Prospects for attaining a Continental Free Trade Area: amidst a culture of missed deadlines in Africa
Taku Fundira, tralac Researcher, discusses the prospects for attaining a Continental Free Trade Area
Significant efforts towards regional economic integration are under way in all regions of the world, involving developing and developed countries alike. Africa is not an exception to this trend. Efforts to integrate the economies of African countries can be traced back to 1910 when the Southern African Customs Union (SACU) was established. While SACU’s conception was not driven by sovereign states per se but rather a decision from the Colonial rulers – the British Empire to facilitate economic engagement, the importance of trade integration cannot be overemphasised. On a Continental basis, the establishment of the Organisation of Africa Unity in 1963 which was disbanded and replaced by the Africa Union in 2002 attest to Africa’s drive to secure a long term economic and political future.
Despite the numerous efforts to integrate, very few successes have been attained. The African continent has been lagging behind in terms of global competitiveness although it has enormous growth potential. Indeed, the relationship between economic growth and trade liberalisation has been the subject of considerable study and analysis, with the majority suggesting a positive correlation between the two. For Africa, regional integration remains the key strategy for African governments to “accelerate the transformation of their fragmented small economies, expand their markets, widen the region’s economic space, and reap the benefits of economies of scale for production and trade, thereby maximizing the welfare of their nations” (UNECA, 2010).
Working towards implementing the Africa Integration Agenda
Motivated by a consensus that by merging its economies and pooling its capacities, endowments and energies, the continent can overcome its daunting development challenges, the Abuja Treaty (1991) laid the groundwork for the creation of the African Economic Community (AEC), with the regional economic communities (RECs) serving as the building blocks. The RECs are expected to merge into the African Common Market between 2019 and 2023.
Despite the optimism, if past experience is by all means regarded as indicative of future success, the prospects of a successful establishment of the AEC within the set timeframe are minimal. Arguments for this notion are based on the fact that currently, within the individual RECs, integration has not been as smooth and there are still problems with implementation.
Looking at development in Southern and Eastern Africa, the picture is not that clear. For example, in COMESA, although in theory, the REC has attained customs union status, some members have not adopted the common external tariff, while in SADC; already the REC has missed a 2010 deadline to attain customs status with some members still not yet implemented the SADC FTA. The suspension of the SADC Tribunal demonstrated the ease with which regional efforts can be reversed. Chief amongst the reasons for such problems is a lack of “political will” and implementation deficiencies to comply with a rules-based regional trading arrangement which they negotiated, within the existing trade regimes.
Recently, in the East African Community (EAC), at the conclusion of the EAC Heads of Summit (30 November 2012), the decision by East African presidents to postpone key issues – “mainly the Monetary Union and admission of South Sudan and Somalia to the bloc – has left the region’s journey to full integration looking longer than ever, and exposed the bureaucratic delays that continue to haunt the plan” (Kamau et al, 2012).
A gloomy picture can also be depicted in West Africa, where over the last two years the regional integration agenda especially the agenda of the Economic Community of West African States (ECOWAS) has been dominated by the challenges of conflict management. According to Vogl and Ouattara (2012), this focus reflects the history of the regional grouping but also reveals its shortcomings as these crises have hampered significant economic progress.
On the whole, a common set of challenges can be identified that exist amongst the different African RECs. Vogl and Ouattara (2012) note that a comparatively low economic and political interdependence amongst African countries hampers interest creation for regional solutions. Furthermore, exaggerated ambitions coupled with a striking lack of capacities and resources dampen the prospects. Moreover, the weak capacities often seem to be uncoordinated and sometimes badly managed. The fact that decisions are made at a political level and little leverage is given to the respective Secretariats of the RECs in terms of decision making makes implementation a significant challenge.
What African governments have however managed to create is a culture that strives for far-reaching integration within overly ambitious time frames. As a consequence, free trade areas and customs unions have not always been fully implemented and deadlines have often been missed. In cases where steps were completed on time, the effective enforcement by member states is highly imperfect. For example, the regional internal and external tariffs are not properly enforced due to flexibilities and exemptions and insufficient harmonization of customs procedures (International Food & Agricultural Policy Council, 2011). This culture which has become endemic will ultimately prove to be the demise of attempts at successfully establishing the AEC according to the Abuja Treaty.
Time for a new culture, a new ideology
This calls for a new culture, a new ideology amongst African countries in order to complete effective economic integration. The fact that the AU ceased recognising new RECs and encouraging the consolidation of existing RECs of which governments are complying demonstrates a strong political commitment on the part of the partner states. However, the existing RECs still have to overcome major challenges. The main challenge is the gap between the commitments and their implementation.
At this early stage, there are important lessons to take and to consider what will contribute to making the AEC a successful integration arrangement. Within the building blocs – the RECs, as a first will be to empower the regional institutions and mainly the Secretariats with a clear mandate to make independent decisions guided by the Agreements. Furthermore, provide these regional institutions and secretariats with adequate resources both in terms of financial and human capital to function effectively. The recent introduction of a Community levy in CEMAC, EAC and ECOWAS is a first step to address these financial difficulties.
What will mark a turning point for African integration is when member states are committed to the development of a comprehensive rules-based integration arrangement within the consolidated RECs. Thus implying that, they will implement the provisions of the agreement, subscribe to effective monitoring of compliance and sanctions for non-compliance. The remedy lies in the outcome of the political economy that operates differently and is distinct from the past.
International Food & Agricultural Policy Council 2011. Economic Partnership Agreements and African Regional Integration: Have negotiations helped or hindered regional integration? Issue Brief, August 2011. Available online at http://www.agritrade.org/Publications/documents/FINALEPAandafricanintegration.pdf
Kamau, S, Barasa, L. and Ligami, C. 2012. State of the EAC: Bureaucratic delays, missed targets hurt integration [News article] Available online at http://www.tralac.org/news/article/1132-state-of-the-eac-bureaucratic-delays-missed-targets-hurt-integration.html
UNECA 2010. Assessing Regional Integration in Africa IV: Enhancing Intra-African Trade, Economic Commission for Africa, Addis Ababa. Available online at http://www.uneca.org/publications/assessing-regional-integration-africa-iv
Vogl, M. and Ouattara, W. 2012. Obstacles to sustainable regional integration in West Africa. GREAT Insights, Volume 1, Issue 9. November 2012. Available online at http://ecdpm.org/great-insights/recipes-regional-integration/obstacles-sustainable-regional-integration-west-africa/
Maxwell Mkumba, 12 December 2012 07:58 PM:
“Firstly, it looks unlikely that African States would attain the continental Free Trade Area, or let alone, Full Continental Integration within the ambitious timeframe set by the African leaders.
The idea to have economic and political integration in Africa is noble. However, as long as there is no clear roadmap, or a roadmap that is realistic and attainable, within the Regional Economic Communities, the road will be long and bumpy. The RECs need to go back to the drawing board and objectively define the proper framework for achieving Regional Integration amidst changing political and economic circumstances. A proper thought-through process should be undertaken based on the varied experiences within the RECs, and the experiences from elsewhere, especially the European Union. Care should be exercised to ensure that individual Member States’ interests do not prejudice the processes. It is a long road to travel, but meanwhile it is a wrong route that RECs and the African Union have taken, with Minimum Integration Programme going no where.”