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10th Session of the Committee on Regional Cooperation and Integration: Implementation of the CFTA and shared gains

10th Session of the Committee on Regional Cooperation and Integration: Implementation of the CFTA and shared gains
Photo credit: MediaClub South Africa

19 Oct 2017

The Committee on Regional Cooperation and Integration of the ECA (Economic Commission for Africa) Conference of Ministers meets on a biennial basis to review the work undertaken in the current biennium under subprogramme 2 on regional integration and trade. It also uses the opportunity to review and deliberate on developments in those sectoral areas and make recommendations that are to guide the work under the subprogramme during the next biennium.

Accordingly, at its 10th Session, the Committee is expected to convene in Addis Ababa on 1 and 2 November 2017 to undertake the aforementioned review for the 2016-2017 biennium and deliberate on the envisaged work for the 2018-2019 biennium.

The tenth session has the overarching theme of “Implementation of the Continental Free Trade Area and shared Gains”. It has long been known that a major challenge in Africa is not a lack of good policies or strategies, but a lack of their effective implementation. Crucial to implementation is an understanding of the political economy underpinning economic integration in Africa. The insights from this perspective can help to frame the policy choices and institutional arrangements required for effective implementation.

The tenth session will also host five parallel, pre-session ad hoc Expert Group Meetings on 31 October. These meetings will serve as a platform to discuss with experts the results of studies conducted during the biennium under sub programme 2, with a view to sharing and validating the policy recommendations emanating from these studies with the Committee members.

The five ad hoc Expert Group Meetings will be on the following topics:

  1. A review of policy options to strengthen agribusiness, agro-industries and regional value chains as pathways to sustainable and inclusive African transformation;

  2. A review and study of how the promotion of Africa’s industrialization can be strengthened through infrastructure development;

  3. A look at policy options for boosting intra-African investment through the regional harmonization of investment policies and treaties;

  4. Trade, gender and human rights as a way to provide a platform for regional economic communities to share experiences about gender mainstreaming and offer a way forward on how they can more effectively support member States in incorporating gender into trade policy;

  5. Brexit and trade between Africa and the United Kingdom of Great Britain and Northern Ireland from an African perspective.

Issues to be addressed

In 2015, the ninth session of the Committee focused on concrete policy actions and measures required to enhance productive integration for Africa’s structural transformation. It was noted at the ninth session that Africa’s structural transformation had lagged, compared with its improved economic growth performance, and that four interrelated processes defined the structural transformation process taking place on the continent, namely:

  1. A declining share of agriculture in gross domestic product (GDP) and employment;

  2. Rural-to-urban migration that stimulates the process of urbanization;

  3. The rise of a modern industrial and service economy;

  4. A demographic transition from high birth and death rates (common in undeveloped rural areas) to low rates (associated with improved health standards in urban areas).

Against this backdrop, and building on the previous session, the tenth session has a proposed overarching theme of “Implementation of the Continental Free Trade Area and shared gains”. Trade and regional cooperation and integration are core pillars to ensure that Africa advances in its transformative agenda. At the tenth session, the continued support for both the Action Plan for Boosting Intra-African Trade and the implementation of the CFTA will be reiterated.

Negotiators from States members of the African Union recently participated in the sixth meeting of the CFTA negotiating forum, which was held in Niamey from 5 to 10 June. The forum was followed by meetings of the senior trade officials and the African ministers of trade. Collectively, the participants at those agreed to ambitious modalities for agreements on trade in goods and services in the CFTA. These modalities are aimed at articulating the vision of lowering tariff and non-tariff barriers to boost intra-African trade and contribute to African industrialization and development.

The CFTA, which is expected to be concluded by the end of 2017, will bring together a continent with a combined population of more than 1 billion people and a combined GDP of more than 2.19 trillion, according to the International Monetary Fund. With the CFTA, African leaders aim to create a single continental market for goods and services, the free movement of business persons and investment and expanded intra-African trade. The CFTA is also expected to enhance competitiveness and harness greater innovation at the industry and enterprise levels. Members States agreed to liberalize approximately 90 per cent of their tariff lines during a period of 5 to 13 years. They also agreed to allow for flexibilities through exclusion and sensitive lists to accommodate countries that may face challenges during liberalization. Other sensitive and crucial issues, such as reports of the technical working groups on technical barriers to trade and non-tariff barriers, sanitary and phytosanitary measures rules of origin, trade in services and customs procedures, were submitted and discussed during the negotiating forum.

Structural transformation and regional integration are key success factors for Africa’s “behind the border” agenda (i.e., the CFTA), while infrastructure development is a key enabler of it. A main contention here is that, without a dynamic industrial sector and wellfunctioning infrastructure assets, including transportation, energy, information and communications technology (ICT) facilities, Africa cannot harness the opportunities offered by integrated regional/continental markets under the CFTA. It has been demonstrated that quality infrastructure matters for industrial development and regional integration. Wellfunctioning infrastructure assets contribute to efficiency gains from economies of scale and scope (at the national and regional levels), increased competition and better access to or efficient use of resources, including labour and technology. Good transportation networks open larger markets for manufacturers, which, in turn, incentivize the latter to set up businesses or to increase production. Unfortunately, in Africa to date, numerous infrastructure bottlenecks have prevented the continent from industrializing and seeing more trade among its countries. Infrastructure constraints in Africa not only impede industrialization efforts, but also undermine trade competitiveness with regard to services and industrial goods (i.e., consumer, intermediate and capital and low, medium and high technology) produced on the continent. To maximize the potential of CFTA implementation, while minimizing the risks attached, scaling up infrastructure assets, industrial output and innovation in Africa is an imperative and jointly beneficial to move the continent from deepseated continued scarce resource drains to greater and tangible shared gains.

Major progress points

Since the discussions held at the ninth session, important progress has been made with regard to the CFTA. The COMESA-EAC-SADC Tripartite Free Trade Area, comprising 26 member States, was launched by the Heads of State of the tripartite countries during their summit held in Egypt in June 2015. The African Union Heads of State and Government also launched the CFTA negotiations during their summit in Johannesburg, South Africa, in June 2015 and reaffirmed their earlier decision to have the CFTA established by 2017.

The negotiations are being led by the negotiating forum, made up of African Union member States, with the African Union Commission serving as the secretariat. The continental task force, comprising technical experts from the regional economic communities, ECA, the African Development Bank (AfDB) and the United Nations Conference on Trade and Development (UNCTAD), provides technical expertise to the negotiating forum. Political oversight is provided by African ministers of trade.

CFTA negotiations are moving in the right direction and at the desired pace, with the first phase of the negotiations expected to be concluded by the end of 2017. Following the launch, six meetings of the negotiating forum have had been held as of July 2017, supported by meetings of the continental task force, meetings of the technical working groups, meetings of the committee of senior trade officials and meetings of the African ministers of trade. The remainder of 2017 will see these institutions convening frequently, with a further two meetings of the negotiating forum, given that progress is sought on top of the current momentum.

The final report from the meeting is available here.