Africa could soon have a free trade area (FTA) stretching from the Cape to Cairo, greatly expanding the ability of African companies to do business across borders, an endeavour currently tangled in a web of tariffs and other barriers that prevents wealth generation and job creation.
The Southern African Development Community (SADC), East African Community (EAC) and the Common Market for Eastern and Southern Africa (Comesa) made the decision to establish a FTA at a summit meeting in Uganda last week.
The SA government`s Bua news service reports that the meeting agreed on a Council of Ministers to be convened within twelve months to determine the time frame for the establishment of a single FTA.
SA President Kgalema Motlanthe attended in his capacity as the SADC chairman.
Bua adds that the FTA “seeks convergence of trade and investment regulations” in and between the SADC, EAC and Comesa “as well as the free movement of persons.”
“With an estimated GDP of $650 billion, the envisaged project also aims to harmonise the different customs unions and other trade related issues that have been a problem due to the overlapping membership of member states which has posed a particular challenge … because in terms of the World Trade Organisation rules, no country [may] belong to more than one customs union…”
The government mouthpiece adds that SA welcomed the development “and viewed it as an important milestone towards continental integration as envisaged by the African Union (AU).”
It quoted Motlanthe as saying that SA saw regional integration as a central component “for our development in an increasingly globalised world economy.
“The process we have embarked on … marks an important step towards the realisation of building an economic bloc in today’s challenging world that will increase the levels of intra-Africa trade.”
The SADC Employers Group, which includes Business Unity SA (Busa), has meanwhile welcomed the decision.
“This is an important step towards the formation of the African Economic Community,” said Jerry Vilakazi, who is president of SADC Employers Group and Busa CEO.
“Our members welcome the political commitment shown towards increasing intra-regional trade and economic linkages between the countries of Southern and Eastern Africa. This commitment must now be matched by a focus on effective implementation.
“Trade facilitation and the removal of non-tariff barriers are key to the success of any free trade area. Intra-regional trade will only flourish if there is the ability to move goods freely among the member states.”