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Southern Africa: African nations endorse plan to merge trade blocs

Business Daily (Nairobi) | 19 February 2008

Southern Africa: African Nations Endorse Plan to Merge Trade Blocs

Allan Odhiambo

Trade ministers from Comesa have passed a resolution setting the stage for the establishment of what would be Africa’s largest common market.

The ministers want trade regimes within the Common Market of Eastern and Southern Africa (Comesa), the Southern African Development Community (SADC) and the East African Community (EAC) harmonised.

"Specifically the harmonisation will be with respect to the Common External Tariff (CET) and related trade policy areas as well as overlapping membership," a joint communique issued at the end of the third special task force meeting on the Customs Union, in Lusaka, Zambia, read in part.

Kenya was represented by Trade permanent secretary David Nalo.

The endorsement by the Comesa ministers comes in the wake of a similar proposal by trade technocrats from the EAC who two weeks ago at a meeting in Arusha, called for the formation of a grand Free Trade Area (FTA) comprising of the Comesa, SADC and EAC, as the best solution to the differences that have arisen among their member states in the recent past.

The differences have deepened recently with indications that Uganda plans to leave Comesa preferring to belong to a single trading bloc - EAC.

Tanzania left Comesa eight years ago but remains a member of SADC, a situation that has complicated EAC’s drive towards a unified market within Comesa.

Though the EAC states view the grand FTA as a solution to their disparities over who to relate with, Comesa trade ministers said such a wide seamless trade arrangement would bolster the plans of launching a Customs Union later this year.

Its objective would be to establish a single economic space leading to reduction of costs of doing business and improving competitiveness.

"The ministers appreciated the underlying benefits of establishing a Customs Union particularly with respect to the creation of a larger market that would enhance competitiveness of producers in the Comesa region, induce economies of scale as well as enhanced welfare implications arising from reduced consumer prices," the statement further said.

Analysts said the latest push for seamless trade arrangements largely borrows from the African Union (AU) agenda for regional integration in the continent as it pursues future dealings with other external trade blocs such the European Union (EU).

"The argument is that SADC would also be coming up with an FTA this year and a Customs Union there after and there is need to make things seamless for more efficient and fast dealing," Mr Richard Sindiga, who heads the Comesa desk at the Trade and Industry ministry told Business Daily.

According to plans, SADC envisages to have in place an FTA by the end of this year and a Customs Union by 2010 before launching a common market five years later followed by a monetary union and a single currency one and three years later respectively.

A free trade area refers to a group of countries that have agreed to eliminate tariffs, quotas and preferences on most (if not all) goods trading among them.

It a form of economic integration that comes out of countries whose economical structures are complementary but if they are competitive, they would prefer a Customs Union.

But unlike a Customs Union, members of an FTA do not have the same policies with respect to non-members, meaning different quotas and customs.

The EAC has already proposed a task force to spearhead the discussions on the establishment of the envisaged grand FTA.

"The matter is now getting more concrete with individual nations coming up with task forces that would eventually deliberate under the auspices of Sadc, Comesa and EAC to see into ways of making the grand FTA a reality," explained Mr Sindiga.