Daily News, Tanzania
CTI applauds move towards an African FTA
12 May 2015
By Finnigan Wa Simbeye
Plans by African leaders to launch an ambitious Free Trade Area comprising of 26 countries and backed by over 600 million people next month are in the right direction for the private sector.
Confederation of Tanzania Industries (CTI) Chairman, Dr Simon Nyantahe, said the FTA which will have a combined 1.0 trillion US dollars in gross domestic product will be one of the world’s biggest markets for local manufacturers.
“In order for these opportunities to become realistic, the government and CTI members must address a number of challenges that adversely affect industries in Tanzania mainly being; high cost of doing business and unfriendly legal and regulatory framework,” Dr Nyantahe noted.
He further pointed out other bottlenecks include excessive bureaucracy, weak market penetration efforts and low quality of some products,” the CTI Chairman noted.
Dr Nyantahe also mentioned some challenges on the FTA Agreement which will group Common Market for Eastern and Southern Africa, East African Community and Southern Africa Development Community (SADC).
“However, on specific components of the FTA Agreement, CTI’s position is; until now members of the FTA have not concluded negotiations on Rules of Origin (RoO) due to different positions,” he argued.
While many SADC countries led by South Africa want the product specific RoO - which are rather complex to apply, EAC and COMESA member countries want simple RoO applicable to all products which either use the Value Addition Criteria of which EAC Partner States have agreed at 35 percent or Local Material Contents of which EAC currently applies 40 percent or Change of Tariff Heading.
CTI position is to use the EAC RoO. The CTI chief further noted that the issue of Internal Tariff Elimination is also crucial and his position is to negotiate with countries which are not members of either SADC or EAC on tariff phase down in order to give time for members and the government to put in place necessary infrastructure and environment before opening up to these countries. Such countries include Egypt and Ethiopia.
In October last year, a Tripartite Sectoral Committee of COMESA-EAC- SADC ministers agreed that the three bloc’s Heads of State and Government Summit scheduled for Egypt mid June will launch the Tripartite Free Trade Area.
The Tripartite FTA will have GDP of 1.2 trillion US dollars which account for half of the membership of the African Union and 58 percent of the continent’s GDP.