The Tripartite Free Trade Area – a breakthrough in July 2017 as South Africa signs the Tripartite Agreement
The ministerial meeting of 7 July 2017 in Kampala injected fresh momentum into the tripartite negotiations to create a free trade area covering half of Africa.
South Africa signed the Tripartite Agreement, bringing the total of countries that had signed to 19 out of 26. Madagascar will sign on 13 July 2017 while Botswana is expected to follow suit.
South Africa signed the Tripartite Agreement the very hour that the remaining three Annexes to the Tripartite Agreement were adopted by the Ministers, at a public ceremony covered by the media following the conclusion of the ministerial meeting.
The meeting finalised and adopted the three remaining Annexes (on rules of origin, trade remedies and dispute settlement), thus producing the full Tripartite Agreement. While the main Agreement had been signed on 10 June 2015, six out of the 10 Annexes had by then been negotiated and cleaned up by the lawyers. Three Annexes, though negotiated, were yet to be scrubbed by the lawyers and were on this ground considered outstanding. And a few other issues had yet to be tied up, such as preparing guidelines under the Annex on trade remedies. The final Annex was simply the tariff schedules, which countries would submit for attaching to the Agreement as and when finalised. Mauritius and Seychelles had already submitted their tariff schedules to the Tripartite Task Force made up of the secretariats of the three regional economic communities (COMESA, EAC and SADC).
These three outstanding Annexes had meant that the Tripartite Agreement was not complete, and this had been advanced by a number of countries as the reason they could not sign or ratify the Agreement.
The adoption of the three remaining Annexes, therefore, represented a milestone in the Tripartite negotiations, as it finally removed the last obstacle to signing and ratifying the Agreement.
Uganda said it would complete its ratification process by end of August 2017, as the matter is before Cabinet. Egypt already ratified the Agreement. A total of 14 ratifications is required for the Agreement to enter force.
The tripartite ministers set a new time frame of three months for completing outstanding issues, that is, 30 October 2017, especially tariff negotiations and ratification of the Agreement.
The tripartite free trade area was launched on 10 June 2015. The presidents set a timeframe of 12 months for finalising tariff negotiations and other outstanding issues. That time frame was missed and in October 2016, the ministers set a new timeframe of April 2017. That too was missed. The timeframe of 30 October 2017 was expected to be different because of the apparent existential risk the tripartite faced from the Continental free trade area expected to be launched by the end of 2017 in accordance with a timeframe the African presidents set back in 2012.
Some argued that with the 55-member continental free trade area, the 27-member Tripartite Free Trade Area was unnecessary and redundant. Besides, they added, the Tripartite free trade area was not as ambitious as the continental free trade area (CFTA) especially regarding the level of tariff liberalisation and areas covered such as services and investment.
The African ministers of trade met in Niamey in Niger on 16 June 2017 to adopt the modalities for negotiating trade in goods and services, with just six months left to the deadline for establishing the CFTA, after a tortured process of negotiations since being launched on 15 June 2015.
First, the Ministers adopted the modalities for tariff negotiations for the CFTA. The modalities provided for tariff liberalisation of 90 percent of tariff lines over a five year period for Non-LDCs and over a 10 year period for LDCs. There would be sensitive and excluded products for the remaining 10 percent of the tariff lines, to be negotiated. the idea was that the 10 percent sensitive and excluded products were for industrialisation policy space, though industrialisation was not mentioned in the modalities. Such an industrialisation strategy, if that was all to it, would be largely erratic if the technological, financial and institutional capabilities were not appropriately prioritised.
It could be observed that these CFTA modalities were not as ambitious as those of the Tripartite, which provided for 100 percent product coverage with a Tariff elimination period of five to eight years, but with 60 to 85 percent of tariff lines to be liberalised upon entry into force of the Agreement. Industrialisation and infrastructure development in the Tripartite were integral complementary pillars to the Tripartite free trade area. The Tripartite Industrial Work Program was negotiated and finally adopted by the ministers in October 2016. The African Union adopted the Action Plan for Boosting Intra-Africa Trade (BIAT) at the time of launching the CFTA negotiations, to supplement the Accelerated Industrial Development Program for Africa adopted earlier but hardly implemented as such.
In addition, there was no consensus on the CFTA Modalities, as seven countries registered reservations. A proposal that would have accommodated these countries was made by the Tripartite group of countries, namely to explicitly underscore the critical importance of industrialisation in the modalities, and to indicate the level of ambition as ranging from 85 to 90 percent, rather than indicating it as just 90 percent. Another tripartite proposal was to recognise the progress made by the regional economic communities and provide that the CFTA would not unravel it. This too was not included in the CFTA Modalities.
The apparent animosity or antipathy towards the Tripartite, had been nurtured over time by those who feared that the Tripartite would present them with a done deal, making them irrelevant or leaving them no room for a role or a contribution. In addition, francophone countries from West Africa started to see the tripartite as an anglo-phone imposition, and fought it in the CFTA negotiations.
Second, the African Ministers adopted modalities for services negotiations. The services negotiations took the positive list approach and were to produce schedules of specific commitments and regulatory frameworks after the negotiations, as well as an Agreement on Trade in Services. On the contrary, the Tripartite had not started services negotiations, nor investment, competition policy and intellectual property negotiations, on which the CFTA had already produced draft text for consideration.
The tripartite had taken the approach of negotiating these additional issues during a second phase, after completing negotiations on trade in goods. This was a strategic decision, not to overload the negotiations. Experience in the CFTA negotiations showed that negotiating all these multiple areas required long sessions lasting half a month, which was costly in terms of funds and time spent away from other equally important priorities of government in the capitals.
The tripartite was to be a launch pad for the CFTA. Covering half the African continent, the Tripartite meant that more than half the job of creating the CFTA was done. Yet the African Union seemed prepared to throw this away and start from scratch.
Dr Francis Mangeni is Director of Trade, Customs and Monetary Affairs at the Common Market for Eastern and Southern Africa (COMESA). The views expressed in this article are those of the author and do not necessarily represent the views of tralac.
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