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Problems Foreseen For African Tripartite FTA

by Lorys Charalambous, Tax-News.com, Cyprus

08 November 2011


The South African Minister of Trade and Industry, Rob Davies, has expressed the opinion that the planned roll out of the proposed tripartite free trade agreement (FTA), between the East African Community (EAC), the Common Market for Eastern and Southern Africa (COMESA) and the Southern African Development Community (SADC), may “hit a snag” when negotiating on trade in manufactured goods between the member countries.

At the Tripartite Summit held in June 2011, the member countries’ Heads of State signed an agreement to launch talks and adopted the roadmap for the establishment of the FTA. The first phase of negotiations on allowing the free movement of goods is expected to take three years. A second phase will then tackle trade in services and other issues.

It has been confirmed recently that preparations are progressing well towards the commencement of substantive negotiations for the combined FTA, which could create a larger regional market of 26 countries with a combined gross domestic product of over USD830bn and 530m people. A tripartite agreement would open the borders of approximately half of the African continent, spanning the entire southern and eastern regions of Africa - from the Cape to Cairo.

However, while addressing a forum entitled "From Cape to Cairo: Prospects for Free Trade in Africa" at the Centre for Conflict Resolution, Davies said he expected there to be very tough negotiations over the industrial development component of the initial three-year roadmap.

He disclosed that rules of origin - where products were really manufactured – would be a difficult question regarding goods produced in some other countries.

"A number of countries are opening up special economic zones with a number of other countries which are coming in, probably bringing the labour force coming from that country,” he pointed out. "Are we going to let products from that source come into the FTA, is that going to be a qualification? Those are going to be some very, very tough nuts (to crack)."

Davies noted that the negotiations over trade in manufactured goods in the FTA will be a particular concern to South Africa, with the country's current drive to ramp up industrialisation through the Industrial Policy Action Plan, launched last year. But, unlike its exports to the rest of the world, a high percentage of South Africa's exports to the rest of the continent were already made up by value-added products.

TAGS: South Africa | tax | free trade agreement (FTA) | Djibouti | Eritrea | Mauritius | Swaziland | Zimbabwe | law | tariffs | Angola | Comoros | Ethiopia | Lesotho | Libya | Madagascar | Malawi | Mozambique | Sudan | agreements | Botswana | Congo, Democratic Republic of the | Egypt | Kenya | Namibia | Rwanda | Uganda | Zambia | trade | Burundi | Ghana | Seychelles | Tanzania | Africa

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