William Mwanza, tralac Researcher, comments on the market integration pillar of the Tripartite Free Trade Area negotiations

The eighth Tripartite Trade Negotiations Forum meeting was held from 4th to 8th October, 2013, in Entebbe, Uganda, where it was expected that tariff offers would first be exchanged, marking a critical point in the negotiations toward the tripartite Free Trade Area (T-FTA). Indications are that these were not exchanged, as not all Member countries were ready with their tariff offers. As efforts to finalise these tariff offers continue, it provides an opportune time to reflect on preparations for, and engagement in the T-FTA negotiations process by countries of the region.

Regional integration in east and southern Africa has proceeded within the frameworks of a number of regional economic communities (RECs), of particular relevance being the Common Market for East and Southern Africa (COMESA), the East African Community (EAC), and the Southern African Development Community (SADC). These RECs are at different levels of integration. Their respective member states aim to take their integration efforts even further by establishing the T-FTA. The first step in this process was agreed to be the conclusion of a grand tripartite FTA (T-FTA) that builds on the liberalisation process that has since been undertaken within each REC. The tripartite arrangement is intended as a crucial building bloc towards a continental FTA and ultimately the consolidation of the African Economic Community (AEC).

Negotiations towards the establishment of a T-FTA were officially launched in June, 2011, and were planned to proceed under three pillars, namely market integration, industrial development, and infrastructure development. Of focus here is the market integration pillar, under which negotiations have so far been on-going in the areas of technical barriers to trade, sanitary and phytosanitary measures, non-tariff barriers, rules of origin, and customs cooperation, documentation and procedures among others. As alluded to, the exchange of offers and requests for the reduction of tariffs is an important step in efforts to conclude the T-FTA. As Member States work to finalise their offers so as to engage in negotiations in a way that keeps with timelines set out in the Roadmap for establishing the T-FTA, it is important to keep in perspective the essence of the process that is currently underway, since how countries will engage in the negotiations will ultimately determine the extent to which the T-FTA framework delivers on its high promise of deepened integration through increased market access, and the benefits that flow from it.

One particular aspect that is important to keep in view is that of the interests involved in the negotiation process. Ultimately, the idea of bringing together the twenty seven economies of the tripartite area into a single market is in the collective interest of all the member countries. The collective interest here is mainly that this larger market will result in freer and hence increased levels of trade, and also in increased levels of investment across the T-FTA area i.e. through both static and dynamic effects of the FTA. When viewed critically, however, the benefits of this increased trade and investment will only accrue individually to respective countries, and it is also from this individual premise that Members will themselves engage in the negotiations, based on what they perceive as being in it for them. Ideally, this “what is in it for us” attitude would not be taken to mean engaging in a mercantilist approach that seeks to increase exports to the region while limiting imports. Indeed when viewed in such a negative way, this issue of “self-interest” can represent a deterring factor in the process. At the level of each individual country, it would be necessary to deconstruct this further to look at who it is that this concept of “self” includes. Is it consumers who would benefit from cheaper imports? Or Governments that would lose some revenue by reducing tariffs on certain imports? Is it producers of certain imports that would face stiffer competition from increased imports? Or producers that would benefit from increased market access in the region for their exports? There is clearly a complex political economy interplay of interests that needs to be managed at the domestic level, as various stakeholders articulate their specific interests. Indeed some countries will have conducted various impact assessments and modelling exercises so as to examine potential gains and losses associated with conclusion of the T-FTA and how these would be distributed amongst various sectors of the economy. Due to the confidentiality of the process in respective countries, whether it is an exercise that is being done at each individual country level is not entirely clear. However, it is a balancing of these factors that will determine the negotiating position that each country will take in the T-FTA negotiations. Indeed each country will enter the negotiations seeking to obtain the best outcome for itself, taking full cognizance of its varied domestic interests. It will also be aware, however, that the very nature of negotiations entails that it makes certain concessions to its negotiating partners so as to attain its own optimal outcome. It is through engaging in this process that each country will ultimately sign into an outcome that each perceives to be an effective balance between its gains and concessions. It is also at this point that welfare gains will hopefully be optimised across all countries, thereby ensuring that the collective interest in concluding the T-FTA is attained, or is at least provided a platform through which it will be attained going forward.

This is fundamentally the crux of the matter in the negotiations and the task with which member countries are currently faced. It is an aspect that can easily be taken for granted, and yet it is one that is not at all easy to navigate. Indeed while there have been some strides in tariff liberalisation within respective RECs in east and southern Africa, progress has mostly been slower than initially intended. The different levels of development of the respective countries have been a factor. This has not been helped by instances where data analysis and consultations with domestic stakeholders have not been undertaken in a way that makes clear the costs and benefits that the liberalisation process presents. In the end, some Governments have engaged apprehensively in the process, by not wanting to liberalise too much too soon. Such caution is understandable as it reflects the high levels of responsibility with which Governments engage in the regional integration process. The only prerequisite to this, however, would be to ensure that such a cautious approach is not only the product of speculation. Essential data-based research needs to be conducted, and effective consultations with the private sector and other key stakeholders need to be made so as to effectively identify opportunities in the T-FTA process and prepare to handle any necessary trade-offs or indeed negative effects that might ensue from the liberalisation process. This must necessarily inform the formulation of individual country offers, and must be followed by effective engagement in the negotiations process to ensure positive outcomes at the individual and bilateral level, and hence in the region at large. It is hoped that the current delay in the presentation of initial offers on the part of some countries is an indication that such a process is currently on-going. This is what will guarantee an optimal and effective outcome in consolidation of the T-FTA. It makes clear the need for robust domestic trade policy engagement on the T-FTA, which fully takes into account the various political economy processes at play domestically and feeds in effectively into the regional process.

Tell us what you think.

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Sources:

Final Communique of the COMESA-EAC-SADC Tripartite Summit of Heads of State and Government. Available online at: http://www.tralac.org/wp-content/blogs.dir/12/files/2011/uploads/FinalCommuniqueKampala_20081022.pdf

Declaration Launching the Negotiations for the Establishment of the Tripartite Free Trade Area. Available online at: http://www.tralac.org/images/docs/5284/declaration-launching-tripartite-fta-negotiations-12062011.pdf

EAC-COMESA-SADC Tripartite Trade Negotiations Forum Meeting in Entebbe 4-8 October 2013. Available online at: http://cartercentre.blogspot.com/