African Union Urges Concrete Action as Regional Trade Integration Hits Hurdles

11 December 2014

African countries should translate their regional integration projects into real action on the ground, especially given today’s rapidly evolving landscape of international trade regulation, African Union (AU) trade ministers said following a 4-5 December conference in Addis Ababa, Ethiopia.

“The time for rhetoric should now be over and that of concrete action should begin in earnest,” said Fatima Haram Acyl, the AU Commissioner for Trade and Industry, while referring to the limited progress made in regional integration so far and the “several milestone[s]” missed for the establishment of an African Economic Community.

The AU’s call for sustained momentum in Africa’s regional integration comes amid reports about delays in the launching of the Tripartite FTA (TFTA), a 26-country trade bloc spanning the continent’s three main Regional Economic Communities, namely the East African Community (EAC), the Southern African Development Community (SADC) and the Common Market for Eastern and Southern Africa (COMESA).

The TFTA negotiations started in 2011 and the free trade bloc, once operational, has been envisaged by the AU as a stepping stone for a planned Continental FTA (CFTA), which they aim to launch in 2017. (See Bridges Africa, 29 October 2014)

Tripartite FTA delayed amid criticism

The launch of the TFTA was expected to take place this month during the Tripartite Summit of Heads of State and Government in Sharm El-Sheikh, Egypt.

However, according to a post by the South African capacity-building organisation TRALAC, an announcement was circulated to official negotiators informing them that the date for the summit is “not convenient” due to “inadequate consultations among SADC Member States coupled with the unavailability of the SADC Chair who is also the Chair of the Tripartite Summit.”

Some observers based in the region speculated that the recent instability within the ZANU-PF ruling party of Zimbabwe’s President Robert Mugabe – who is also the chairman of SADC and the chair of the Tripartite Summit – as well as some unresolved technical issues might have impeded the conclusion of the negotiations this month.

According to the draft report of the senior officials’ meeting that preceded the AU conference, a copy of which has been seen by Bridges, a summit to launch the Tripartite FTA will be held in Egypt during the first quarter of 2015. This summit is seen as a stepping stone for the projected start of the CFTA negotiations around mid-July 2015.

The report notes that, while the TFTA will be launched, there will also be consideration of a “built–in agenda on outstanding issues.”

According to an African Union source, the launch, as planned originally, would have been a step towards introducing an implementation plan covering the finalisation of negotiations on outstanding areas of the agreement, most likely rules of origin, trade remedies, and dispute settlement; the ratification by the member states; and the start of the implementation itself.

Following the postponement, allegations about the secretive nature of the process were quickly raised.

“We are ill informed about the progress made, the objectives, and the technical aspects,” commented Gerhard Erasmus, an associate at TRALAC, who attributes part of the problem to that of transparency and public participation.

Mega-regionals: Going the extra mile

The conference participants discussed regional integration in Africa especially against the background of mega-regional trade agreements currently under negotiation in other parts of the world, notably the Transatlantic Trade and Investment Partnership (TTIP) between the EU and the US.

“The emergence of mega FTAs by key players in world trade has underscored the importance of accelerating Africa’s market integration,” said AU official Acyl.

Two main concerns were raised over the implications of mega-regionals for Africa: the risk of preference erosion, and the possibility that such agreements affect international rules and standards, confining African economies to the role of “standard-takers.” (For more information on this topic see the latest edition of Bridges Africa, December 2014)

“The world is moving,” said Treasure Maphanga, Director of Trade and Industry at the African Union Commission, while urging participants to aim higher than the Tripartite FTA in the CFTA negotiations by addressing non-tariff barriers, including standard harmonisation and productive capacity.

Some observers have commented that an even more ambitious integration agenda will prove difficult given the already complex nature of the current TFTA negotiations.

Among the difficulties pointed out were the harmonisations of differential rules of origin across the continent, the lowering of trade costs, the strengthening of trade and productive capacities through regulatory reforms, trade facilitation, and infrastructure development.

“There is a lot of excellent work going on to lower barriers and streamline procedures so that you can trade with each other more effectively,” said WTO Director-General Roberto Azevêdo in his intervention, while further commending the importance of the AU Action Plan to this end.

EPAs: Back to square one for Nigeria

During the meeting in Addis Ababa, Nigeria voiced concerns about the Economic Partnership Agreements (EPAs) between individual African regional blocs and the EU. 

“Nigeria will not sign an Economic Partnership Agreement until it can be sure that the EPA does not threaten the economic integration of Africa or lead to the loss of jobs and investment in Nigeria,” reads the Ministerial draft report.

The country’s position comes amid reports that the Economic Community of West African States, a 16-country trade bloc including Nigeria, is expected to sign its EPA in the coming days and will subsequently gear its efforts towards ratification.

Earlier this year Nigeria had raised various objections against the EPA, arguing that such an agreement contradicts its industrial development plan. (See Bridges Africa, 15 May 2014)

The AU Ministerial Conference also highlighted the need to better understand the implications of EPAs for regional economic integration. 

“The main preoccupation in this regard is to ensure that EPAs do not weaken our regional and continental integration process and retard the growth of intra-African trade,” said Acyl.

West African leaders formally initialled their EPA with the EU in July this year, when they also instructed regional chief negotiators to take action toward the signing and implementation processes. In recent months SADC and the EAC followed with the conclusion of their respective EPA deals.

Going forward all EPA texts will now be shared with the African Union Commission for a review, “while the process of ratification and preparations for implementation are on-going,” according to the draft report.

Efforts to renew AGOA on track

Africa’s request for the renewal of the US’ African Growth and Opportunity Act (AGOA), which is set to expire in September 2015 unless Washington lawmakers pass new legislation, “is receiving favourable response,” reported Acyl during the discussions.

However, the AU official added that “we must continue to intensify our lobbying and advocacy efforts in order to materialise the reauthorisation of AGOA as soon as possible and avoid loss of contracts and jobs.”

In this context, AU trade ministers encouraged African countries to increase their trade capacity so as to be able to fully benefit from the scheme.

Addressing the US as the preference giver, they further called for a review of the eligibility criteria to facilitate participation in AGOA by all beneficiary countries.

WTO issues

Regarding the WTO and the recent resolution of the deadlock at the multilateral organisation over the implementation of the decisions reached at last December’s ministerial conference in Bali, Indonesia, Acyl encouraged African countries to continue to speak with a “coherent common” voice within the global trade body.

During the conference, WTO chief Azevêdo referred extensively to the resolution of the impasse over food stocks and trade facilitation and the setting up of the Trade Facilitation Facility.

The Trade Facilitation Facility is aimed at ensuring that developing and least developed countries receive the assistance they need to implement the WTO’s Trade Facilitation Agreement.

A declaration on WTO issues was adopted by the AU Ministers but was not available as this publication went to press.

ICTSD reporting; “Progress slows on planned African free trade bloc,” VOICE OF AMERICA, 4 December 2014; “West African trade deal to be signed,” EUROPEAN VOICE, 4 December 2014; “When Trade Negotiations are a top-down Affair: Where to with the Tripartite FTA?,” TRALAC, 3 December 2014.

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