The New Global Economic Order as a Stimulus for Harmonising the Law of Sale in the Southern African Development Community (SADC) Region

The origins of cross-border trading can be traced back to time immemorial.¹ Although there is little agreement on the historical development of the global economy as we know it today, it is clear that international trade has always played a determining role. The levels of international trade experienced in the current era are unprecedented. Prior to the First World War, the global economy had several decades of stable international trade relations characterised by a significant cross-border flow of goods, capital and people.² During this period, trade relations centred on a network of bilateral trade treaties,³ which reduced trade barriers, mostly in the form of tariffs, removed quantitative restrictions, voluntary restraint agreements and exchange controls and largely limited trade discrimination.⁴ Reductions in transport costs resulting from technological innovations such as railways and steamships were a major contributory factor to the increase in international trade. However, this system began to falter towards the end of the nineteenth century and was invariably destroyed after the First World War as countries imposed protectionist mechanisms in the form of higher tariffs, import quotas, licensing requirements and foreign-exchange controls.⁵ When the Great Depression struck, countries imposed further tariffs, import quotas and foreign-exchange controls in the false hope that this might help revive their economies. Instead, these policies led to a collapse in world trade.⁶ As a result, cooperation in trade and integration in economic and political affairs became an absolute necessity. Emerging from the Second World War, decontrol of trade and the reduction or elimination of trade restrictions drove the process of economic globalisation which, in turn, functions as a stimulus for international trade. Within this globalised economic order, nations, particularly the developing states, must create mechanisms for economic development and poverty alleviation through effective participation in cross-border trading. In the Southern African Development Community (SADC) region, a case can be made for the harmonisation of international sales laws as a mechanism for enhancing regional participation in the new global economic order.

Economic globalisation is seen as the process that is characterised by the features of the post-Cold War era in which we live today. Stiglitz describes the concept of economic globalisation as ‘[t]he closer integration of the countries and the peoples of the world which has been brought about by the enormous reduction of costs of transportation and communication, and the breaking down of artificial barriers to the flow of goods, services, capital, knowledge and (to a lesser extent) people across borders.⁷ Friedman concurs and notes that economic globalisation is

… the irrevocable integration of markets, nation states and technologies … in a way that is enabling individuals, corporations and nation states to reach around the world further, faster, deeper and cheaper than ever before, and in a way that is enabling the world to reach into individuals, corporations and nation states further, faster deeper and cheaper than ever before.⁸

There now exist unprecedented levels of international cooperation and coordination on trade and trade policy than at any other period in world trade history. In the globalised system, there are a number of reasons as to why states may wish to cooperate on trade policy. These include strategic reasons such as to increase market size and to protect themselves against unfavourable trade policy developments in partner countries. Other reasons such as increasing bargaining power and the pursuit of geographically limited market-opening for protectionist motives could be more relevant to preferential or regional arrangements.¹¹

The key issue is why states trade in the first place, or to put it differently, why is trade so important? Trade is regarded as the main vehicle for both national and international economic growth and development. By taking advantage of differences in productivity or endowments, countries that participate in trade benefit from greater efficiency in the allocation of resources.¹² Citizens are able to enjoy more goods and services than they could in the absence of trade. They can also consume a greater variety of goods. Even in the absence of significant differences among countries, more trade allows economies of scale to operate, thereby bringing down the average cost of production. Finally, trade generally channels resources to the most productive firms in the economy, boosting a country's overall productivity.¹³ All states need trade for economic growth and sustenance. Lack of economic growth can plunge a state into poverty.¹⁴ Restrictions on trade and growth might also be a source of conflict.¹⁵ Economic globalisation has thus brought about the necessary cooperation and coordination to facilitate trade and stimulate economic growth and development while avoiding conflict. These are key ingredients for the eradication of poverty.

Economic globalisation has seen an expansion in international trade to impressive levels. Unprecedented global economic growth has been registered in the period from the second half of the twentieth century to date.¹⁶ Trade openness is believed to have been central to the remarkable growth of developed countries since the mid-twentieth century and an important factor behind the alleviation of poverty experienced in much of the developing world since the early 1990s.¹⁷ In this sense, there is a considerable belief, among policy makers at the UN level and influential world leaders, that economic globalisation can be used to eradicate poverty.¹⁸ Kofi Annan, the then United Nations Secretary General, in presenting his April 2000 United Nations Millennium Report, noted that ‘the benefits of globalization are obvious … faster growth; higher living standards; and new opportunities, not only for individuals, but also for better understanding between nations, and for common action.’¹⁹

Generally speaking, there seems to be a cross-cutting consensus and optimism that economic globalisation is a major vehicle for reducing poverty.²⁰ Poverty remains one of the significant challenges facing the world. It is particularly of great concern for the poor and developing world, especially in Africa.²¹ Economic...