|
The Abuja Treaty, which was signed in 1991 and entered into force in 1994, envisages the creation of an African Economic Community through a process of six stages. Two stages have been completed, with the creation of regional economic blocs in regions and the strengthening of intra-REC integration and inter-REC harmonisation. Four stages remain to be achieved, including the establishment of a free trade area and customs union in each regional bloc. The last three stages of this process are at a continental level and entail the creation of a customs union, African Common Market (ACM) and an economic and monetary union, by 2034 at the latest.
In June 2011 the East African Community (EAC), the Common Market for Eastern and Southern Africa (COMESA) and the Southern African Development Community (SADC) formally launched negotiations for the establishment of an integrated market of 26 Countries at the second Tripartite Summit. In January 2012, African Heads of State and Government adopted a Decision during the 18th African Union Summit for boosting intra-African trade and fast tracking the establishment of a Continental Free Trade Area (CFTA). The Decision endorsed a Framework, Road Map and Architecture for the establishment of a CFTA with the aim:
a) To finalize the COMESA, EAC and SADC FTA initiative by 2014;
b) To complete FTA(s) by Non-Tripartite RECs, between 2012 and 2014;
c) To consolidate the Tripartite and other regional FTAs into a CFTA initiative between 2015 and 2016;
d) To establish the CFTA by 2017 with the option of reviewing the target date according to progress made.
Free and unrestricted movement of goods and services, including labour, is expected to create economies of scale and estimated to expand trade flows among African countries by as much as 50% above the baseline in 2022 (adding up to USD 33.8 billion). Estimates show that intra-African trade could double from its current level of 10-12 percent to 20-25 percent provided that trade liberalization in the context of the RECs’ Free Trade Areas (FTAs) and a Continental Free Trade Area (CFTA) eliminates existing tariff and non-tariff barriers and is accompanied by robust trade facilitation measures, improved trade-related infrastructure and supply-side capacity. In addition, regional integration is likely to improve efficiency across industries and create a more conducive environment for industrial diversification.
The intensification of the process for establishing a Tripartite FTA between COMESA, EAC and SADC communities is an encouraging move forward that provides a potential model for other RECs. The comprehensive Action Plan for boosting intra-African trade in the short, medium and long-term, and the Plan of Action of the Minimum Integration Programme will also help to foster economic convergence among African countries.
The CFTA, if achieved, would be a major further milestone and stepping stone towards the objective of a Continental Customs Union. There are however still key challenges to overcome, including the need for a collective financial pool to address adjustment costs due to initial unequal distribution of gains from CFTA, and making available ample financial resources to facilitate the development of competent institutions and complementary infrastructure.
|
