Free Trade Area Nears Reality
The “grand” or tripartite Free Trade Area (FTA), with a combined population of some 600 million people and a Gross Domestic Product of about US$1 trillion, covers half of the member states of the African Union and is intended to boost intra-regional trade, increase investment and promote the development of cross-regional infrastructure.
The target was set just five years ago by the Common Market for Eastern and Southern Africa (Comesa), the East Africa Community (EAC) and the Southern African Development Community (SADC), commonly referred to as Comesa-EAC-SADC.
Since the historic Summit of Heads of State and Government in October 2008 in Kampala, Uganda, they have made significant progress towards realising this dream of opening up borders to literally half of the continent, spanning the entire southern and eastern regions of Africa – from Cape to Cairo.
The chairperson of the Tripartite Task Force, Dr Richard Sezibera, has indicated that negotiations are progressing according to the agreed timeframe, and that consultations will be concluded soon.
He said an agreement by the three regional communities would be signed by June 2014, paving the way for the launch of the FTA.
“Considerable progress has been made and negotiations have intensified to ensure that we clinch the Tripartite Free Trade Agreement by June 2014,” Dr Sezibera, who is also the EAC Secretary General, said at a tripartite meeting held in November in Arusha, in the United Republic of Tanzania.
His counterparts, Dr Stergomena of Tax of SADC and Dr Sindiso Ngwenya of Comesa, have pledged to make the tripartite negotiations a success.
The ongoing negotiations involving Comesa-EAC-SADC are being followed keenly by the AU as other regions that want to learn from this experience.
Africa’s long-standing vision since 1963 at the formation of the Organisation of African Unity (OAU), now the African Union, is to have a united and integrated region.
Under the African Economic Community Treaty signed in 1991, Africa aims to establish a continent-wide free trade area and these regional trade arrangements such as the Tripartite FTA are regarded as the building blocks.
Once operational, this tripartite FTA will become a new benchmark for deeper regional and continental integration in Africa.
There is a clear recognition that Comesa-EAC-SADC is founded on a strong and clear agenda, despite the challenges that the three regional communities may face.
According to a roadmap adopted in June 2011, negotiations for a Tripartite FTA are being conducted in three different phases — preparatory phase, phase one and phase two.
To date, the Tripartite Trade Negotiation Forum (TTNF) has completed the preparatory phase, which involved the exchange of relevant information, including applied national tariffs and trade data and measures.
It was aimed at ensuring the adoption of the terms of reference and rules of procedure for the establishment of the TTNF. This phase began in December 2011 and lasted about 12 months. The tripartite negotiations are now concluding phase one which will cover core FTA issues of tariff liberalisation, 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. Facilitating movement of businesspersons within the region is being negotiated in parallel with the first phase.
Phase two, the last stage of the negotiations, is expected to start soon and will cover trade in services and trade-related issues such as intellectual property rights, competition policy and trade development and competitiveness.
According to the roadmap, all negotiations should be completed within 36 months. Thereafter, Comesa-EAC-SADC are expected launch a single FTA by 2016, building on the FTAs that are already in place.
It will also resolve the long-standing conundrum of overlapping membership, which has presented barriers for the three communities in their quest towards integration.
Technically, a country cannot belong to more than one customs union, yet the three communities have either already established or are working towards creating their unions.
The ultimate launch of the enlarged FTA will result in the three sub-regions coalescing into a single FTA with the goal of establishing a single Customs Union in the near future.
With the launch of the “grand” FTA now getting closer to becoming a reality, countries in eastern and southern Africa including Zimbabwe should ensure that they fully benefit from such an arrangement.
The creation of an enlarged market would promote the movement of goods and services across borders, as well as allowing member countries to harmonise regional trade policies to promote equal competition.
Removal of trade barriers such as huge export and import fees would enable countries to increase their earnings, penetrate new markets and contribute towards their national development.
However, like any other trade arrangement, the Tripartite FTA will bring its own challenges that need to be addressed. For example, less prepared nations are at risk of being swallowed economically by more powerful nations, as their local industries would suffer from the stiff trade competition from more rival firms in an open market. This competition may subsequently allow the more organised and developed nations to push weaker local firms out of business.
Hence, member states must smartly address such pertinent issues to fully benefit from the trade arrangement.
One way of addressing this could be by boosting the manufacturing sector to ensure it is able to compete and withstand pressure from outside firms.
Another option is value-addition to increase benefit from natural resources such as gold, diamonds and nickel.
Zimbabwe has already identified various measures that aim at accelerating economic development and preparing its industries to withstand stiff competition in an open market. These measures are contained in the newly crafted Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim Asset). Zim Asset is a government blueprint that will guide economic transformation and development in Zimbabwe for the next five years, spanning October 2013 to December 2018.
It should be noted this is the same period in which the Tripartite FTA involving Comesa-EAC-SADC is to be launched, thus ZimAsset is also an important blueprint for the country in this context.
Zim Asset has identified four key priority clusters that will enable Zimbabwe to achieve economic growth and reposition the country as one of the strongest economies in the region and Africa.
These key priority clusters are food security and nutrition, social services and poverty reduction, infrastructure and utilities, and value addition and beneficiation.
Value addition in various sectors, among them mining, agriculture, infrastructure focusing on power generation, transport, tourism, information communication technology and enhanced support for small to medium enterprises, are the key drivers of any economic agenda.
Various organisations including Comesa and Nepad have endorsed Zim Asset saying if fully implemented, the plan has the capacity to make a difference for the country and for the wider region. ‑ Sardc