Nairobi: The heads of state meeting of the African Union in Addis Ababa this weekend is set to launch an initiative creating a Continental Free Trade Area (CFTA) by the year 2017. This effort reflects both a success and failure of past initiatives at integrating the economies of Africa to optimise on scale, rationalise infrastructure and unbuckle the continent’s productive forces.
Twenty years ago, Africa committed to The Lagos Plan of Action which envisaged a rapid consolidation of Regional Economic Communities (RECs) as building blocs to inter-lock into a continental customs union by 2019. As the dateline approaches, the goal appears elusive. While some regions like Eastern, West and Southern Africa have made progress, elsewhere little has happened.
Even where these RECs have grown, their negotiated rules and tariff structures have evolved in total disregard of what neighbouring blocs are doing. As a result, what was conceived as building blocs for African integration have actually erected new barriers to trade between regions.
Still the progress made in negotiating integration in the RECs has been a major learning process for the crafters of the new initiative. Simplifying and standardising customs procedures and documentation, agreeing on rules of origin for tax-exempt goods and cutting down on red tape within regions, is the foundation upon which the quest for a trade regime for the whole continent is founded.
It is a common truth that countries which trade best with the world first trade most with their neighbours. Intra-African trade, currently at about 12 per cent, remains way behind Europe, Asia and the Americas. The cost of trade logistics for land-locked African countries on average accounts for 40 per cent of the value of their products; by far the most costly in the world.
A chill in the international environment has brought to the fore the urgency of concrete action on the continent. The stalled Doha Round negotiations for a rules-based multilateral trading system has diminished the voice of Africa on global market access issues. The crisis in the eurozone has cast doubt on the medium-term access to Africa’s most important traditional market.
The arm-twisting and goal-shifting of Brussels in reviving the stalled Economic Partnership Agreement negotiations portends even worse for Africa’s most important preferential market.
Yet even as the architects of the new CFTA effort get down to model the roadmap, celebrations will be very premature. Security concerns across the continent threaten the plan in its infancy.
The protracted denouement of the Spring Revolution has left uncertainty in The Arab Maghreb and shifted priorities in key countries of Egypt and Libya.
The dirty divorce between Khartoum and Juba is dramatically spinning into crisis mode with serious implications for both countries and their neighbours.
Somalia continues to fester like an incurable wound on the east board with related escalation in the cost of containing piracy.
Beyond security challenges, Africa must learn to practise what it has signed up before looking to sign onto new undertakings. The experience within existing RECs is not very encouraging. Many times old habits shroud implementation of new commitments.
East Africa’s recent experience bears this out. Seven years since the coming into force of the EAC Customs Union and nearly two years since launching the common market, the East African partners continue to play hide and seek with each other.
A mountain of non-tariff barriers continues to suffocate cross-border trade.
Uganda continues to seek extensions on a so-called list of sensitive products for which its input taxes are lower than for their neighbours.
Last year Tanzania suspended maize “exports” to Kenya during a season of scarcity.
This past month, government officers in Kenya have been complaining of Kenyan maize being “smuggled” into Uganda since the Cereals Board announced it had run out of money.
East African governments continue to attempt selective and solo subsidies either for fertiliser or grains at different times.
There is no model of a common market where customs duty on inputs is varied between countries. You cannot be a common market while banning movement of cereals across borders. If you are a common market there is no longer export between countries. Goods and services are in free flow.
The regime of subsidies by government must become a collective negotiated policy for all the countries in the REC.
If we fail the consistency test within a small and closely-knit effort like EAC, it casts major doubts on how much we will keep our word on abandoning trade restriction practices within a continental initiative.
The leaders gathered in Addis should have the boldness to sign the commitment to a CFTA, but also understand and commit to the challenges of abandoning ancient habits.
This is the only way Africa’s integration will strengthen her hand in a mean and hostile global trading regime.
- Dr Kituyi is a director at Kenya Institute of Governance firstname.lastname@example.org