Tripartite FTA an opportunity not threat
The tripartite arrangement of the Common Market for Eastern and Southern Africa, East African Community and Southern Africa Development Community (COMESA-EAC–SADC) is the most exciting trade and infrastructure development in Africa at the moment.
It provides the foundation of the Continental Free Trade Area promoted by the Africa Union (AU) Commission and its partners.
The main reason why the three Regional Economic Communities (RECs), decided to launch the Tripartite Programme in 2006 was to remove some of the inconsistencies and costs in regional integration brought about through overlapping memberships.
Thus the Tripartite is not a new legal structure neither is it a new REC. It is an attempt to merge the Regional Organisations into the African Economic Community.
There are benefits which accrue from countries being members of more than one REC. Among them, is the achievement of economies of scale. Through developing its large internal market, Africa and producers in the continent will be in a position to compete globally.
Tripartite countries account for half (27) of the Membership of the AU with a Gross Domestic Product of $1.3 Trillion, a population of 565 million and a combined landmass of 17 million square kilometres.
COMESA alone brings to the tripartite table 19 Member States, a population of over 490 million, an annual import bill of around US$150 billion and an export bill of US$82 billion.
The tripartite strategy consists of designing and implementing the Tripartite FTA, the preparation of a Trade and Transport Facilitation Programme elaboration of a regional industrial development programme, the design and implementation of trade and transport infrastructure projects along corridors and free movement of business persons across the RECs.
The Tripartite Free Trade Area builds on the FTAs that are already in place in COMESA, EAC and SADC. Its roadmap presupposes that the countries will need to engage in negotiations.
It also recognises that there are Preferential Trade Areas and FTA trading arrangements already in place among them. This means that not all the countries will need to negotiate with each other.
Significant progress has been made in implementing the Tripartite FTA and negotiations are underway, although behind schedule. However, efforts are being made to catch up and complete negotiations within the 36 months set in the roadmap. Of the 27 countries in the Tripartite, 23 are already in a Free Trade Area, two (Ethiopia and Eritrea) are in a PTA and three (Angola, DR Congo and South Sudan) offer no trade preferences to their regional partners.
The proposal that has been adopted by the Tripartite Summit is that those countries that are in FTA should extend the preferences they offer to first, members of their regional FTA and secondly, to members of other regional FTAs.
For example, all COMESA members implement the COMESA FTA and offer the same preferences to non-COMESA FTA members on a reciprocal basis.
EAC and SADC States do the same; and COMESA Non-SADC and EAC members offer SACU (a customs union comprising of Botswana, Lesotho, Namibia, South Africa and Swaziland), Angola and Mozambique duty free, quota free market access for all originating goods on a reciprocal basis.
If this is done the TFTA will be arrived at for all 27 countries in the Tripartite in a relatively short period. It is also possible to implement the TFTA at variable speeds given that some countries may achieve a tariff phase-down to zero tariffs on originating goods faster than other countries, subject to negotiations.
It is safe to draw the conclusion that the Tripartite Free Trade Area is more of an opportunity than a threat. But to realise that opportunity we need to reject the “crab in a bucket” mentality and work together for the common good.
It is not a zero-sum game, what is good for our neighbour can be good for all of us. The challenge is to get this message across to the general public, civil servants and private sector.
The counterfactual to the Tripartite Free Trade Area is a steady spiral downward, another generation of missed opportunities and continuing to bump along the bottom. According to the draft TFTA Agreement, the objectives of creating the enlarged market include the need to eliminate all tariffs and non-tariff barriers to trade in goods; the liberalisation of trade in services and facilitation of cross-border investment and movement of businesspersons.
Other objectives include harmonisation of customs procedures and trade facilitation measures across all the 26 member states; enhanced cooperation in infrastructure development; and establishment of an institutional framework for implementation and administration of the TFTA and eventually a Customs Union.
Specific interventions will include an undertaking by the TFTA member states to simplify and harmonise customs legislation and documentation, as well as to initiate trade facilitation programmes aimed at reducing the cost of trade and establishment and promotion of one-stop border posts.
The tripartite member states also undertake to cooperate and develop infrastructure programmes to support interconnectivity in the region and promote competitiveness. Priority areas of regional infrastructure will include energy, information and communications technologies, and development of transport corridor.
According to the draft agreement, the 26 countries will also undertake to strengthen cooperation in air and marine transport to promote regional and international trade, and the development of ports and harbours.
Initially scheduled for launch in June 2014, the “Grand” FTA has been delayed by lengthy negotiations, with the launch pushed to December last year but later postponed to June.
A precursor to the eventual launch of the Continental Free Trade Area (CFTA), the TFTA will open borders to literally half of the continent, spanning the entire southern and eastern regions of Africa, from Cape to Cairo.
It will be a formidable economic bloc with a combined Gross Domestic Product (GDP) of US$1.2 trillion.
With a combined population of more than 625 million in 26 countries, the “Grand” FTA places member states in a stronger position to respond effectively to intensifying global economic competition and will make the economic bloc more attractive to foreign direct investment.
The “Grand” FTA is within the framework of establishing an African Economic Community and the overall African Union Vision and Strategy presented in the Lagos Plan of Action (1980) and the Abuja Treaty (1991).
To deepen regional integration and boost intra-Africa trade, AU heads of state and government in 2012 decided to establish the CFTA by 2017.
SADC executive secretary Stergomena Lawrence Tax said negotiations on the CFTA are expected to be launched in June 2015, and stressed the need for speedy finalization of the TFTA to enable adequate preparations at both national and regional levels for the forthcoming CFTA.
This means that there would only be two years to complete the negotiations process before the launch of the CFTA. – COMESA News/Southern Times Writer