A continental free trade area by 2017?
The annual African Union summit will start on 29 January with as a central theme the development of intra African trade. Although the African economy is characterized by a relatively high degree of openness, trade has not served as a potent instrument for the achievement of rapid and sustainable economic growth and development for many of the countries. As a consequence Africa remains the most aid-dependent continent of the world, unable to eliminate poverty through trade.
Currently African trade remains weak compared to trade within other regions at around 10 -12 percent of total trade against 60 percent for Europe, 40 percent for North America and 30 percent for ASEAN.
Also due to the fact that Africa does the bulk of its trade with the outside world and the exports are heavily concentrated on primary commodities, the continent has been particularly vulnerable to external macroeconomic shocks and protectionist trade policies.
It is in this context that the AU Conference of Ministers of Trade decided to fast track the creation of a Continental Free Trade Area, followed by the decision of the AU Assembly of Heads of States and Government to focus its January 2012 summit on the theme boosting intra African trade.
The Parties will also exchange views on the report of Mr. Denis Sassou Nguesso, President of the Republic of Congo and Africa's Coordinator on Africa's preparations for the United Nations Conference on Sustainable Development (Rio +20) in the context of the challenges posed by the global economy and the international governance of the environment.
The African Union Commission and its collaborating partners the United Nations Economic Commission for Africa, the African Development Bank, Regional Economic Communities and other partners elaborated three key documents: an issue Paper, an Action Plan and a framework document for launching the fast track process to achieve the CFTA. These documents together form the basis for the agenda to boost trade by at least 25-30 percent in the next decade and to establish the CFTA by 2017. The C-FTA if achieved will include 26 countries representing 525 million people.
The Issues Paper is aimed at provoking the subject of low performance of intra-African trade, raising as it were, the key issues why intra African trade is low. The Action Plan focuses on a number of priority action areas which cut across different sectors : trade policy, trade facilitation, trade related infrastructure, trade finance, trade information, market integration. The third paper, the Framework Document for fast tracking the CFTA addresses the ambitious programme of launching the Continental FTA. It accordingly proposes a Road Map for the fast tracking process, an Institutional Architecture, Monitoring and Evaluation and Dispute Settlement Mechanisms.
The broad spectrum of the proposed road map is set against the backdrop of two key principles or concepts, namely: "to fast track and therefore being ambitious" and "to draw from and build upon existing progress already made", particularly given the trail blazing experience of the COMESA-EAC-SADC Tripartite Free Trade Area.
Source : SYNTHESIS PAPER on boosting intra-African trade and fastracking the continental free trade area and related articles, Reuters "Cape-to-Cairo "Made in AFrica" bloc to boost trade", June 201.1
See related articles in Bridges Weekly next week on the outcome of the Summit.