Monday, November 3, 2008

Time frame set for establishing Africa's biggest free market

This week's Tripartite Summit held in Uganda agreed on a Council of Ministers to be convened within twelve months to determine the time frame for the establishment of a single Free Trade Area (FTA) comprising the three regional economic communities (RECs), writes Bathandwa Mbola.

The summit provided a platform for the three RECs to map out the way forward in building a single and integrated regional economic community while spurring economic development in Africa.

In the area of trade and economic integration, the Tripartite Summit approved the establishment of a FTA encompassing the member states of the three RECs.

Including the Southern African Development Community (SADC), East African Community (EAC) and the Common Market for Eastern and Southern Africa (Comesa), once signed, this will be the largest FTA on the continent, connecting different economic hubs of the African continent.

The project seeks convergence of trade and investment regulations in the three RECs as well as the free movement of persons.

With an estimated GDP of $650 billion, the envisaged project also aims to harmonise the different customs unions and other trade related issues that have been a problem due to the overlapping membership of member states which has posed a particular challenge.

This because, in terms of the World Trade Organisation rules, no country will belong to more than one customs union, which creates problems for some of the countries.

The South African government has welcomed the outcome of the Tripartite Summit and viewed it as an important milestone towards continental integration as envisaged by the African Union (AU).

"We see regional integration as a central component for our development in an increasingly globalised world economy," said President Kgalema Motlanthe who attended the summit in his capacity as the SADC chairperson.

"The process we have embarked on today marks an important step towards the realisation of building an economic bloc in today's challenging world that will increase the levels of intra-Africa trade."

Areas of co-operation in the envisaged FTA include exchange of information and expertise and mobilisation of resources for implementation of activities of common interest and capacity building.

Although the three RECs were already well-established in their own right, they would have to agree on common rules.

For example, the EAC's free trade area is fully established and COMESA is making good progress toward a free trade area, while the SADC region formally launched its free trade area in August this year.

However, in order for this single envisaged FTA to work, the three RECs will have to remove their tariff barriers and agree on common rules of origin to expand their economic, trade co-operation and integration.

As this will be a big market, there will be risks involved, however according to President Motlanthe for it to work it would require "commitment to an irreversible process of building economic, political and social unity."

President Motlanthe further expressed concern that the current global financial crisis has the potential to undermine the economic stability of Africa and the developing world and expressed the wish for a more just, equitable and representative international financial architecture.

He was also applauded when he challenged the Tripartite Summit to heed former President Nelson Mandela's call to make regional integration people-centered and ensure that tangible benefits of poverty alleviation, job creation and sustainable development are realised.

In the area of infrastructure development, the Tripartite Summit launched the Joint Competition Authority on Air Transport Liberalisation which will oversee the full implementation of the Yamoussoukro Decision on Air Transport in the three RECs.

Further the delegates also discussed how to further enhance the co-operation and co-ordination of the three RECs and how to improve the infrastructure in order to facilitate the trade among them.

The countries that will benefit from the envisaged FTA include Rwanda, Burundi, Kenya, Uganda, Tanzania, Egypt, Libya, Ethiopia, Eritrea, Djibouti, the Comoros, Zambia, Zimbabwe, Angola, Madagascar, Seychelles, Mauritius, Malawi, Sudan, Swaziland, South Africa, Mozambique, Lesotho, Namibia and Botswana.

Article published courtesy of BuaNew [24 Oct 2008]