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T-FTA: Devil is in implementation

Southern Times, Namibia

T-FTA: Devil is in implementation

By Felix Njini

3 June 2011

Windhoek - Success of the grandiose Tripartite Free Trade Area will largely depend on how geared members of COMESA, EAC and SADC are to swiftly implementing agreements and trade protocols.

Previous regional initiatives to boost intra-regional trade through bringing fragmented economies together - a process broadly referred to as integration - have suffered a still birth largely due to slow and sometimes non-existent implementation of agreed programmes, trade analysts have pointed out.

Leaders from COMESA, EAC and SADC meet from June 12 in South Africa to try and negotiate a roadmap towards an expanded FTA that will stretch from South Africa’s Cape to Cairo in Egypt.

This will bring together half of the continent’s countries in a single market without barriers that have hindered intra-African trade.

Fully implemented, the three blocs’ coalescence should give birth to a market with a conservative 560 million consumers.

The 26 countries have a combined GDP of US$624 billion, which could top US$1 trillion by 2013 if members maintain or surpass current growth trends.

Trade analysts are, however, sceptical about the success of this grand project.

They cite the way COMESA-SADC initiatives have floundered in their infancy, though EAC has progressed further than its peers though this too is largely on paper only.

Trade Law Centre for Southern Africa analyst JB Cronje pointed out that while EAC has progressed rapidly, many programmes are yet to be implemented.

EAC’s smaller membership could have helped the bloc’s rapid progress, with Kenya - whose economic policies have been largely liberal - has driven the agenda.

Cronje told The Southern Times that the T-FTA’s success will anchor on the pace and willingness to implement agreed programmes.

Member states have a herculean task convincing a sceptical public that the integration process will actually result in an improvement in living standards.

The points of negotiations agreed at a tripartite ministerial summit in Lusaka, Zambia last month, and which will likely be rubberstamped by Heads of State at their June 12 meeting, are the same trade facilitation issues they have failed to overcome in the past.

The Lusaka meeting agreed to negotiate towards elimination of all tariff and non-tariff barriers for trade in goods; liberalize trade in services; and facilitate cross-border investment and movement of businesspersons.

SADC’s FTA was meant to have achieved full liberalization by 2009 and subsequently launch its Customs Union in 2010.

Leaders will also negotiate how to harmonize customs procedures and trade facilitation measures, enhance co-operation in infrastructure development, establish and promote co-operation in all trade related areas, and establish and maintain an institutional framework for implementation and administration of the T-FTA towards establishing a Customs Union.

The negotiations towards an expanded FTA will also seek to scrap all import duties and charges on goods originating in member states and that duty-free treatment on goods is implemented.

Countries that have not joined FTAs at regional level will be expected to scrap import duties on goods from T-FTA members.

’They have agreed to negotiate but everything will depend on how fast they are willing to implement it.
’Our track record has proven that governments are not unwilling to conclude agreements but then still fail in implementation.

’The will is there to conclude agreements but to implement them becomes problematic,’ Cronje said.

Sindiso Ngwenya, COMESA secretary-general told this paper in early May that the T-FTA was likely to use the EAC as a prototype for integrating the three blocs.

Studies on trade effects in developing economies have generally concluded that integration could be negative for member states and that immediate increased trade could be as a result of trade diversion and not trade creation.

Asymmetrical economic developments in member countries pose a critical puzzle in integration member states’ economies.

Added to this are profound ideological differences and it is not yet clear how different economic models pursued by member countries will impact on trade facilitation efforts.

Economic analysts cite macro-economic stability as one of the pre-conditions for successful integration.

Macro-economic stability has remained elusive in most African economies with debt overhang, poor economic planning and management of resources, endemic corruption choking efforts by countries to chart a sustainable growth path.

There are also structural deficiencies in almost all member states which range from weak financial systems, underinvestment in quality infrastructure, insufficient human capital and a dearth of institutional capabilities.

While South Africa, southern Africa’s economic powerhouse, could aid integration efforts, its relatively developed economy and dominance holds the potential risk of polarization.

’What has failed COMESA and SADC initiatives is that some countries do not have the political will to move faster and as a result they can’t reach agreements. Even if they reach agreements, they do not implement them,’ Tralac’s Cronje observed.