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|
Africa |
DEVELOPMENT
Hopes by the Common Market for Eastern and Southern Africa (COMESA)
to achieve
an integrated duty-free regional market,
could be dashed by an apparent
reluctance by some members
of the economic grouping, to eliminate tariffs
and other trade barriers
At the launch of the Free Trade Area (FTA) on 31 October 2000 in Lusaka, only nine countries out of the group’s total membership of twenty, entered the duty-free zone. The FTA countries are Djibouti, Egypt, Kenya, Madagascar, Malawi, Mauritius, Sudan, Zambia and Zimbabwe. Other members of the regional economic bloc are: Angola, Burundi, Comoros, Congo RDC, Eritrea, Ethiopia, Namibia, Rwanda, Seychelles, Swaziland and Uganda.
Ratification of COMESA‘s FTA is designed to offer duty-free market access among its members.
Six countries — Burundi, Comoros, Congo RDC, Eritrea, Rwanda and Uganda — had indicated their willingness to enter the FTA by the end of 2001. This was to follow the completion of studies meant to assess the impact of the tariff reduction programme on local economies. Some of these countries now appear to have lost the zeal to abolish trade barriers, apparently after realising the huge financial loss involved in such a move.
Second thoughts
Already, some of the present members of the FTA have begun developing second thoughts about their position under the trade agreement. For example, Zambian producers believe that the FTA has created an uneven trade field, encouraging some unscrupulous COMESA member countries to dump goods on the local market. They are now pressing the government to impose some measures to protect domestic industry.
«It is a fact that we all went into COMESA blindly. Already, we have started seeing the adverse effects that have been experienced,» says Ajay Vashee, president of the Zambia National Farmers Union. «We have seen a surge in cheaper imports of these products coming in duty-free, most of them with suspicious origins, certainly from beyond COMESA‘s frontiers.»
These worries have been confirmed by recent research findings, indicating that some COMESA members consciously allow their industries to use materials imported from non-COMESA countries, and in larger quantities than permitted under regional free trade rules.
The Zambian government appears to have listened to the manufacturers’ call. Misheck Chiinda, the former Agriculture Minister, recently stated publicly that there was an urgent need for «legitimate defence measures» to counter unfair trade practices by some COMESA producers.
Analysts believe that the Zambian producers’ concerns could have a regional spill-over effect, providing a convenient excuse for non-FTA members to dilly-dally even further about whether to join or not. «It’s like a lion’s den,» says a Lusaka-based business analyst, refusing to be named. «Some countries will not go into it after seeing that their neighbour has been devoured.» This change of mind could put paid to regional plans to create a customs union in 2004 and a common market in 2014.
COMESA’s weakness
Other observers say COMESA‘s greatest weakness is that it does not have clear strategies to ensure compliance with regional trade arrangements. They say member countries are at liberty to make their own trade rules, often in contradiction of COMESA regulations.
Zimbabwe is cited as one country that, despite joining the FTA, has gone full throttle in erecting and enforcing several tariff barriers, restricting imports from fellow FTA members such as Zambia. This has resulted in serious trade imbalances between Zambia and Zimbabwe. While intra-COMESA trade accounts for only 15 per cent of Zambia’s imports, 83 per cent of these come from Zimbabwe. At the same time, non-tariff barriers have resulted in Zambia exporting little more than token volumes to Zimbabwe.
Despite these concerns, however, senior COMESA officials remain upbeat about the future of the Free Trade Zone. «Our consolidation and implementation of the FTA should facilitate further trade and investment in the region,» argues Egyptian Foreign Minister, Yousef Boutros Boutros-Ghali. «By dismantling trade barriers, COMESA has expanded trade and investment opportunities in the region.»
The deadline
A recent Council of Ministers meeting in Lusaka urged the 11 to sign up. COMESA has set 30 April 2002 as the deadline for the countries to join the FTA. At the time of writing, there was, however, no public commitment by the concerned countries to abide by the deadline. «We cannot force any country to join the FTA, apart from only showing such countries the benefits of joining the FTA, especially the large market enjoyed by the member states,» COMESA‘s Public Relations Officer, Mweusi Karake, says. «Right now, Tanzania is already regretting its decision to pull out, but we allow business people from that country to benefit from duty-free trade in our member states.» (Tanzania withdrew from COMESA in 1999, arguing that its local industry did not stand to benefit from the elimination of trade duties).
Karake dispels reports of non-members having lost interest to join the free trade zone, explaining that these countries are still working out modalities on how they can harmonise their domestic tax systems with the implications of the FTA. He is hopeful more countries will sign up eventually, citing the European Union which, initially, started with less than nine members but now has more than 15.
According to Secretary General Erastus Mwencha, COMESA‘s immediate priority is to expand and consolidate the FTA through paying greater attention to trade in transport, entertainment, health and education, tourism, banking and financial services. But Mwencha admits that delays in joining the free trade area could have a negative impact on the entire region. Efforts will be made to persuade the 11 countries to enter the FTA this year, he says.
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