In order to avoid a situation where the Regional Organisations of COMESA, EAC and SADC took contradictory implementation decisions on trade policy, trade facilitation, investment issues or infrastructure development that would either slow down or weaken the process of continental regional integration as outlined in the Lagos Plan of Action and in the creation of the African Economic Community, it was agreed between the three regional organisations of COMESA,
EAC and SADC to work closely together in the form of a Tripartite process. The Tripartite, which was formalised in 2006, has decided to initially concentrate on coordinating and harmonising programmes in trade, trade facilitation and infrastructure and, as such it has established sub-committees on trade and infrastructure (with components of trade facilitation addressed by both sub-committees).
The flagship programme for the Trade Sub-Committee is the preparation of the Tripartite Free Trade Area or “Grand” FTA. The decision to develop a Tripartite FTA Roadmap and to roll out this Tripartite FTA was endorsed by Heads of State and Government at their first Tripartite Summit held in Kampala in October 2008. Since this decision was taken the Tripartite, led by the Trade Sub-Committee has prepared a Draft FTA Roadmap and a Draft Agreement establishing the Tripartite FTA, including annexes on non-tariff barriers, rules of origin, customs co-operation, transit trade and transit facilities, trade remedies, competition policy and law, standards, SPS measures, movement of business persons, Intellectual Property Rights, services negotiations, dispute settlement and institutional arrangements. This draft has been sent out to all COMESA-EAC-SADC Member and Partner States and will be discussed in the coming months. In addition, draft tariff liberalisation and FTA negotiating modalities, draft Rules of Origin and Rules of Procedure for Tripartite Free Trade Agreement meetings and negotiations have been prepared and are in the process of being discussed.
Given that there are 26 countries comprising the COMESA-EAC-SADC region, which is almost half of the countries of Africa, this process can be regarded as a very significant step in the goal of the African Union to deepen economic integration of the African continent, with the first step being to create the African Economic Community.
The flagship programme for the Infrastructure Sub-Committee has been the design and roll-out of the North South Corridor Pilot Aid for Trade Programme.
It is clear that one of the major constraints to the economic development, poverty alleviation and job creation in the region is the high cost of doing business across borders. In the ESA region the costs of transport, in particular road transport, is directly related to the time taken for the journey. The typical charge for a stationary truck is between US$400 and US$500 a day.
Therefore, if a truck takes 5 days to clear a border (which is not excessive in the COMESA-EAC-SADC region, the transporter will pass on an additional cost of US$2,500 for the cost of the truck sitting idle at the border to the importer.
This will, in turn, be passed on to the importer’s client and ultimately, to the consumer. This makes producers in the ESA rgion that are in landlocked countries (and in locations of coastal countries that are long distances from the port) more uncompetitive than they should be. It costs about US$6,000 to transport a 20-foot container from Durban to Lusaka and to take the empty back. This means that a producer that relies on imported components for his manufacturing business that is based in Lusaka would need to absorb this extra transport cost compared to his competitor near the port. It is often less expensive to export a raw material, or a semi-processed raw material (such as copper concentrate as opposed to copper wire or sugar as opposed to confectionary) than to import the materials needed to process the material and to then export the processed good. Until the costs of production in the region are reduced it is unlikely that this situation will be changed.
The Tripartite saw the need to reduce costs of cross-border trade as crucial to economic growth and to do this it was appropriate to reduce transport costs along a whole corridor in a sequential fashion. One of the concerns of the Tripartite is that, traditionally, development and rehabilitation of surface transport infrastructure has been done in isolation, meaning that if a section of road is repaired the section before and after the repaired section is not repaired; no account is taken of transport facilitation measures and no account is taken of other modes of transport. Therefore, the North South Corridor programme has a number of projects that are inter-related but which address, road infrastructure, road transport facilitation, rail infrastructure, reducing time taken to cross border posts, port infrastructure and, in the future, energy and ICT infrastructure.
The North South Corridor is one of a number of corridors in the COMESA-EAC-SADC region. These corridors are linked and no one corridor should be regarded as being more important than any other or of taking precedence over any other. The North South Corridor is a pilot Aid-for-Trade programme and the lessons learned in rolling out this Aid-for Trade programmeshould be able to be applied to the development of other corridors. This is already happening on the Northern Corridor and Central Corridor in East Africa. In addition, the Tripartite is looking to address some of the challenges of other corridors.
* The 28 page report prepared by TradeMarkSA, dated November 2010, can be accessed here.