integration of developing countries into the global market. The issues the meeting focussed on included the need for policy coherence among member states, the need to pay special attention to problems of Africa, improvement of market access to developing countries, the need for trade negotiations to take cognisance of developmental aspects of globalisation.

The Commonwealth Heads of Government Summit's theme for its conference was "People Centred Development - a Challenge of Globalisation." This took place in Durban and was attended by 52 member states, 47 of which were represented by their heads of state. The reason for the absence of the heads of Sri Lanka and New Zealand was that national elections were taking place in their respective countries. This was the second meeting where one party and military regime states were not allowed to attend. The major success of the meeting was the signing of the Fancourt Commonwealth Declaration . A committee of the high level group also held a meeting that was chaired by South Africa. The idea is to look at all Commonwealth structures and to make recommendations which will be presented in the next conference.

Discussion
Q. Is there an intention to make the IOR-ARC a fully fledged trade agreement.

A. There are provisions in the IOR-ARC Charter allowing for development into a fully fledged trade organisation, but there are concerns among some countries that this would promote dumping of low quality goods. Also, the organisation was meant to be a forum for economic dialogue and co-operation; most member states belong in regional trade organisations such as SADC and ASIA which raises the question as to whether the organisation should seek to replace these.

Q. Mr Pheko (PAC) asked why there was reluctance to have a secretariat for the Indian Ocean Rim and whether it is going to grow bigger.

A. The kind of work that the Association envisaged doing did not warrant a large secretariat. It was felt that it would be expensive to run such a secretariat and thus a smaller one was opted for.

Q. What is the difference between member states and those afforded dialogue status.

A. Countries afforded dialogue status are those that are technically not in the Indian Ocean boundary, such as Japan, Egypt and United Kingdom. These countries are allowed to participate in projects but not in other issues.

Q. Regarding South Africa's policy of inclusiveness what are the long-term plans for intervention in the India/Pakistan issue.

A. Sri Lanka has been trying to use its position in the regional organisation to intervene. But this is a very complex issue - with India saying that the Kashmir issue is a bilateral matter and Pakistan arguing that it is a multilateral issue. At the moment, concentration is on having the two countries have laws that encourage dialogue to take place.

Appendix:
INDIAN OCEAN RIM FOR REGIONAL CO-OPERATION (IOR-ARC) PORTFOLIO COMMITTEE BRIEFING: 8 March 2000

1. ISSUE
South Africa is a founder member of the Indian Ocean Rim Association for Regional Co-operation (IOR-ARC). The Charter of the IOR-ARC was adopted by a Resolution in a Ministerial Meeting of the IOR-ARC Ministers in Mauritius in March 1997. The organisation is still in its fledgling stage but shows increasing potential of becoming an important regional economic organisation.

2. IMPORTANCE OF THE INDIAN OCEAN
The Indian Ocean carries half of the world's container ships, one-third of the bulk cargo traffic and two-thirds of the world's oil shipments. It is a lifeline of international trade and economy. The region is woven together by trade routes and commands control of the major sea-lanes. The Indian Ocean Rim constitutes between a quarter and a third of the world's population - close to two billion - which makes it a massive market. It is rich in strategic and precious minerals and metals and other natural resources, valuable marine resources ranging from fisheries to raw material and energy for industries. It has abundant agricultural wealth in terms of the variety and mass or arable land and significant human resources and technological capabilities. Many countries of the Rim are becoming globally competitive and developing new capacities and externalities, which can be jointly harnessed through regional co-operation efforts.

3. EVOLUTION OF THE IOR-ARC
3.1 Over centuries, the countries, economies and peoples of the Indian
Ocean Rim have been bound together into an Indian Ocean community.
Traders, seamen, fishermen and pilgrims traversed the Indian Ocean and
its numerous ports, enabling a vibrant trading network to emerge.

3.2 The post-Second World War era has been characterised by the emergence of global and regional interdependence Today, the new global order is characterised by a market-driven environment, accompanied by the formulation of economic and political groupings. The current multilateral trading system is thus characterised by the development of trading groupings.

3.3 In 1995, during a visit to India, President Mandela stated that:
"The natural urge of the facts of history and geography that Nehru spoke of should broaden itself to include exploring the concept of an Indian Ocean Rim for socio-economic co-operation and to improve the lot of developing nations in multilateral institutions such as the United Nations, Commonwealth and Non-Aligned Movement."

President Mandela went on to state that:

"Recent changes in the international system demanded that the countries of the Indian Ocean Rim shall become a single platform. The natural urge of the facts of history and geography should broaden itself to include exploring the concept of an Indian Ocean Rim of socio-economic co-operation and other peaceful endeavours."

3.4 Subsequently India and Australia, the two other major countries forming the IOR triangle, enthusiastically supported the President's statement. For Canberra, this was in line with their "Look West" strategy announced in 1994. For New Delhi, this was seen as a culmination of the vision of India's first post-independence Prime Minister, Jawaharlal Nehru, who had encouraged unity among the Indian Ocean states.

3.5 On 29-31 March 1995, the Mauritius Government convened a meeting to discuss the possibility of enhancing economic co-operation among countries of the Indian Ocean Rim. Government representatives of seven countries (Australia, India, Kenya, Mauritius, Oman, Singapore and South Africa) subsequently known as the "core group states" or "M-7" attended, along with members of the business sector and academia. A joint statement issued at the conclusion of the meeting declared that the participants had agreed on "principles of open regionalism and inclusivity of membership, with the objectives of trade liberalisation and promoting trade co-operation. Activities would focus on trade facilitation, promotion and liberalisation, investment promotion and economic co-operation.

3.6 A tripartite Working Group (government, academic and the private sector) met in Mauritius on 15 -17 August 1995. This meeting supported, inter alia, the establishment of a wider non-governmental second track process as complementary to the inter-governmental movement. A further meeting in Mauritius in September1996 finalised a Charter to underpin the creation of the IOR-ARC, and also saw the doubling of membership to include Indonesia, Malaysia, Sri Lanka, Yemen, Tanzania, Madagascar and Mozambique - now known as the "M-14".

4. THE IOR-ARC CHARTER
The Charter of the IOR-ARC was adopted at the First Ministerial meeting on Mauritius on 6 - 7 March 1997, when the organisation was formally launched. Minister Nzo, when addressing the meeting, stated: "It is clear that, for whatever different reasons of the past, we have neglected our identity as a region. This has not been to our advantage. The signing today of a Charter for a closer association, is thus in fact a rediscovery of both our common interests and the potential benefits to be derived from greater inter-regional trade and co-operation.

4.1. The Principles
The Charter clearly indicates that the OR-ARC "seeks to build and expand understanding and mutually beneficial co-operation through a consensus- based, evolutionary and non-intrusive approach". Co-operation is to be based on principles of sovereignty, equality, territorial integrity, political independence, non-interference in internal affairs, peaceful coexistence and mutual benefit. The membership of the IOR-ARC is open to all sovereign States of the Indian Ocean Rim who are willing to subscribe to principles and objectives of the Charter. It focuses on economic co-operation and particularly in promoting trade and investment, IOR-ARC explicitly excludes bilateral relations and other issues likely to generate controversy and be an impediment to regional co-operation. Decisions on all matters and issues and at all levels will be taken based on consensus. According to the Charter, the IOR-ARC is foremost an outward looking forum for economic dialogue and co-operation, with the following key objectives:
* improved market access through trade liberalisation
* facilitation of freer and enhanced flows of goods and services and investment through the region.
The IOR-ARC is firmly based on the principle of "open regionalism" as encouraged by the World Trade Organisation (WTO).

4.2 Scope of Activities
Co-operation in the IOR-ARC Charter seeks to "focus on those areas of economic co-operation which provide maximum opportunities to develop shared interests and reap mutual benefits".

4.3 Tripartite Nature
The IOR-ARC combines officials, businesses and academics as an integral part of its functioning. The business persons also meet in parallel in the Indian Ocean Rim Business Forum (IORBF). Similarly, the Academics meet in their own Indian Ocean Rim Academic Group (IORAG). Both IORBF and IORAG have been actively involved in the consideration, formulation and implementation of the projects in the Work Programmes of IOR-ARC(and the conceptualisation of the initiative itself)

4.4 Institutional Arrangements
The Charter provides for regular Council of Ministers Meetings (once every two years) and Committee of Senior Officials Meetings (CSO) (will meet as often as mutually decided, but at least once a year) for taking decisions and implementing the co-operation agenda. It also provides for a Co-ordinating Secretariat to co-ordinate, service and monitor the implementation of policies and Work Programmes laid down.

5. IOR-ARC MEMBERSHIP
In addition to the Full Membership, the CSO in Maputo in March 1999 recommended two additional categories, namely, Dialogue Partner and Observer status categories.

5.1 Full Membership
Current membership includes the nineteen member states:
At the Extraordinary Ministerial Meeting held in Oman from 22 - 23
January 2000, the original fourteen members, viz. Australia, India,
Indonesia, Kenya, Madagascar, Malaysia, Mauritius, Mozambique, Oman,
Singapore, South Africa, Sri Lanka, Tanzania and Yemen welcomed five
additional members to the IOR-ARC viz. Bangladesh, Iran, Seychelles,
Thailand and the United Arab Emirates.

5.2 Dialogue Partners
The CSO Meeting in March 1998, recommended that Dialogue Partner status of the IOR-ARC should be created to enable individual sovereign countries, not qualifying for membership of the IOR-ARC. but with a special interest and capacity to contribute to the IOR-ARC, to apply for this status.

The Extraordinary Ministerial Meeting in Oman welcomed Egypt and
Japan as Dialogue partners. The Meeting also approved the applications for Dialogue partners from the United Kingdom and China.

5.3 Observers
The CSO Meeting also recommended that Observer status of IOR-ARC should be created for regional groupings of countries, inter-governmental organisations (including development banks, funding institutions) and international organisations with an interest and capacity to contribute to IOR-ARC.

The Extraordinary Ministerial Meeting in Oman also approved the application for Observer Status of the Indian Ocean Tourism Organisation (IOTO).

5.4 BACKGROUND OF MEMBERSHIP OF THE IOR-ARC
From 29 to 31 January 1995, Mauritius invited delegates from Australia, India, Kenya, Oman, South Africa and Singapore for a preliminary exchange of views on the possibility of setting up a platform for regional co-operation in the Indian Ocean region. It was decided to establish a Working Group comprising the representatives of the seven countries. The First Meeting of the Working Group met in Mauritius from 15 - 17 August
1995.

At this meeting it was agreed that that the Membership of the IOR-ARC should be increased to 14 members. It was agreed that each of the 7 founding members would nominate another member country from its region (the definition of "region" was not identified).

Australia nominated Indonesia; India - Sri Lanka; Kenya - Tanzania; Oman - Yemen; Mauritius - Madagascar; South Africa - Mozambique; and Singapore - Malaysia.

The Prime Minister of Mauritius wrote to the Heads of States/Governments of Indonesia, Madagascar, Malaysia, Mozambique, Sri Lanka, Tanzania and Yemen in March 1996 and invited them to join the Initiative at the Second Inter-Governmental Meeting, to be held in Mauritius on 10 and 11 September 1996. Special Envoys were sent to the respective new countries to carry the message of the Prime Minister of Mauritius. The response from the prospective new countries was positive and all countries subsequently sent their formal acceptance to join the Initiative.

Delegates from the 14 participating countries in the IOR-ARC initiative reached consensus on the proposed Charter of the IOR-ARC at the Second Inter-Governmental Meeting in September 1996 and commenced preparations for a First Ministerial Meeting to adopt the Charter in Mauritius in March 1997.

5.5 SOUTH AFRICA'S POSITION ON CURRENT NEW MEMBERSHIP
South Africa's official position is: (a) all sovereign states in the Indian Ocean Rim are eligible for membership, and (b) the time frame should be a gradual and evolutionary process.

6. IOR-ARC WORK PROGRAMME
6.1 The Work Programme of the First Ministerial Meeting includes the following projects as proposed by the IORBF and the IORAG. The co-ordinating parties are indicated in parenthesis.

1. Co-operation in Standards and Accreditation (Mauritius/South Africa)
2. Indian Ocean Rim Business Centre and Indian Ocean Rim Network (India)
3. Investment facilitation and Promotion (India)
4. Chair in Indian Ocean Studies and Associate Fellows (in Mauritius, co-ordinated by India)
5. Trade Promotion Programme (India)
6. Development, Upgrading and Management of Seaports, Maritime Transport, Insurance and Re-insurance (South Africa/Oman/Kenya)
7. Human Resource Development (at the last CSO Meeting South Africa offered to co-ordinate this project)
8. Working towards Complementarity - A comparative analysis of existing regional economic & trade policy arrangements and processes (Australia)
9. Tourism Promotion and Development (Kenya/Yemen)
10. Technology Enhancement in the IOR Region (South Africa)

6.2 New Project Proposal
At the CSO Meeting held in March 1998, South Africa was invited to participate in the initiation of a study related to cross-border financial services especially in industrial projects & trade financing within the IOR-ARC. The study will consider the scope for co-operation in the areas of banking facilities, payment instruments and settlement of trade transactions. This project will be co-ordinated by a sub-group of the IORBF comprising bankers and financial and capital market agents.

7. COMMUNICATION IMPLICATIONS
Pursuant to Article 8 of the Charter, National Focal Points will be designated to each member state, in order to facilitate communication and co-ordination. South Africa has its National (Government) and Academic Focal Points in place since the last CSO Meeting in March 1998 and, on 28 September 1998 the Business Focal Point was confirmed.

8. NEXT MINISTERIAL MEETING
Oman will host the Third Ministerial Meeting in Muscat in March 2001.
This will be preceded by a Trade & Investment Seminar to be attended by
Senior Trade and Business officials followed by a Committee of Senior
Officials Meeting.

9. FINANCIAL IMPLICATIONS
The nineteen member states will contribute on an equal basis to operating expenses estimated not to exceed US$82,000 in total. Beyond our share in the latter, South Africa is not expected presently to contribute anything other than voluntary participation in selected projects and attendance of meetings.

10. CONSTITUTIONAL IMPLICATIONS
The Charter of the IOR-ARC creates rights and obligations (including financial) for South Africa. From the point of view of the Constitution of the Republic of South Africa (Act No.108 of 1996), the Charter is considered a treaty, and Parliament is required to ratify the Charter in terms of Section 231 of the Constitution. The Department of Justice has expressed the view that none of the provisions of the Charter are incompatible with the domestic law of South Africa.

11. BENEFITS FOR SOUTH AFRICA
a. The re-establishing of important historical trading ties within the Indian Ocean Rim region;
b. South Africa is one of the three countries which form the "strategic triangle" around which the IOR-ARC was built, establishing the country as a global player in the community of nations after decades of isolation as a result of apartheid;
c. The Indian Ocean is currently the only major geographic region in the world that does not form part of a significant group. The formation of the IOR-ARC encompassing the Indian Ocean Rim countries will co-ordinate and increase economic co-operation, especially in the fields of trade and investment;
d. The region has enormous potential and offers vast business and investment opportunities over a wide spectrum. In the north-west are various oil-rich countries, possessing more than 60% of the world's proven oil reserves. In southern Asia there are emerging countries, like India, with huge untapped markets. On the south-east flank of the Indian Ocean are Malaysia and Singapore, already economic success stories, and beyond them Indonesia and mineral rich Australia. The islands of Mauritius and Seychelles are increasingly attractive tourist destinations, as is the East Coast of Africa with vast tourist attractions and potential;
e. The joint projects referred to in (F) such as investment facilitation and promotion, trade promotion programme, upgrading of ports and marine transport, human resources development, tourism promotion and technological enhancement are already concrete examples of joint co-operation which will benefit all the member states of the IOR-ARC;
f. As an ocean which carries a third of the world's oil and a significant percentage of its container cargo, there is much scope for co-operation in maritime matters including safety of shipping, search and rescue and environmental impact studies aimed at minimising the risk to the marine environment through oil spills, etc.

12. CONCLUSION
South Africa's financial commitment to the IOR-ARC is comparatively low. In terms of value for money, the IOR-ARC must be one of the most effective groupings to which South Africa currently belongs. As the organisation was only officially established in March 1997, it is still too soon to gauge whether the expected benefits of membership will be as great as expected, but it is clear that the potential is too great for South Africa to miss.