The COMESA-EAC-SADC Tripartite launched negotiations for a Tripartite Free Trade Area at their Second Tripartite Summit on 12 June 2011. One of the key areas that must be negotiated during the first phase of FTA negotiations (within 36 months from June 2011) is the Rules of Origin that will facilitate trade in goods between countries within the FTA.
Rules of Origin refer to laws, regulations and administrative procedures that are applied to determine from which country a product originates. This is important to trade within a preferential trading arrangement, because the reduced or duty free importation rates that signatories to such an agreement are entitled to, applies only to products that originate within the preferential trade area.
Rules of Origin are, therefore, important to avoid trade diversion from occurring. If there were no Rules of Origin to be observed, a Member State of a Regional Economic Community (REC) could import a good from a country not in the COMESA-EAC-SADC region, and then re-export it within COMESA-EAC-SADC FTA’s free of import duty. This would mean that the good would simply transit through the Member State and the exporting country would be benefitting from a preference intended only for Member States of the REC. No benefit would accrue to the other REC partners and this would also have a negative impact on other countries trading with the preference giving country.
To be effective, a preferential or free trade agreement must have transparent and simple Rules of Origin that promote trade while ensuring no, or minimal, trade diversion takes place.
TMSA is supporting the Tripartite to establish a regional Rules of Origin database. This database contains:
- The Rules of Origin applied under the preferential trading arrangements of the three Regional Economic Communities.
- Rules of Origin applied under the Generalized System of Preferences Scheme of the European Union (EU-GSP) and
- the American Growth and Opportunity Act (AGOA).
This database will be an invaluable tool during negotiations for a common, Tripartite wide Rules of Origin under the FTA, as it will allow comparison of the current Rules of Origin in the region.
The database has been completed, and will be officially launched once it has been presented to, and approved by the Tripartite Task Force.