Regional Integration Schemes in Africa- Some Lessons from COMESA Presentation at the Expert Group Meeting on Preferential Trade Arrangements and Regional Integration in the Arab World Yusuf Atiku Abdalla Regional Trade Advisor- COMESA Ramada Hotel, Gammarth, Tunis, Tunisia 5-6 December, 2012

Outline of Presentation COMESA in brief Features (Evolution) of COMESA’s integration process Challenges and prospects Conclusion 2

COMESA in Brief n THE PROCESS OF REGIONAL INTEGRATION IN THE COMESA REGION: n TREATY ESTABLISHING PTA SIGNED. n 1982 – PTA TREATY RATIFIED n 1993 – TREATY ESTABLISHING COMESA SIGNED n 1994 – COMESA TREATY RATIFIED n 2000 – FREE TRADE AREA (FTA) n 2009 – LAUNCH OF CUSTOMS UNION - A LOGICAL AND SYSTEMATIC PROCESS OF INTEGRATION FROM THE FORMATION OF A PREFERENTIAL TRADE AREA (PTA) THROUGH TO THE ATTAINMENT OF A COMMON MARKET AND SUBSEQUENTLY THE ACHIEVEMENT OF AN ECONOMIC COMMUNITY 3

COMESA at A Glance TOTAL AREAApprox MILLION SQ. KM POPULATION 465 MILLION (as of end 2011) MEMBERSHIP 19 COUNTRIES (soon to be 20) FTA MEMBERSHIP15 COUNTRIES Combined GDP/PER CAPITA GDPUS$ 485 Billion/ about US$ 1,040 INTRA-COMESA TRADEUS$ 18 Billion ( as of 2011 from about US$ 3 Billion in 2000) roughly 7.5 percent of total trade TOTAL TRADEUS$ 241 Billion 4

Features of COMESA’s integration process -Regional Trade Arrangements (RTAs) contribute towards integration -In the case of the African continent, encourage trade and to secure scale economies and market access opportunities -COMESA born in 1994 as an RTA (replacing its predecessor- the Preferential Trade Area (PTA) for eastern and Southern African States formed earlier in One of 8 regional economic communities in Africa- as building blocks for the establishment of continental wide African economic community 5

Features of COMESA cont. -In the COMESA RTA was transformed into an FTA -The requirement of this arrangement required member states to eliminate trade policy and implementation restrictions -At the moment, 15 of the 19 COMESA member states participate in a an FTA, while the remaining 4 trade on preferential terms -Reflected in the region’s comprehensive product coverage 6

Features of COMESA cont. -The 2 features of the COMESA FTA Agreement addressed substantially a critical aspect of the liberalisation of international trade -Sensitive list of goods of economic importance to -In a further bid towards the furtherance of the integration process, COMESA launched a Customs Union in As a result, regulations were established to govern the conduct of the Customs Union, internal trade within the region, relations with 3 rd countries under the framework of a common external tariff (external trade policy), trade remedies, export promotion and a dispute settlement mechanism. -A COMESA Task force on the implementation and operation of the Customs Union was also established (to address future developments). 7

Features of COMESA cont. -Alongside, COMESA is currently involved with pursuit of the formation of a Tripartite Trade Arrangement between 3 RECs in the Eastern and Southern Africa Region- and that is the formation of the COMESA- EAC-SADC Tripartite FTA -The Tripartite arrangement between the 3 RECs will lead to the formation of Africa’s largest FTA -Negotiations have commenced and are expected to be concluded within 24 months -Other key pillars of the proposed Tripartite arrangement are also being pursued simultaneously -Reasons to believe that its feasible for a couple of reasons: 8

Features of COMESA cont. -1) The so called “spaghetti bowl” -2) SACU member countries that do not belong to COMESA and SADC that would have to negotiate and make tariff offers to the EAC -Beyond cooperation with the EAC and SADC, COMESA’s integration process is also actively engaged in trade cooperation and partnerships with other RECs within Africa and other third -COMESA has been negotiating with the EU an EPA package for sometime- the same form of negotiations have been going on between the EU and the EAC and SADC in separate clusters. 9

Features of COMESA cont. -The common thrust towards is emphasis on a development friendly EPAs -This is against some salient worries as to suggest that EPAs with the EU could in fact undermine regional integration schemes -Another form cooperation that COMESA has continued to pursue is in the context of AGOA (the African Growth and Opportunity Act -Currently, 12 members of COMESA are eligible under AGOA provided they meet AGOA rules of origin and SPS requirements 10

Features of COMESA cont. - Bilateral trade arrangements -Latest effort- opening up trade cooperation opportunities with 3 rd counries and regional arrangements: china, India and the GCC member states e.g. there is now an initiative to cultivate an FTA with India -Idea is to promote a reasonable level of coordination of all forms of economic integration among regional economic communities of Africa and beyond, particularly because of similarities of objectives 11

Challenges and prospects -One of the challenges- i) disparities in the trade regimes of member states on the one hand and ii) the tradition of over dependence on trade taxes for public revenue as a source of fiscal sustainability on the other -Slow pace of harmonisation of tariff structures and macroeconomic policies within the membership of the -Institutions that can reliably propel the regional integration agenda 12

Challenges and prospects -Lingering weaknesses of appropriate technical capacities for negotiating credible trade agreements -Coordination weaknesses- policies and implementation -Poor trade facilitation regimes:  Poor infrastructure and the absence of active investments therein  Poor connectivity channels  Entrenched corruption in many member states  Poor and slow implementation of regional integration programmes in member states  Weak customs administration procedures etc. 13

Challenges and prospects Prospects? –Need for improvement and modernisation of infrastructure and related trade facilitation instruments – Need for cohesion of regional policies –Modernisation of TF administration and instruments (customs administration and payments systems) –Removal of endemic tariff and non-tariff trade barriers (NTB/TNTBs) –Other trade facilitation instruments (incl. peace and security and easier free movements of capital and human resources) 14

Conclusion -The scope for growth of regional trade in COMESA and its 3 rd parties still looks good and encouraging -Address key constraints- infrastructure and supply constraints as well as implementation weaknesses -Political commitment rendered consistently to support the progress of regional integration at all levels -Mode 4 incentives and protocols 15

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