15 August 2014

Southern Africa: SADC Ready to Establish Africa's Largest Integrated Market

Southern Africa is committed to finalize negotiations to establish Africa's largest integrated market covering 26 countries in eastern and southern Africa.

The proposed Tripartite Free Trade Area involves three regional economic communities namely the Common Market for Eastern and Southern Africa (COMESA), East African Community (EAC) and the Southern African Development Community (SADC).

According to a roadmap developed by COMESA-EAC-SADC, the Grand FTA is expected to come into force by 2016.

If this happens, intra-regional trade is expected to increase sharply and deepen regional integration through improved investment flows and enhanced competition.

In fact, this arrangement will create a combined population of some 600 million people covering half of the member states of the African Union (AU) and a Gross Domestic Product of about US$1 trillion.

Briefing journalists ahead of the 34th SADC Heads of State and Government Summit that opens on 17-18 in the resort town of Victoria Falls, Zimbabwe, the SADC Director of Trade, Industry, Finance and Investment, Boitumelo Gofhamodimo said southern Africa is ready for the establishment of the tripartite FTA.

"Apart from offering a bigger market, the tripartite trade arrangement is very important as it allows countries in eastern and southern Africa to harmonize their trade policies," she said.

She said negotiations to establish the Tripartite FTA - also known as the "Grand" FTA - are progressing well, and all the three regional economic blocs are committed to finalizing the negotiations.

"We expect to conclude the negotiations by end of the year," Gofhamodimo said, adding that the talks had been delayed by a combination of factors, including limited financial resources.

"As SADC, I believe we are ready for the tripartite arrangement. It is one arrangement which is very important in boosting trade and deepening integration."

The ongoing negotiations involving COMESA-EAC-SADC are being followed keenly by the AU as other regional economic communities on the continent want to learn from this experience.

Africa's longstanding vision since 1963 at the formation of the Organization of African Unity (OAU) - precursor to the AU - has been to have a united and integrated continent.

Under the African Economic Community Treaty signed in 1991, Africa aims to establish a continent-wide FTA and the proposed COMESA-EAC-SADC trade arrangement is regarded as one of the building blocks for the continental target.

Therefore, once operational, the proposed Tripartite FTA will be used as a benchmark for deeper regional and continental integration in Africa.

According to a roadmap adopted in June 2011, negotiations for the Tripartite FTA would be conducted in three different phases - a year-long preparatory phase that was supposed to run until December 2012, to be followed by two other phases.

To date, the Tripartite Trade Negotiation Forum (TTNF) has completed the preparatory phase which involved the exchange of relevant information, including applied national tariffs and trade data and measures.

This phase was aimed at ensuring the adoption of the terms of reference and rules of procedure for the establishment of the TTNF.

The tripartite negotiators are now concluding phase one, which covers core FTA issues such as tariff liberalization, rules of origin, customs procedures and simplification of customs documentation, transit procedures, non-tariff barriers, trade remedies and other technical barriers to trade and dispute resolution.

Facilitating movement of business persons within the region is being negotiated in parallel with the first phase.

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.

According to the roadmap, all negotiations should be completed within 36 months. Thereafter, COMESA-EAC-SADC are expected launch a single FTA by 2016, building on the FTAs that are already in place.

It will also resolve the longstanding overlapping membership conundrum, which has presented challenges for the three communities in their quest towards accelerating integration.

Technically, a country cannot belong to more than one customs union, yet the three communities have either already established or are working towards creating their unions.

The ultimate launch of the enlarged FTA will result in the three sub-regions coalescing into a single FTA with the goal of establishing a single Customs Union in the near future.

The creation of an enlarged market would promote the movement of goods and services across borders, as well as allowing member countries to harmonize regional trade policies to promote equal competition.

Removal of trade barriers such as huge export and import fees would enable countries to increase their earnings, penetrate new markets and contribute towards their national development.

The 34th SADC Summit, whose theme is "SADC Strategy for Economic Transformation: Leveraging the Region's Diverse Resources for Sustainable Economic and Social Development through Beneficiation and Value Addition," is being held on 8-18 August, and leaders will meet on 17-18 August.

Prior to this, there are meetings of senior officials, followed by the Council of Ministers, who will adopt the agenda for the leaders.

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