In recent years countries have increasingly become focussed on enhancing market access through regional integration in light of the stalled decade-long WTO Doha round of trade of negotiations.  Africa is no exception and in 2008, Heads of State and Government from the member states of the regional economic communities (RECs) of the Common Market for East and Southern Africa (COMESA), the East African Community (EAC) and the Southern African Development Community (SADC), agreed to establish a Free Trade Area (FTA). The aim of the FTA among others is to enhance market access, harmonise policies in areas of common interest and address the issue of multiple membership.  This new configuration would see an expanded market covering 26 countries with an estimated population of 500 million people, a GDP of US$624 billion and a per capita GDP of US$1,184.

The objective for this book is to examine the trade and specifically agricultural production, agribusiness and the agricultural policy regimes in East and Southern Africa.  A computer analysis of the benefits of the proposed is also presented, along with a review of sensitive products and non-tariff barriers in the region.  Member states of SADC, EAC and COMESA are due to begin negotiations to establish the Tripartite FTA in 2011. Below is a summary of the key points from each chapter.

1.   Agricultural production in the tripartite region

A special emphasis in this project is given to agriculture, and the objective for this Chapter is to examine agricultural production trends in the region as a basis for the subsequent analysis. This analysis makes extensive use of the United Nations Food and Agriculture Organisation (FAO) data. The section starts by providing an analysis of agricultural production in Africa as a whole as well as in the tripartite region countries in order to place the tripartite countries in perspective before moving on to examine the individual countries and their associated commodities in more detail. The generalisation is that while Africa has done well with agricultural production per se it has not done so well on a per capita basis. The chapter ends with an analysis of undernourishment and food aid in the region.

2.   Intra-African trade in Southern and Eastern Africa and the role of South Africa

The purpose of this chapter is to provide a background of agricultural trade in the region. . Any analysis of this nature needs to take into account the problem of regional data quality and timeliness, and for this reason a wide range of data sources have been investigated and, where possible, the best data for the specific components has been used.

The overall conclusion from detailed agricultural trade analysis of partner country exports to Africa is that the EU was by far the main supplier during 2009, but that along with the US its exports declined from the 2008 levels; that both the EU and US in particular show exports declining in 2009 over 2008; that most other countries have seen a greater export growth from 2000 than the EU and US; and that the main destinations are Algeria, Egypt, Nigeria and Sudan, with wheat, rice, palm oil, sugar, tea, milk powders and wine being the main products exported from the major sources examined.

3.   The impact of agricultural policies in Africa

This chapter outlines the agricultural policy and trade settings for the individual countries of the tripartite grouping. It does this by examining these settings in each of the three major groupings of SADC, EAC and COMESA sequentially. In general, the major sources of information are:

• The WTO Trade Policy Review Mechanism (TPRM) documents that are published by the WTO about its members every few years;
• The seminal work on global agricultural policies undertaken by Kym Anderson and his colleagues at the World Bank (Anderson et al, 2009) and the individual country contributors to this study; and
• FAO trade and production data for agricultural products during 2009 using the top-20 production, export and import commodity lines to provide additional background information. While it is an underestimate of both production and trade in many instances, it is a consistent source across countries and augments the policy profiles.

4.   Agribusiness Opportunities

The modern focus of trade is to move past commodity trade and try to search out more value-added products that offer opportunities for producers, processors and traders. The objective of this chapter is to start that examination of implications for South Africa from regional integration. This has been done using the FAO trade database where there are 484 agricultural product lines listed for the latest complete data of 2007 to look at what the tripartite region is importing and what South Africa is exporting in order to get a preliminary idea of where some opportunities exist. The emphasis is on opportunities in the more distant EAC and COMESA markets because the SACU market is already integrated and SADC is hopefully moving in that direction with its own FTA. Conscious that the FAO database provides trade data only for agricultural outputs, World Trade Atlas data have been used for an indication of where opportunities may lie in the wider agribusiness input sectors. We also extent the definitions of ‘agribusiness’ to include goods generally associated with agricultural production, processing and marketing.

5.   The GTAP modelling paper

In this chapter we examine the implications of the so-called tripartite countries of SADC, EAC and COMESA entering into a genuine free trade agreement (FTA). We use the Global Trade Analysis Project (GTAP) latest pre-release Version 8 database to assess the welfare and trade gains from this FTA as determined by duty-free merchandise goods access and with a small (two percent) reduction in assumed non-tariff barriers to both merchandise goods and services barriers also factored in. Importantly, our simulation starts from the assumption that the three regional blocs of SADC, EAC and Comesa all have their FTAs operating in a comprehensive manner in that all three have tariff-free trade within their blocks but not for outside of their blocks. Thus, our results relate to combining these three blocks into one large tripartite FTA and not the adjustment process to reach this point. The updates made and assumptions used are detailed in the main chapter.

For the final tripartite agreement only the results show that there are significant gains to South Africa. Results for the rest of SACU (Lesotho, Namibia and Swaziland) are disappointing with a welfare loss of $84 million, while Botswana similarly loses $16 million. Most other tripartite partners gain or lose very marginally, excepting Mozambique which gains $57 million.  This is because most countries other than South Africa and Mozambique have access to other FTAs through their multiple membership of overlapping FTAs.  All non-African countries outside of the agreement lose.

6.   Sensitive Products

We note that the issue of sensitive products for exemption from tariff liberalisation in the different countries/regional groupings may become an area of contention in the tripartite FTA negotiations, simply because much of the basis for this exemption designation is likely to be arbitrary, and the sensitive products are more likely to reflect protectionist interests or rent-seeking behaviour, both of which will perpetuate inefficiencies.

This chapter provides an overview on what motivates countries to seek for flexibilities for certain products from full liberalisation. The chapter concludes by highlighting the need for policy makers to find ways to develop a systematic approach to determining sensitive products and to ensure that all stakeholders are aware of the purpose of a sensitive products list. The current list of sensitive products reflects poorly on the desire to establish a CU with a CET, to which all the RECs have or aspire to attain.

7.   Non-tariff barriers in the EAC-COMESA-SADC Tripartite FTA

Successive round of Multilateral Trade Negotiations have led to a decrease in the use of tariffs as barriers to trade. However, the reduction in tariffs has been substituted by the utilisation of non-tariff barriers, which are the basis of this Chapter.

The chapter highlights the most prevalent NTBs hindering regional trade in the tripartite territory. These include customs procedures and administrative requirements, technical standards, government participation in trade and the lack of physical infrastructure.

The chapter concludes by highlighting that in order to enhance regional development and promote intra-regional trade the tripartite member states need to intensify efforts to address NTBs on a regional basis.

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Publication of this book was made possible by the support of the Trade Law Centre for Southern Africa (tralac) and the National Agricultural Marketing Council (NAMC).  The views expressed by the authors are not necessarily the view of any of these institutions.

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