Tripartite SADC-EAC-COMESA Initiative and Free Trade Area Negotiations By Dr Rob Davies, Minister of Trade and Industry Republic of South Africa June 2011

South Africa’s New Growth Path and Regional Integration NGP aims to accelerate growth and industrial development in to generate employment A key element of the strategy is regional integration SA consistently runs a trade surplus in Africa Structure of exports to Africa is value added products that support industrial and employment objectives Work has focused on integration in SACU and SADC Tripartite Initiative between SADC,EAC and COMESA will extend these integration efforts 2

Africa’s Growth and Development Prospects Africa is the second fastest growing region in the world, after Asia Enormous reserves of raw materials 60% of unused arable agricultural land globally Young and growing population Growing middle class with considerable purchasing power, Rapid urbanisation Improvements in economic governance 3

Africa’s Growth and Development Prospects Over the next five years: Africa’s output will expand 50%: From US$1.6 to 2.6 trillion Growth will expand on average at 5.5% per annum Africa’s GDP per capita income will expand by 30% Private consumption in Africa’s 10 largest economies will more than double Africa’s total trade will grow dramatically: from US$ 654 billion to US$1.6 trillion by 2015; expanding by 17% per year with share of global trade almost doubling from 3.2% to 6% in 2015 Capital inflows expected to reach US$150 billion

Tripartite FTA Imperatives In context of growing competition for African markets, T-FTA can ensure that we trade among each other on equal terms to third parties Tripartite framework derives legal basis from Lagos Plan of Action and the Abuja Treaty establishing the African Economic Community (AEC) Strategic response to the AEC’s objective to rationalise and consolidate existing regional economic communities (RECs), to achieve an African common market

Tripartite FTA Imperatives T-FTA will strengthen economic growth and development prospects in Africa Encompasses 26 countries; combined GDP approaching US$1 trillion; population of almost 600 million Larger market attracts FDI and can boost intra-Africa trade Allow Africa to compete more effectively on global stage Allow Africa to join emerging economies in the South as new centres of global economic growth, and sources of trade and investment

Tripartite Initiative In 2008, Heads of State of SADC, EAC, COMESA met in Kampala to launch Tripartite Initiative Directed Secretariats of the 3 RECs to begin work on: Negotiations for a FTA among the RECs Cross-border infrastructure development, notably North-South transport corridor Free movement of business people In 2009, 2nd Tripartite Summit in Lusaka mobilised finance for the N-S Corridor

Third Tripartite Summit President Zuma hosted 3rd Tripartite Summit in SA on 12 June 2011 Summit adopted “development integration” approach combining market integration, industrial development, and infrastructure development: Agreed to initiate a work programme on building production capacity across member states Received an update on current work on regional infrastructure development (N-S Corridor); and Launched SADC-EAC-COMESA T-FTA negotiations. 8

T-FTA Negotiations Summit adopted proposals on scope, phasing, timeframe and principles for FTA negotiations: Trade in goods negotiations in phase one Technical preparations and data exchange of trade and tariffs – 6-12 months Overall indicative time frame: 3 years Phase two may cover services and trade related issues (eg. services, competition, intellectual property, investment) Principles: build on acquis under 3 RECs; reciprocity; acknowledge sensitivities; flexibility and variable geometry Address non-tariff barriers, regional standards and trade facilitation (border measures)

Movement of Business People, Supply Capacity and Infrastructure Negotiations on free movement of business people to be conducted on separate track lead by departments of Home Affairs in phase one Secretariats to coordinate work on building production capacity and identifying cross border value chains Infrastructure work on separate track with relevant Departments (eg: transport, energy, communication) President Zuma requested by NEPAD/AU to champion N-S transport Corridor Task Team set up under Presidency to lead this work