Why countries are dilly-dallying over freeing their markets

Sunday July 22 2018

container depot

Entrance to one of the Container Depots in Nakawa, Kampala where Export and Import goods are verified. FILE PHOTO | NMG 

By ALLAN OLINGO
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Only three of 27 members of the Common Market for Eastern Africa (Comesa) bloc have endorsed the tripartite free trade area deal, three years after it was launched, shining the spotlight on their commitment to opening up the region’s market.

The Tripartite Free Trade Area (TFTA), featuring Comesa, the East African Community and the Southern African Development Community (SADC), was launched on June 10, 2015 in Egypt, to open up a market of 700 million people in the region, with a GDP of over $1.4 trillion.

It is expected to come into force in April next year after at least 14 countries endorse the deal, and will smooth the path to achieving the African Continental Free Trade Area (AfCFTA) launched early this year.

But the slow progress in ratifying the TFTA instruments has brought to the fore the challenges countries face in trying to open up their markets.

At the 20th Comesa Summit in Lusaka, Zambia, this week, it emerged that only Kenya, Uganda and Egypt have endorsed the agreement.

It was expected that the Council of Ministers and the Heads of State Summit would put pressure on the remaining countries to ratify the deal.

Comesa’s outgoing chairman, Madagascar President Martial Rajaonarimampianina, appealed to member countries to prioritise endorsing the agreement “so that it may be used as a basis for implementing the African Continental Free Trade Area.”

Progress

But in their statement at the end of the summit, the heads of state only acknowledged the progress made in preparing the instruments for the Digital Free Trade Area (DFTA), such as the Electronic Certificate of Origin. They encouraged the member states that are ready to implement the DFTA to do so on a pilot basis.

“The heads of state stressed the importance of prioritisation programmes that promote small-scale cross-border trade, taking into account gender empowerment and poverty eradication, and called for the extension of these programmes to cover both goods and services,” the statement reads.

In mid-June, the region’s ministers met in Cape Town to give direction on the implementation of both the TFTA and the continental market, where members set yet a new deadline of April 2019 for countries to complete the ratification process. On tariff negotiations, the ministers set a new deadline of December 2018.

The meeting also adopted the tripartite agreement on the movement of business people, after outstanding issues were addressed by the chiefs of immigration.

“As the tripartite has higher levels of deeper integration, and shorter timeframes in light of the upfront elimination of Customs duties on 60 to 85 per cent of total tariff lines, its implementation should be fasttracked as a building bloc for the AfCFTA.

“So far 49 out of the 55 African countries have signed the AfCFTA deal. Kenya, Ghana, Niger, Rwanda, Chad and eSwatini (formerly Swaziland) have ratified the agreement. However, Rwanda and eSwatini are yet to ratify the TFTA Agreement.

“We appeal to all member states to ratify the Tripartite Agreement so that it enters into force not later than April 2019,” the ministers said in their statement.

27 countries

At the end of June, only 22 of the 27 countries had signed the TFTA agreement, with Botswana being the latest signatory in January.

The countries that have so far signed the agreement are Angola, Burundi, Botswana, Comoros, Democratic Republic of Congo, Djibouti, Egypt, Kenya, State of Libya, Madagascar, Malawi, Mauritius, Namibia, Rwanda, Seychelles, Sudan, Tanzania, Uganda, South Africa, eSwatini, Zambia and Zimbabwe.

Uganda, which has ratified the tripartite agreement but is yet to deliver it to Comesa, has yet to ratify the AfCFTA.

In June, Kenya’s permanent representative to Comesa Sophy Kombe presented the ratification instrument to the chair of the Tripartite Task Force, former Secretary-General Sindiso Ngwenya.

Rwanda, which has been seen as the champion of free markets, is yet to ratify the tripartite agreement, despite being among the first AU members to ratify the AfCFTA.

When contacted, Rwanda's Trade and Industry Minister Vincent Munyeshaka referred The EastAfrican to Prime Minister Edouard Ngirente, who attended the Comesa summit.

“The Prime Minister, as leader of government business, is better placed to provide more information. However, we expedited the AfCFTA agreement and ratification because we believe in continental trade to achieve our target of increasing intra-Africa trade to spearhead integration. It is a big opportunity because Africa is the future," said Mr Munyeshaka.

Missing legal information

The EastAfrican understands that some countries have taken time to sign the agreement because of some missing legal information, while the reasons given for the lack of ratification is that countries are still aligning some of the annexes with their domestic laws.

The first phase of the negotiations, which involved tariff negotiations among member states and regions that do not have preferential arrangements among themselves has taken long, delaying the second phase.

For instance, the Southern African Customs Union (SACU), comprising Botswana, Lesotho, Namibia, South Africa and Swaziland, is still negotiating tariff liberalisation with the EAC and Egypt, and it has yet to start negotiations with individual countries like Djibouti, Sudan and Eritrea.

Negotiations between SACU and EAC have two major outstanding areas; automobiles and dairy products.

In addition to the tariff negotiations, there are efforts towards concluding a protocol on movement of businesspersons, which is a side agreement.

The member countries have also adopted an industrial development framework and a plan to co-operate on infrastructure development.