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Regional blocs seek to remove trade barriers

Regional blocs seek to remove trade barriers

September 30, 2012 in Business
THREE regional economic communities (Recs) have taken the lead as Africa 
seeks to remove trade barriers by 2017.

Report by Ndamu Sandu

The establishment of a Continental Free Trade Area (CFTA) was endorsed by 
African Union leaders at a summit in January to boost intra-Africa trade.

Sadc, Common Market for Eastern and Southern Africa (Comesa) and the East 
African Community (EAC) have combined forces to establish a tripartite FTA 
by 2014.

Willie Shumba, a senior programmes officer at Sadc, told participants 
attending the second Africa Trade Forum in Ethiopia last week that the 
tripartite FTA would address the issue of overlapping membership, which had 
made it a challenge to implement instruments such as a common currency.

“…overlapping membership was becoming a challenge in the implementation of 
instruments, for example, common currency. The TFTA is meant to reduce the 
challenges,” he said.

Countries such as Zimbabwe, Tanzania and Kenya have memberships in two 
regional economic communities, a situation that analysts say would affect 
the integration agenda in terms of negotiations and policy co-ordination.

The TFTA has 26 members made up of Sadc (15), Comesa (19) and EAC (5).
The triumvirate contributes over 50% to the continent’s US$1 trillion Gross 
Domestic Product and more than half of Africa’s population.

The TFTA focuses on the removal of tariffs and non-tariff barriers such as 
border delays, and seeks to liberalise trade in services and facilitation of 
trade and investment.

It would also facilitate movement of business people, as well as develop and 
implement joint infrastructure programmes.

There are fears the continental FTAs would open up the economies of small 
countries and in the end, the removal of customs duty would negatively 
affect smaller economies’ revenue generating measures.

Zimbabwe is using a cash budgeting system and revenue from taxes, primarily 
to sustain the budget in the absence of budgetary support from co-operating 

Finance minister Tendai Biti recently slashed the budget to US$3,6 billion 
from US$4 billion saying the revenue from diamonds had been underperforming, 
among other factors.

Experts said a fund should be set up to “compensate” economies that suffer 
from the FTA.

Shumba said the Comesa-Sadc-EAC FTA would create a single market of over 500 
million people, more than half of the continent’s estimated total 

He said new markets, suppliers and welfare gains would be created as a 
result of competition.

Tariffs and barriers in the form of delays have been blamed for dragging 
down intra-African trade. Stephen Karingi, director at UN Economic 
Commission for Africa, told a trade forum last week that trade facilitation, 
on top on the removal of barriers, would see intra-African trade doubling.

“The costs of reducing remaining tariffs are not as high; such costs have 
been overstated. We should focus on trade facilitation,” he said.

“If you take 11% of formal trade as base and remove the remaining tariff, 
there will be improvement to 15%. If you do well in trade facilitation on 
top of removing barriers, intra-African trade will double,” Karingi said.

He said improving on trade information would save 1,8% of transaction costs. 
If member states were to apply an advance ruling on trade classification, 
trade costs would be reduced by up to 3,7%.

He said improvement of co-ordination among border agencies reduces trade 
costs by up to 2,4%.

Karingi called for the establishment of one-stop border posts.
Participants at the trade forum resolved that the implementation of the FTA 
be an inclusive process involving all stakeholders.

They were unanimous that a cost-benefit analysis should be undertaken on the 
CFTA to facilitate the buy-in of member states and stakeholders for the 


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