Sadc, EAC, Comesa free trade talks begin in December
Sunday Citizen, Tanzania
Sadc, EAC, Comesa free trade talks begin in December
13 November 2011
By The Citizen Reporter & Agencies
Dar es Salaam. First round of negotiations to establish the $1 trillion Tripartite Free Trade Area (FTA) covering 27 countries in eastern and southern Africa are scheduled to start next month, the head of the taskforce spearheading the process has said.
According to the Tripartite Taskforce chairperson Sindiso Ngwenya, the first round of the negotiations to create the grand Comesa-EAC and Sadc free market will take place in Nairobi on 8-9 December. He said a lot of ground has been covered to begin the negotiations.
If all goes according to plan, the negotiations will completed within 36 months and already investors are strategically locating in the three blocs member countries in order to take advantage of the regional huge market.
The FTA negotiations ground was created in June following the adoption of the negotiating principles, modalities for negotiations and a roadmap for negotiating at the 2nd Comesa-EAC-Sadc Summit, which was held in South Africa.
The establishment of the FTA is expected to boost intra-regional trade by creating a wider market, increased investment flows, enhanced competitiveness, and the development of cross-regional infrastructure.
Its creation would ensure a combined population of nearly 600 million people and a gross domestic product of almost $1 trillion. This would open borders to literally half of the continent, spanning the entire southern and eastern regions of Africa - from Cape to Cairo.
"Pursuant to the roadmap decided upon by the Summit, it is now planned that the first round of negotiations for the Tripartite Free Trade Area will take place in Nairobi, Kenya on 8-9 December," Mr Ngwenya, who is the Comesa executive secretary, said.
"It is envisaged that the negotiations for establishing the tripartite would be completed within the timeframe of 36 months (or three years) as decided by the Tripartite Summit in June."
If successfully concluded, the tripartite FTA would comprise a market of 533-million people at the moment, with a combined GDP of $833-billion, or a GDP per capita of $1,500 (about Sh2.4 million). That equates to 58 per cent of Africa’s GDP and 57 per cent of the continent’s population.
It could also incorporate economies that are collectively expected to expand at 5.8 per cent in 2011.
Despite its relevance in national growth and importance in the continent’s efforts to reduce poverty, intra-regional trade in Africa has remained miniscule, accounting for around 12 per cent of cross-border trade and on average for 5.3 per cent of GDP. Economists argue that the aspiration should be to raise intraregional trade levels to at least the 40 per cent- to 50 per cent-type levels of Asia, and ultimately to the 80 per cent levels being achieved in the European Union.
According to the World Bank, intra-Africa trade has long been viewed as the key to unlocking the continent’s growth potential. But in spite of the development of economic blocs such as custom unions and common markets, as well as improvements in inter-continental transport, only about 10 per cent of trade on the continent takes place among African countries.
The Bretton Woods institution says that percentage is the least worldwide. Part of the reason is a manifold of country-to-country trade barriers still in place and apparent unwillingness by governments to open up, according to a World Bank seminar titled “Can Africa Trade With Africa”.
In 2007, it was estimated that African merchandise exports grew some 17.5 per cent to $424.14 billion compared to $360.9 billion in 2006. Intra-African merchandise trade was only 9.5 per cent of the total of the growth of merchandise exports.
In the EAC trade between Kenya, Uganda, Tanzania, Rwanda and Burundi currently stands at 13 per cent. However, intra-regional trade within the East African Community region has grown by 49 per cent since the EAC Customs Union has been in force. Implementation of the trade arrangement has also earned the regional bloc other tangible benefits such as increased investments from outside.
The decision to develop a Tripartite Free Trade Agreement (FTA) roadmap and to roll out the Tripartite FTA was endorsed by heads of state and government at their first Tripartite Summit held in Kampala in October 2008.
According to the roadmap adopted at the second tripartite summit, negotiations for the grand FTA will be conducted in different phases.
The first stage - the preparatory phase mainly involves the disclosure and exchange of all relevant information including applied national tariffs and trade data and measures. This stage should also see the adoption of terms of reference and rules of procedure for the establishment of a Tripartite Trade Negotiating Forum.
The preparatory phase is expected to last between six to 12 months, after which phase one of the negotiations will commerce.
At this stage, negotiations will cover core FTA issues of tariff liberalization, rules of origin, customs procedures and simplification of customs documentation, transit procedures, non-tariff barriers, trade remedies and other technical barriers to trade and dispute resolution.
Phase two of negotiations is expected to cover trade in services and trade related issues including intellectual property rights, competition policy, and trade development and competitiveness.
This tripartite framework was born out of a realization that the regional integration processes of the three regional communities were similar and in some cases identical.
Thus, it was deemed prudent for the three RECs to co-operate and harmonize their trade, infrastructure and other regional integration programmes.
The FTA would serve as one of the building blocks of an African Economic Community, which has been a longstanding vision of the continent’s leaders, since 1963 at the formation of the Organization of African Unity (OAU), and eventually agreed in writing decades later when the leaders approved the African Economic Community Treaty in 1991.
Thus, the creation of a grand FTA would become a new benchmark for deeper regional and continental integration in Africa.
Some of the major infrastructure projects planned by the three blocs include those along the North-South Corridor, which traverses eight countries in southern and eastern Africa.
An initial $1.2 billion was raised in April 2009 to upgrade regional infrastructure including over 8,000km of road and 600km of rail, as well as upgrading ports and energy transmission lines.
Significant progress has been made in meeting some of the targets with the launch of the Chirundu One-Stop Border Post between Zambia and Zimbabwe in 2009 being one of the indicators.
However, there is need for more efforts in areas such as energy generation and transmission as well as road infrastructure to ensure that the process of deeper integration is fully achieved.
