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Tripartite Free Trade Plan May Repeat Previous Mistakes

Inter Press Service

Tripartite Free Trade Plan May Repeat Previous Mistakes

21 April 2011

WINDHOEK, Apr 21 (IPS) - With regional wheels rolling to put in place the envisaged grand tripartite free trade area (FTA), questions have arisen about whether it would be viable and increase competitiveness.

"Free trade areas by themselves are not an engine for growth," remarked SADC trade policy advisor Paul Kalenga at a public trade dialogue in Windhoek, Namibia, organised by the Agricultural Trade Forum and the Friedrich Ebert Stiftung.

"Trade between the region and China, for instance, shot up with 500 percent in the past few years, but intra-regional trade is still proportionally low, despite all the efforts around a Southern African Development Community (SADC) FTA," he said.

Experts from different countries in the envisaged tripartite FTA gathered on Apr. 20 in the Namibian capital to discuss the readiness of smaller nations in the region to engage in the scheme.

The alliance would unite three existing regional economic communities (RECs) : SADC, the East African Community (EAC) and the Common Market for Eastern and Southern Africa (COMESA). The FTA would encompass 26 countries and 521 million consumers.

But doubt was discernable on the benefits of the grand FTA and whether it will automatically lead to economic growth. "Our policy makers have not asked the question : is this viable for our region ? The FTA should be about more than removing tariffs, it should build competitiveness," mooted Kalenga.

"Efforts are mostly geared towards removing tariff barriers, but how can the tripartite FTA be designed in a way that removes remaining non-tariff barriers ?" "In the negotiations, officials have a tendency to list everything that a country produces as ‘sensitive’. These products are then excluded", meaning that whole sectors are not part of the free trade regime, explained Kalenga.

"Today SADC doesn’t even trade in wheat flour on a preferential basis because the member states cannot agree on the rules of origin. A tripartite FTA based on that methodology is not going to be meaningful.

"Countries should not be allowed to simply exclude whole sectors from a FTA. They should justify exclusions on the basis of development policies. But this is a sensitive issue. When we spoke to Zambian farmers about removing agricultural tariff barriers, we almost got thrown out of the room."

According to Kalenga the answer lies in designing the FTA in a way that stimulates trade creation through specialisation ; benefitting from comparative advantages ; and increasing efficiency and productivity. "Look at Botswana that has specialised in services, including medical services and finance. Namibia could also specialise and use the port of Walvis Bay to establish itself as a transport hub." So far a clear vision beyond mere tariff liberalisation seems lacking in the region.

"What we lack in most countries are clear industrial policies on which to base our vision of regional economic integration," said Tarah Shaanika, chief executive officer of the Namibian Chamber of Commerce and Industry (NCCI).

"Instead of listing sensitive products, we should build on success stories like Namibia Breweries that exports its beers all over the continent. There is also too much emphasis on the manufacturing sector while growth in services is huge. We should strategically develop the services sector."