8 th Session of the Committee on Trade, Regional Cooperation and Integration 6 - 8 February 2013

1. Report on Africa’s Regional Integration Agenda By Daniel Tanoe 8th Session of the Committee on Trade, Regional Cooperation and Integration 6 - 8 February 2013 Addis Ababa, Ethiopia

2. Outline • Integration Imperative • An Overview of Progress • How is Integration Progressing? • The Challenges • Areas of Action 2

3. I Integration Importance • Create united, modern, safe, inclusive and self-reliant economic and political space. • Transform African economies. • Wider economic space permits addressing trans boundary issues. • Bigger markets and diversified production create greater wealth. • Regional integration a strategic link to globalization. 3

4. II An Overview of Progress • RECs have diverse sectoral programmes and are at different integration phases. • Progress is mixed: • Visible in trade, some aspects of transport and communications, policy convergence. • Less visible in Free movement people/labour mobility, policy and programme harmonization and non-tariff barriers. • Rationalization of RECs started. AU recognizes only 8 of the 14 RECs. COMESA/SADC/EAC Tripartite Initiative 4

5. i) Trade • Formation of FTAs, CUs, Elimination of Trade Barriers through improved trade facilitation • The COMESA/SADC/EAC Tripartite Initiative • The CFTA Initiative • Under the CFTA, intra regional trade is expected to increase by USD34.6 billion in 2022 5

6. ii) Infrastructure • Serious infrastructural gaps at both the sub-regional and continental levels particularly transport and energy. • New impetus provided by: NEPAD, PIDA, 6

7. Trans African Roads and Corridors • Building hard surface roads • Rehabilitation, interconnection, upgrading and extending transport infrastructure • The trans-African Highway Network – Critical missing links remain, particularly in central Africa and North-South routes. • Corridor Management Institutions 7

8. Railways and Air transport Railways development (e.g. in UEMOA – Senegal-Mali- Côte d’Ivoire-Burkina Faso • The Yamoussoukro Decision on the liberalisation of African air space making a difference 8

9. Energy Africa has enormous and diversified energy potential in terms of hydropower and other resources. There is increased focus on developing energy resources in a regional integration context. 9

10. iii) Free movement of People/Labour mobility • Beyond ECOWAS and EAC progress is limited. • Structural factors (low levels of development, unemployment and lack of regulations on residence) limit labour movement potential. 10

11. iv) Policy Convergence Many African RECs established macroeconomic convergence schemes or deregulated their financial environments. 11

12. v) Peace and Security • Peace and security accorded attention by RECs, AU and UN. But tensions still simmer. • The question of who pays peace and security costs is vital. 12

13. III The Challenges • There is a serious mismatch between expectations and outcomes. • A number of challenges need to be addressed. 13

14. The Challenges are: - Inadequate commitment to regional integration Supply-side constraints Institutional aspects Compatibility with WTO/EPAs Financing

15. 1. Inadequate commitment to regional integration (i) National focus vs. regional-orientation (ii) Private sector and civil society are not effectively on board (iii) Doubts on equality of benefits and the fear of polarization (iv) Sovereignty: Who is in charge?

16. 2. Supply-side constraints • Few quality tradeables. • Low trade traceable to low production, poor productivity, and limited range. • RECs focused on exchange, giving less attention to agricultural breakthroughs and modernization of industry.

17. 3. Institutional aspects • Integration institutions suffer weaknesses, overlaps, and insufficient harmonization and coordination and national de-links. • Institutional constraints compounded by inadequate national mechanisms for integration. • Governments are also reluctant to subordinate national sovereignty to that of the Community

18. 4. Compatibility with EPA/WTO • WTO and EPAs bring new demands on regional integration. • The negotiating capacity of RECs and member States is overstretched. • Research on implications needed.

19. 5. Financing • Financing problems cut across the entire range of integration activities. • RECs have limited capacity resulting in overdependence on external support. • Resource mobilization for regional integration is a critical activity including innovative sources.

20. IV. Areas of action • These include: • Infrastructure strengthening. • Addressing fears and concerns on unequal benefits of regional integration. • Strengthening RECs’ capacity. • Broadening Community support • Assuring equal benefits of regional integration. • Addressing regional commons/Peace and Security. • Implementing the MIP 20

21. i) Infrastructure strengthening The physical integration of Africa bedrock of the continent’s integration.But numerous gaps in all areas. 21

22. Roads High priority to completion of missing links in the Trans African Highway. PIDA contains a number for regional and continental focus that need to be rigorously implemented.

23. Land locked countries and the corridors Give attention to the underlying inefficiencies resulting in the high costs and frustrations on the corridors. Establish or strengthen proper and autonomous institutions for managing the corridors.

24. Energy The development of energy resources should be a matter of special focus. AU/RECs should champion the efforts to build a constituency for financing such major energy projects as the INGA project. 24

25. Reasons: Countries jealously guard their sovereignty for fear of its being jeopardized through regional projects. Country apprehensions to join: eg. FTAs Fear of implementation of free movement of people protocols. ii) Addressing fears and concerns on unequal benefits 25

26. AU/RECs to encourage reluctant countries to join FTAs, and study the reasons. AU/RECs to sensitize countries on implementation of free movement/labour mobility protocols at least for businessmen and professionals.

27. Overlapping results in replication and wastage of resources and confuses national policies. REC’s human and financial capabilities need augmentation. iii) Strengthening of REC’s 27

28. Supporting harmonization initiative between COMEA/SADC/EAC to establish the common FTA. Recognizing and building on momentum generated for convergence of UEMOA/ECOWAS on adopting a common external tariff. Providing support to CEN-SAD, ECOWAS and UMA to create a grand FTA.

29. Advocating for supranational authority for RECs. Sensitizing RECs members to implement community decisions. Mobilizing donor support for RECs.

30. iv) Broadening Community support AU/RECs to champion efforts to enhance civil society participation, knowledge of the issues and projects to establish legitimacy for the process. Specific initiatives could include: Support cinematographic and audiovisual activities for integration Organize workshops, seminars and other activities for sharing experience on regional integration Advocate for integration day in all sub-regions. 30

31. Benefits of regional integration are neither automatic nor spontaneous. RECs to establish Structural Funds for lagging Community members along the lines of the European Union. v) Assuring equal benefits of regional integration 31

32. Peace and security are at the center of integration concerns. UN to add value to the efforts of the RECs and the AU. vi) Addressing regional commons

33. The scale of needed resources is huge. New sources and approaches needed particularly for infrastructure. Financing for infrastructure gaps, in particular through the establishment of Development Funds. Exploring potential of innovative financing (Diaspora, remittances, Integration Fund). vii) Financing 33

34. Thank you 34