Trade revolution beckons
While most of Africa’s political elite were arriving in Johannesburg for the 25th African Union Summit, another continental gathering – one likely to have more visible and more immediate consequences – was happening in the sunny seaside resort of Sharm el-Sheikh in Egypt.
It is here that the leaders of three Africa trade blocs – the Southern African Development Community (SADC), the East African Community (EAC), and the Common Market for Eastern and Southern Africa (Comesa) – put pen to paper on an agreement that could revolutionise trade in Africa.
The agreement joins the three blocs to create the Tripartite Free Trade Area (TFTA), effectively creating a common market that encompasses 26 African countries and 625 million Africans.
“Africa has made it clear that it is open for business,” said World Bank President Jim Yong Kim about the new deal.
African Union trade commissioner Fatima Haram Acyl was even more effusive in her praise when the Daily Maverick’s Simon Allison caught up with her on the sidelines of the 25th African Union Summit in Johannesburg – although she was quick to point out that the TFTA is only halfway towards the continental body’s even more ambitious goal: the creation of a Continental Free Trade Area.
Daily Maverick: The Tripartite Free Trade Area sounds like a good idea. What’s your reaction?
Fatima Haram Acyl: I’m very happy to hear that finally we are signing it. We’re very excited. It is 26 countries in Africa, so it’s big news. It’s also perfect timing. We’re going to be launching the negotiations on the Continental Free Trade Area at the AU Summit on the 15th. For some of the people that are asking is the Continental Free Trade Area ambitious, is it doable by the 2017 deadline, I’m saying the Tripartite is happening, the signatures are done. So it’s doable.
Do you really think that 2017 deadline is realistic?
As long as you have the will it’s possible. If we know the benefits of the Continental Free Trade Area, if we know what it means for us, if we look around us, around the world and we see this mega trade going on, and where is Africa?
We’re going to be left behind… [but] if we know all the importance of this Continental Free Trade Area to our Agenda 2063 [the AU’s long-term development plan], we will prevail. It will be difficult negotiations, it will require sacrifices and a lot of disagreements, but I think we will prevail. One of the things we need to think about seriously, especially at the beginning, is a compensation mechanism to alleviate the fear of countries that are fearing they’re going to lose too much.
The other positive news is that not everybody has to be ready at the same time.
The ones that are ready, they can just move. We know everybody is willing but we’re not at the same stage.
Later on the others can join. Based on all these parameters I think that 2017 is doable.
Why is the Tripartite Free Trade Area such a big deal?
It’s going to bring a common market, a common customs union.
This is 26 countries with common legislations, common customs, etc.
It will help the movement of people within that zone because goods don’t move by themselves. Yes, they negotiated only goods but the people have to follow so of course it will help address that issue. The other issue it will help address is the concept of value chain. How do you make sure the value chain is from one country to the other, how do we produce in that region?
The other things are the trade facilitation, the bigger market, the attraction of investment in that region. The benefits range wide.
It also brings infrastructure investment. I think that as a bloc they attract huge amounts of investment and they can justify it because it’s a bigger market.
In the short term, some countries in the Tripartite Free Trade Area will be left behind. The same applies to the Continental Free Trade Area. How are you going to keep the stragglers happy?
The ministers of trade are debating already what to do. When you look at Ecowas, the West African community’s 15 countries they do have a compensation mechanism, they say ok, because we’re going to have an free trade area in that zone, country X will be losing that much, but country B will gaining that much.
It’s fact analysis. Figures don’t lie. So you will find a way to compensate. So there is funding that must come from the countries that win big time.
Do you think that better peace and security on the continent will follow on from closer trade links?
When you talk about peace and security on this continent, and the development of trade, you’re talking about an egg and chicken situation. In order to trade you need security.
In order to develop you need peace on this continent. But on the other side, some of the root causes of instability are under-development, poverty, corruption.
I think that it’s very important that when we talk about the issue of peace and security, or about trade and development, it’s important to talk about them on a more holistic way.
Will the 28 countries that aren’t in the Tripartite Free Trade Area be left out of a trade boom? Will the deal negatively impact them?
Actually it’s good if this happens, it will just encourage countries, will make them see the benefits of having a Continental Free Trade Area. Of course people will go to the Tripartite Free Trade Area because it’s a bigger market, it’s no longer fragmented market.
We want to have this effect so that we’ll see practically what the benefits are of having a free trade area. There is no better example than seeing or living something, rather than just the analysis.
Negotiations around the Continental Free Trade Area won’t be easy. What are the main challenges?
Some of the main challenges are protectionism. You know, I’m going to be losing, going to be a market for everyone else. Movement of people – other people will come and take my job. These are legitimate questions and concerns. What we need to do, as a commission, is really to do a lot of fact analysis.
Yes, for those countries it will be a loss in the short term, but in the longer term you will gain; maybe it will bring investment, or maybe our people will die less in the sea. I think it’s really important that we do a really clear analysis.
One of my roles, and one of my boss Dr Dlamini-Zuma’s roles, is to do political engagement. And to do this you have to have figures, to talk the language of that country, of that region, you have to address their concerns.
And to address their concerns we need data, figures, analysis, and to ensure we can ease up their fears, to give them factual findings, not just to say regional integration is important.
Does your department have the capacity to provide this kind of analysis?
No, we don’t. Let me give you an example. If you look at the European Union, their trade and industry department has more than 500 people. Today as I sit I can tell you we have about 20 people, and then we’re going to have about 10 more people for the Continental Free Trade Area negotiations. So no, we don’t, even with 30 people it’s not possible. However we are using the United Nations Economic Commission for Africa to give us some of this technical analysis because they’re a technical partner.
We’re also working with the African Development Bank, and the United Nations Conference on Trade and Development.
We’re also working with other partners such as the United Kingdom’s Department for International Development, and the Technical Assistance Fund, to give us some analysis. We’re looking for other technical partners to give us information and consultants to give us analysis that we require in order for us to move forward. – Daily Maverick