Negotiations on the Tripartite Free Trade Agreement are moving forward
African high-level officials indicated recently that negotiations for the establishment of a free-trade area spanning three major regional economic communities in Africa have progressed well and could conclude by the end of this year.
“Once we complete (the negotiations), it will be the engine of the continent’s economic and political empowerment. I am satisfied with the pace of the negotiations. I look forward, as I am sure we all do, to the conclusion of these negotiations before the last quarter of 2014, remarked President Kenyatta, who was the Chairperson of the Summit of the East African Community (EAC) Heads of State during the East African Legislative Assembly held in Arusha, Tanzania on 25 March.
Echoing President Kenyatta, the outgoing Executive Secretary of the Southern African Development Community (SADC), Tomaz Salomão, said significant progress has been recorded towards the launch of the Tripartite Free Trade Area (TFTA) in a recent SADC summit in Lilongwe, Malawi.
The three main regional blocs in Africa – the Common Market for Eastern and Southern Africa (COMESA), the EAC and the SADC – are expected to conclude the TFTA that will cover 26 countries with an estimated gross domestic product (GDP)of about USD 1 trillion by the end of this year.
The TFTA will then serve as a basis for the completion of a Continental Free Trade Area by 2017 and is expected to boost trade within Africa by at least 25-30 per cent in the next decade and ultimately establish an African Economic Community.
Negotiations: half way through
According to the roadmap for establishing the TFTA – which was adopted during the second Tripartite Summit of Heads of State and Government in Johannesburg, South Africa in 2011 – all negotiations should be completed within three years of the signing of the Memorandum of Understanding (MoU) establishing the Tripartite in January 2011. Thereafter, the COMESA, the EAC, and the SADC are expected to launch a single FTA by 2016, building on the FTAs that are already in place.
The negotiations for the TFTA are being conducted in different phases: the preparatory phase, phase one, and phase two.
The three economic communities are now engaged in phase one negotiations, which cover core FTA issues of tariff liberalisation, rules of origin, customs procedures and simplification of customs documentation, and transit procedures among other issues.
The movement of business persons is dealt with during the first phase of negotiations as a separate track.
The preparatory phase, which ran from December 2011 to November 2012 mainly, covered the exchange of all relevant information, including tariffs as well as trade data and measures.
Phase two, the last stage of the negotiations, is expected to start soon and will cover trade in services and trade-related issues, such as intellectual property rights, competition policy, and trade development and competitiveness.
The TFTA is expected to be built on three pillars of market integration, infrastructure development, and industrial development and consolidate the progress on trade liberalisation that has already been achieved within the three regional economic communities.
With respect to market integration, meetings of the Tripartite Trade Negotiation Forum, which is the institution charged with negotiations on this pillar, yielded the following: Adoption of a Work Plan for negotiations on Trade in Goods; recognition of the draft FTA Agreement and Annexes for the negotiations; agreement to adopt the outcome of the negotiations; and the establishment of Working Groups on Customs Cooperation, Documentation Procedures and Transit Instruments; Technical Barriers to Trade, Sanitary and Phytosanitary Measures and Non-Tariffs Barriers (NTBs); and Rules of Origin.
Tackling the challenges ahead
While acknowledging the potential benefits of increased trade, some experts have underlined the fact that the TFTA could be sustained only if obstacles currently undermining trade in Africa are lifted. These obstacles include, for example: overlapping memberships, which can hinder harmonisation processes as well as the enforcement of unified rules of origin; the lack of economic diversification; and infrastructure deficiencies.
Sceptics believe until these challenges are dealt with a TFTA will not be feasible. But, other factors mostly in the form of non-tariff barriers to trade are considered equally costly to trading across the region. World Trade Organization (WTO) 2012 statistics show that intra-African trade stood at a low level of 12 per cent of total trade, compared with 60 per cent for Europe, 40 per cent for North America, and 30 per cent for ASEAN. Although a TFTA may not eliminate infrastructural hurdles for intra-African trade – at least in the short term, experts believe it will drastically reduce the cost of trade in terms of border restrictions and deficiencies, issues related to rules of origin, general non-tariff barriers, and the cost of trade.