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SA to host SADC-Comesa-EAC free trade agreement summit this year

Creamer Media’s Engineering News, South Africa

SA to host SADC-Comesa-EAC free trade agreement summit this year

By: Christy van der Merwe

5 April 2011

Before mid-year South Africa would host the next summit on the establishment of a Trilateral Free Trade Agreement (T-FTA) among the regional economic groupings of the East African Community (EAC), the Common Market for Eastern and Southern Africa (Comesa), and the Southern African Development Community (SADC).

Trade and Industry Minister Rob Davies said that this would launch the negotiations dealing with the creation of the T-FTA, after initial discussions between the regional groupings in October 2010.

Davies emphasised that regional integration was fundamental to South Africa’s developmental policy. “We have found a fairly sizeable amount of common ground between the three about which approach we should take. So we will have negotiations about the T-FTA within a realistic timeframe, focusing on a realistic set of ambitions, and we think this will be the start of the consolidation of an important process,” said Davies.

Davies was more upbeat about the creation of the T-FTA than he was about the likelihood of conclusion at the Doha Development Round of negotiations under the World Trade Organisation (WTO).

Addressing participants at a South African Institute of International Affairs discussion on trade policy, he added that the 2011 “window of opportunity” for reaching a deal at the WTO was “fast beginning to close”.

He noted that with the creation of the T-FTA, there would be wider integration in Africa, rather than deeper integration, which would happen if there were the establishment of a customs union between member states of one regional grouping such as the SADC, for example.

The establishment of the T-FTA was expected to create conditions to widen trade opportunities and grow the internal market in Africa, and transport logistics should also be bolstered to support this.

Davies said that the real barriers to intraAfrican trade were not those of tariffs.

“They [barriers] reside from the fact of under developed production structures, inadequate infrastructure, inability to reach standards and so on. Things of that sort located in the real economy,” he reiterated.

If T-FTA members could work together to address infrastructural bottlenecks and lack of capacity challenges, then practical benefits could be leveraged.

The EAC, SADC, Comesa discussion was also aimed at responding to global challenges in the economy, such as the rising influence of the Brics grouping (Brazil, Russia, India, China, and more recently South Africa).

Davies conceded that when compared with the other Brics member states, South Africa is “small beer”. However, when grouped together in a common market with the member states of the EAC, SADC and Comesa - the numbers started to look more convincing.

The three regional groupings together represent 26 countries with a combined population of about 527-million people, a combined gross domestic product (GDP) of $624-billion, and a GDP per capita averaging $1 184.

There are, however, also important differences between countries, and Davies noted that rules of origin would be an important discussion, and would be member driven.

Davies also noted that despite recent unrest in North Africa, particularly Egypt, this country was a key player in Comesa. Davies was convinced that the new Egyptian Trade Minister would be capable of taking part in the T-FTA negotiations.

Trade facilitation issues were likely to be discussed and the Minister welcomed inputs from business, which would help policy makers understand what the issues hindering intra-African trade are.

The Southern African Customs Union (Sacu), which exists within the SADC would also have to put forward a harmonised position in these discussions, and it would not be a South African standpoint put forward.