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Regional Integration Schemes in Africa- Some Lessons from COMESA

Regional Integration Schemes in Africa- Some Lessons from COMESA. Presentation at the Expert Group Meeting on Preferential Trade Arrangements and Regional Integration in the Arab World Yusuf Atiku Abdalla Regional Trade Advisor- COMESA yabdalla@comesa.int ; yusuf_abdalla@yahoo.com.

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Regional Integration Schemes in Africa- Some Lessons from COMESA

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  1. Regional Integration Schemes in Africa- Some Lessons from COMESA Presentation at the Expert Group Meeting on Preferential Trade Arrangements and Regional Integration in the Arab World Yusuf Atiku Abdalla Regional Trade Advisor- COMESA yabdalla@comesa.int; yusuf_abdalla@yahoo.com Ramada Hotel, Gammarth, Tunis, Tunisia 5-6 December, 2012

  2. Outline of Presentation • COMESA in brief • Features (Evolution) of COMESA’s integration process • Challenges and prospects • Conclusion

  3. COMESA in Brief • THE PROCESS OF REGIONAL INTEGRATION IN THE COMESA REGION: • 1981 - TREATY ESTABLISHING PTA SIGNED. • 1982 – PTA TREATY RATIFIED • 1993 – TREATY ESTABLISHING COMESA SIGNED • 1994 – COMESA TREATY RATIFIED • 2000 – FREE TRADE AREA (FTA) • 2009 – LAUNCH OF CUSTOMS UNION - A LOGICAL AND SYSTEMATIC PROCESS OF INTEGRATION FROM THE FORMATION OF A PREFERENTIAL TRADE AREA (PTA) THROUGH TO THE ATTAINMENT OF A COMMON MARKET AND SUBSEQUENTLY THE ACHIEVEMENT OF AN ECONOMIC COMMUNITY

  4. COMESA at A Glance TOTAL AREA Approx. 12.2 MILLION SQ. KM POPULATION 465 MILLION (as of end 2011) MEMBERSHIP 19 COUNTRIES (soon to be 20) FTA MEMBERSHIP 15 COUNTRIES Combined GDP/PER CAPITA GDP US$ 485 Billion/ about US$ 1,040 INTRA-COMESA TRADE US$ 18 Billion ( as of 2011 from about US$ 3 Billion in 2000) ............. roughly 7.5 percent of total trade TOTAL TRADE US$ 241 Billion

  5. Features of COMESA’s integration process - Regional Trade Arrangements (RTAs) contribute towards integration - In the case of the African continent, encourage trade and to secure scale economies and market access opportunities - COMESA born in 1994 as an RTA (replacing its predecessor- the Preferential Trade Area (PTA) for eastern and Southern African States formed earlier in 1982 - One of 8 regional economic communities in Africa- as building blocks for the establishment of continental wide African economic community

  6. Features of COMESA cont. • In 2000- the COMESA RTA was transformed into an FTA • The requirement of this arrangement required member states to eliminate trade policy and implementation restrictions • At the moment, 15 of the 19 COMESA member states participate in a an FTA, while the remaining 4 trade on preferential terms • Reflected in the region’s comprehensive product coverage

  7. Features of COMESA cont. - The 2 features of the COMESA FTA Agreement addressed substantially a critical aspect of the liberalisation of international trade • Sensitive list of goods of economic importance to • In a further bid towards the furtherance of the integration process, COMESA launched a Customs Union in 2009. As a result, regulations were established to govern the conduct of the Customs Union, internal trade within the region, relations with 3rd countries under the framework of a common external tariff (external trade policy), trade remedies, export promotion and a dispute settlement mechanism. • A COMESA Task force on the implementation and operation of the Customs Union was also established (to address future developments).

  8. Features of COMESA cont. • Alongside, COMESA is currently involved with pursuit of the formation of a Tripartite Trade Arrangement between 3 RECs in the Eastern and Southern Africa Region- and that is the formation of the COMESA-EAC-SADC Tripartite FTA • The Tripartite arrangement between the 3 RECs will lead to the formation of Africa’s largest FTA • Negotiations have commenced and are expected to be concluded within 24 months • Other key pillars of the proposed Tripartite arrangement are also being pursued simultaneously • Reasons to believe that its feasible for a couple of reasons:

  9. Features of COMESA cont. • 1) The so called “spaghetti bowl” • 2) SACU member countries that do not belong to COMESA and SADC that would have to negotiate and make tariff offers to the EAC • Beyond cooperation with the EAC and SADC, COMESA’s integration process is also actively engaged in trade cooperation and partnerships with other RECs within Africa and other third • COMESA has been negotiating with the EU an EPA package for sometime- the same form of negotiations have been going on between the EU and the EAC and SADC in separate clusters.

  10. Features of COMESA cont. • The common thrust towards is emphasis on a development friendly EPAs • This is against some salient worries as to suggest that EPAs with the EU could in fact undermine regional integration schemes • Another form cooperation that COMESA has continued to pursue is in the context of AGOA (the African Growth and Opportunity Act • Currently, 12 members of COMESA are eligible under AGOA provided they meet AGOA rules of origin and SPS requirements

  11. Features of COMESA cont. -Bilateral trade arrangements • Latest effort- opening up trade cooperation opportunities with 3rd counries and regional arrangements: china, India and the GCC member states e.g. there is now an initiative to cultivate an FTA with India • Idea is to promote a reasonable level of coordination of all forms of economic integration among regional economic communities of Africa and beyond, particularly because of similarities of objectives

  12. Challenges and prospects • One of the challenges- i) disparities in the trade regimes of member states on the one hand and ii) the tradition of over dependence on trade taxes for public revenue as a source of fiscal sustainability on the other • Slow pace of harmonisation of tariff structures and macroeconomic policies within the membership of the • Institutions that can reliably propel the regional integration agenda

  13. Challenges and prospects • Lingering weaknesses of appropriate technical capacities for negotiating credible trade agreements • Coordination weaknesses- policies and implementation • Poor trade facilitation regimes: • Poor infrastructure and the absence of active investments therein • Poor connectivity channels • Entrenched corruption in many member states • Poor and slow implementation of regional integration programmes in member states • Weak customs administration procedures etc.

  14. Challenges and prospects Prospects? • Need for improvement and modernisation of infrastructure and related trade facilitation instruments • Need for cohesion of regional policies • Modernisation of TF administration and instruments (customs administration and payments systems) • Removal of endemic tariff and non-tariff trade barriers (NTB/TNTBs) • Other trade facilitation instruments (incl. peace and security and easier free movements of capital and human resources)

  15. Conclusion • The scope for growth of regional trade in COMESA and its 3rd parties still looks good and encouraging • Address key constraints- infrastructure and supply constraints as well as implementation weaknesses • Political commitment rendered consistently to support the progress of regional integration at all levels • Mode 4 incentives and protocols

  16. The End

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