East African Business Week | Sunday, 27 February 2011
COMESA FTA deal in final stages
KAMPALA, UGANDA — As the Common Market for Eastern and Southern Africa (COMESA), East African Community (EAC) and Southern African Development Community (SADC) continue to integrate their economies, countries are now subscribing to the block’s trading area in order to attract investment.
The Democratic Republic of Congo (DRC) is the latest country to assent to the grouping’s tripartite Free Trade Area (FTA) agreement as it gears for its next level of integration.
DRC’s assertion was revealed by the DR Congo government officials during a working visit by COMESA and Preferential Trade Area (PTA) bank delegation led by COMESA Secretary General Mr. Sindiso Ngwenya recently.
During the visit, the DR Congo, Finance Minister, Mr Matata Ponyo, submitted an official application for accession to the PTA bank, a procedure required by a COMESA member State for membership. This implies that DR Congo is due to become a member upon payment of her share contributions to the bank.
"The COMESA FTA is going to benefit the country given the fact that it will give the business community more opportunities in the regional market. These opportunities will be further facilitated by the PTA trade and investment financing facilities," the Prime Minister emphasized in a statement to the COMESA secretariat.
The importance of adherence to the PTA bank was reiterated by the Congolese private sector in line with the increase of productive capacity within the country as well as competitive.
The Tripartite FTA is a larger market, with a single economic space, than any one of the three regional economic communities. It will be more attractive to investment and large scale production.
Dr Francis Mangeni, the COMESA Director, Trade, Customs and Monetary Affairs, said in an interview with the COMESA newsletter the FTA, which will give duty-free access for exports within the member states, is in its final stages of scrutiny.
"The 26 Tripartite countries, being members of COMESA, EAC and SADC have agreed to integrate their economies focusing on two areas for a start. These are trade integration and infrastructure development," Dr Mangeni said.
"In the area of trade, the draft Tripartite FTA Agreement is in its final stages of scrutiny by legal, trade and customs experts of the region and should be presented to the Ministers of the Tripartite countries at the next Tripartite Summit planned for the first quarter of 2011 in South Africa".
Dr Mangeni said at the legal and institutional level, the three Regional Economic Groupings (RECs) have signed a Memorandum of Understanding at the level of Chairpersons of the RECs Heads of State to show the serious political commitment the leadership of the region accord to the above processes.
When Heads of State and Government of COMESA, EAC SADC met in Kampala, Uganda on 22 October 2008, they conveyed in their communiqué a palpable sense of urgency in calling for the establishment of a single Free Trade Area, and later, a Customs Union covering the 26 countries of COMESA, EAC and SADC.
The Tripartite countries also agreed to jointly develop their infrastructure, which include roads, railway, telecommunication, energy, ports and harbours.
But despite all, COMESA, the largest trading bloc on the continent, is still experiencing difficulties in persuading some of its member states to move to the next level of integration by joining the FTA. While most countries are members of the FTA, countries such as Uganda have not yet subscribed to it.
Much as COMESA is Uganda’s leading destination market for her goods, Ugandan products continue to be less competitive due to its inability to join the Free Trade Area.
Even as other East EAC states reap the benefits of this large export market of 430 million people and a $392 billion (GDP), most countries are still trading under the Preferential Trade Area arrangement that allows only limited duty-free access to members.