Business
Will free trade in Africa fuel growth or introduce regional imbalances?
But trade experts warn that the cumbersome economic integration process in SADC, with an envisaged customs union being pushed back and countries failing to implement the provisions of a 2008 FTA, raises doubts about the tripartite area.
“No doubt there are challenges,” says Fundira. “The smaller problems manifesting themselves in the RECs could be multiplied in the tripartite FTA. But states have also learned from experience. Rules of origin, for instance, should not be an obstacle but a facilitator of trade.”
Rules of origin are a means to protect products and industry sectors. Countries use them to exclude third parties from preferential trade agreements. An example would be preventing a Chinese product, repackaged in South Africa, finding its way into the European Union (EU) under South Africa and the EU’s Trade and Development Cooperation agreement (TDCA).
Similarly, countries listing products as sensitive should not hinder the process, says Fundira. “The definition of ‘sensitive’ currently is quite broad. As most countries in the region produce the same things, listing a few tariff lines as sensitive immediately restricts trade. Then the process becomes meaningless. We can see that this issue is approached more cautiously in the FTA negotiations.”
It is still unclear how the ambitions of the tripartite FTA will be reconciled with those of the RECs. EAC and COMESA are customs unions, while SADC announced two weeks ago it still intends to establish a customs and monetary union.
“It will be interesting to see how a SADC customs union will converge into the tripartite FTA,” notes Kruger. “The current situation in COMESA, which has a customs union without a common external tariff, indicates it will be impossible for SADC to realise its ambition of a customs union.”
