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REGIONALISM: A TRADE STRATEGY FOR AFRICA? Paul Kalenga

REGIONALISM: A TRADE STRATEGY FOR AFRICA? Paul Kalenga. WTO SYMPOSIUM 21 April 2005. INTRODUCTION. Regionalism - still a viable trade strategy for Africa? Africa - a relatively insignificant player in global trade Intra-African (formal) trade remains relatively low

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REGIONALISM: A TRADE STRATEGY FOR AFRICA? Paul Kalenga

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  1. REGIONALISM: A TRADE STRATEGY FOR AFRICA?Paul Kalenga WTO SYMPOSIUM 21 April 2005

  2. INTRODUCTION • Regionalism - still a viable trade strategy for Africa? • Africa - a relatively insignificant player in global trade • Intra-African (formal) trade remains relatively low • Regionalism - still highly regarded by most African policy makers as a viable mechanism for dealing with Africa’s continued marginalization within the world economy • The New Partnership for Africa’s Development (NEPAD) is premised on the building of intra-regional trade blocs as a stepping stone towards an integrated African community

  3. PROLIFERATION OF RTAs • The number of bilateral and preferential trade agreements continues to rise • Almost all countries belong to at least one RTA • Nearly 40% of total global trade takes place between RTA partners • Most-favored nation (MFN) treatment has become rather an exceptional or least-favored-nation treatment • Does this undermine or support the WTO system? • This largely depends on their design and implementation

  4. AFRICA NOT AN EXCEPTION • Africa is home to a multiplicity of overlapping sub-regional trade agreements: - Central Africa: CEMAC - North Africa:AMU - Southern and Eastern Africa: SACU, SADC, COMESA, EAC - West Africa: ECOWAS, WAEMU, MRU

  5. WHAT HAS BEEN AFRICA’S EXPERIENCE? • Poor record of African integration initiatives (with few exceptions) speaks for itself • Many reasons have been advanced to explain this unsatisfactory experience – political and economic - civil strife and political instability - the structural characteristics of the African economies with little complementarities - import-substitution strategies - lack of implementation of agreed commitments largely due to problems related to the distribution of costs and benefits - overlapping and conflicting membership - design problems – concerns with sensitive sectors, customs revenue issues, restrictive rules of origin and attendant administrative burdens, persistent non-tariff barriers, etc.

  6. SADC CASE STUDY - A cautious approach to intra-regional trade liberalisation and backloading of tariff reduction offers - Little consideration on countries’ pattern of trade and comparative advantages - Restrictive rules of origin (sector/product specific), no harmonisation with other overlapping regimes - Persistence of non-tariff barriers to intra-SADC trade - variable levels of external levels of protection - weaker domestic policy coherence and national institutional capacity to support regionalism

  7. Emergence of New Regionalism? • Covering a much wider range of institutional, administrative and regulatory issues (behind the border issues) • E.g. the prospective Economic Partnership Agreements (EPA) between the Africa Caribbean Pacific (ACP) States and the European Union (EU) • The Southern African Customs Union (SACU) Member States, composed of Botswana, Lesotho, Namibia, South Africa and Swaziland, are also jointly negotiating trade agreements with the United States (US) and the European Free Trade Association (EFTA)

  8. Some Problematic Issues • Effects on the Regional Integration Process • Adjustment costs • Potential trade diversion arising from Africa’s partial liberalization to EU imports • Enhancing Market Access Conditions: EU Rules of Origin regime, other NTBS such as SPS/TBT measures • Treatment of Singapore Issues • National ownership and domestic policy anchoring • WTO Compatibility and DDA Coherence

  9. Conclusions • Regionalism is not a panacea to Africa’s growth and development problems • However, it will be inappropriate to dismiss the merits of African regionalism – for the simple reason that it has never been appropriately designed and effectively implemented. There are promising signs of making positive progress. • Some insights: - Regional integration should be underpinned by supportive domestic policies of Member States as well as national capacity towards its effective implementation - Strong evidence that outward-looking regional trade agreements among trading partners are likely to produce superior positive results than inward- oriented agreements - What confronts Africa now is how to rationalize these existing regional arrangements and transform them into meaningful instruments for trade and development through appropriate design and implementation capacities

  10. AFRICAN RTAs

  11. EPA Configurations

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