1. AAMP Training Materials
Module 4.1: Regional Trade Agreements
& Cross Border Trade
Helen Kenani (COMESA)
This is the first section of the Trade Module which is part of the AAMP Training Materials.

2. Contents What is a regional trade agreement? COMESA vision and mission
Rationale for trade integration
Current trade agreements
Non-tariff barriers to trade in foodstuffs
Legal basis for export/import bans
Opportunities in the East and Southern Africa region
Enforcement mechanisms and procedures
Way forward

3. What is a regional trade agreement?
Regional trade agreements aim to reduce or eliminate restrictions on items traded between the member nations
COMESA aims to be a community of member nations within which goods, services, capital and labor move feely across borders
The COMESA vision is to boost economic prosperity through integration and co-operation in
trade, customs & monetary affairs
Transport, communications and information
Technology, industry & energy
Agriculture, environment and natural resources
gender

4. Rationale for trade integration
Fundamental Questions
Who should integrate and why?
How should integration happen?
Which countries benefit from integration?
Countries integrate for political and economic reasons. A number of small and segmented individual economies cannot attract the same investment as larger, integrated markets. A regional economic community can help address issues of competitiveness and trigger economic growth and development. In some cases, however, it should be recognized that disparities in levels of development between member countries may merit the need for cushioning measures, at least in the early stages.

5. Regional trade agreements in ESA
COMESA, EAC AND SADC set up Free Trade Areas (FTA) established to carry out regional integration
While they all mandate the establishment of customs unions, the EAC will also pursue the formation of a single political confederation
Establishing an FTA implies that trade among member countries should be quota and duty free, provided that they meet agreed Rules of Origin and other standards.
COMESA is the largest FTA and was formed in 2000 with 14 member states participating and SADC launched its FTA in 2008 with six member states. The EAC, reformed in 2000, adopted a Customs Union between five member states with inbuilt asymmetry to address envisaged disparities in levels of Development between member states.
COMESA Rules of Origin
Wholly produced/obtained
Local content (60/40)
Value added (35%)
CTH
Goods of Particular Economic Importance

6. Challenges of trading in food in ESA
Infrastructure
High transport costs lead some countries in FTAs to source food elsewhere to meet deficits (Kenya/Zambia, 2004, 2008)
Supply side constraints
Interconnectivity is poor within countries, making transport to borders costly and difficult
Low production is the norm, but when there is a bumper harvest, storage capacity is unavailable
Information
Planting and marketing information is often lacking

7. Challenges of trading in food in ESA
Import / export bans
Arbitrary trade bans on food commodities for political, health or security reasons
Uncertainty
Unpredictable policy changes cripple private sector traders’ ability to plan, and discourages trade
High production cost
High input costs and fragmented land use result in inefficient production leaving ESA farmers uncompetitive

8. Challenges of trading in food in ESA
Sanitary and Phytosanitary (SPS) issues
SPS concerns often limit trade in staple food crops during crises
Standards
Until regional trade agreements harmonize, standards can be used as an excuse to reject imports of food

9. COMESA Legal basis for trade bans
The COMESA Treaty stipulates the circumstances under which a member state may restrict trade in food staples
To protect animal and plant health
Food security: to protect against famine or civil disturbance
To protect items of national importance
In theory, member states should not introduce trade restrictions with the aim of inhibiting free movement of goods. The restrictions so imposed should not extend longer than necessary to achieve the aims for which it was intended and shall be applied on non discriminatory basis.

10. Opportunities from FTAs
Expanded single market
Producers have access to a market of over 500 million people which should boost production
Food security
Increased food production and integrated markets should reduce likelihood of food crises
Competitiveness
As producers compete with a wider group for the larger market, competitiveness will be enhanced
Better Utilization of Resources
The open market will encourage specialization

11. Opportunities from FTAs
Agro-based industries
Enhanced production arising from creation of the larger market should trigger the development of agro-industries
FDI and intra-investments flows
The expanded market will attract Foreign Direct Investment as well as intra-regional investment
Employment creation
Increased investment will in turn create new employment

12. Opportunities from FTAs
Reduced imports from non-FTA countries
Regional efficiency improvement leads to increased production
Money not spent on expensive overseas imports can be put toward health, education and infrastructure
Economic growth and development
Ag-sector growth will increase farm-incomes which in turn will reduce poverty

13. Trade Agreement Enforcement
Article 49 of the COMESA Treaty stipulates that member states should eliminate all non-tariff barriers (NTB) to trade and refrain from introducing new NTBs to imports originating within the FTA
Infant Industry: Member States must take reasonable steps over a specified period determined by Council before quantitative or like restrictions can be placed on similar goods from other Member States.
Article 61 Safeguard Measures: serious injury

14. Way Forward Address supply-side constrains
Enhance production
Improve energy, road, and rail infrastructure
Create air-transport links for high value exports
Hasten the process of standards harmonization
Agree on SPS measures and customs procedures
Comply with 24 hour operating border post
Support the decision of the leadership of COMESA , EAC and SADC to merge into a single market for the region to experience prosperity.
Promote PP Dialogue on issues of trade policy