Tripartite FTA summit in June

Windhoek – The first summit of the envisaged Tripartite Free Trade Area (T-FTA) will be held in South Africa on June 12 where a specific roadmap and timetable for implementation of the expanded economic grouping will be announced. The T-FTA is a coalescence of three regional blocs, the Southern Africa Development Community, the East Africa Community and the Common Market for Eastern and Southern Africa, and is a major step forward in the continental integration agenda. The ambitious T-FTA, brings together half of the continent – 26 countries with a combined Gross Domestic Product of US$624 billion and a conservative estimate of 560 million consumers. The June 12 summit will be preceded by a tripartite Council of Ministers meeting to be hosted by Zambia on May 13 and 14. While details on the roll-out of the grandiose idea are still sketchy, the T-FTA is seen as the panacea to low level intra-regional trade. Trade analysts are concerned with how the envisaged trade liberalization programme will be able to deal with contentious issues of non-tariff barriers and implementation challenges. SADC’s own FTA is 85 percent complete and countries are still grappling with a list of sensitive trade products, some of which are major sources of revenue. SADC has also postponed indefinitely plans for a common market, single monetary union and a single currency. How to structure the T-FTA in a manner that brings down remaining non-tariff barriers will dog the ministers when they meet in Lusaka on May 13. “Our policymakers have not asked the question, is this viable for our region? “The T-FTA should be about more than removing tariffs, it should build competitiveness,” SADC trade policy advisor Paul Kalenga said. Comesa secretary-general Sindiso Ngwenya told The Southern Times that while previous regional initiatives have not borne the desired results, the T-FTA will take a leaf from the EAC example. “Comesa has an FTA, SADC has an FTA which has been operating but without a list of sensitive products. “Instead of us having FTAs for each bloc, we must merge and this is what will be discussed by ministers in Lusaka. “The June 12 tripartite summit to be hosted by South Africa will then come up with a specific roadmap and specific timetable for the T-FTA,” Ngwenya explained. SADC has a herculean task in convincing critics who have witnessed previous trade liberalization initiatives flounder because of implementation challenges and lack of political will among member states. “This is a platform for work to be done collectively, we are all working on that. “For example look at how the EAC they have already achieved it. “We should be in a position to take the best practices of EAC,” the Comesa secretary-general insisted. Quizzed on regional blocs’ failure to bring down trade barriers and harmonize laws to set the platform for deeper and wider integration, Ngwenya admitted that some countries adopted protectionist policies “out of fear”. “The movement of people, for example, is more out of fear that one country cannot accept the sudden changes but if one regional bloc has adopted it becomes very simple.” EAC has five members – Burundi, Rwanda, Kenya, Tanzania and Uganda and was originally founded in 1967. It collapsed in 1977 but was rejuvenated in 2000. EAC’s progress has been rapid with successful implementation of duty-free trade amongst member states, and setting up common customs procedures, a common market as well as introducing a single tourist visa for residents of member states. “The T-FTA is the first step towards establishment of one customs union and ultimately the merger of three blocs to become one organization. “All this is being done in pursuance of African Union programme for establishment of an African economic union,” Ngwenya said. Concern has also been raised that the expanded market will not equally benefit member states. South Africa is well-placed to use its competitive muscle to build a market presence from Cape to Cairo. “At the moment South Africa, yes, because of its larger economy, but in regional integration we expect other countries to also become profitable,” Ngwenya said. SADC’s Kalenga concurred that economies with stronger manufacturing bases were better placed to exploit market opportunities. “As in any market integration process, economies will not gain in the same way. “Some economies may have the diversified productive capacity to take advantage of the free market or withstand the competitive pressure that will result. “However, competitiveness does not depend on the size of the country or even its economy. “It really depends on comparative and competitive advantage. “The argument here is that smaller economies can even be more competitive than bigger economies if the FTA is designed in a manner that does not undermine their comparative advantages,” Kalenga said. He advised countries to cut over-reliance on customs revenue as a solution towards bringing down non-tariff barriers. “The T-FTA is a consolidation of the process that seeks to harmonize the trade regimes, and it has to start, otherwise the regions will remain where they are.”

May 2011
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