Stakeholders reach consensus on Africa free trade zone

The need for a continental free trade area has gone beyond talk to action as stakeholders at the Second Africa Trade Forum (ATF II) reach consensus on its establishment.

The ATFII was held from September 24 to 26, 2012 at the UN Conference Centre in Addis Ababa, Ethiopia.

The Continental Free Trade Area (CFTA) the Forum believes will enhance among other things intra-African trade and boost economic growth.

The forum held on the theme: “Boosting intra-African trade and establishing the Continental Free Trade Area” made recommendations aimed at the October 2012 joint meeting of Ministers of  Trade and Ministers of Agriculture, on boosting intra-African trade, agricultural transformation and ensuring food and nutrition security.

Studies conducted by the Economic Commission for Africa has found that on removing existing trade barriers and tariffs, formal intra-African trade would increase from 11% to around 22%, according to Mr. Stephen Karingi, Director, Regional Integration and Trade Division at the ECA.

Seeking to build on the current political expression of support for the continental trade agenda as agreed by two Summits of Heads of State and Government held this year on the same theme, the stakeholders representing a broad base of actors in academia, business, policy-makers, finance, non-governmental organizations, as well as the media, agreed on the need to simplify trade regimes to facilitate cross-border trade undertaken by SMEs, and the establishment of projects to support the private sector in improving supply chain efficiency.

They therefore, urged member states to enhance the “corridor approach to integrated regional transport” and in this regard, aim to match developments in ports, such as establishing links to road and rail.

They further called on member states to enhance border efficiency and trade-related processes, through the use of national and regional single window systems, as well as One-Stop-Border-Posts, such as the one at the Zambia-Zimbabwe Chirundu border.

The meeting also called on member states to improve infrastructure for trade by allocating 1% of GDP to fund national infrastructure projects, including rural infrastructure.

“At the continental level, an African infrastructure fund would need to be established as a special purpose vehicle co-guaranteed by member states,” they said.

They also urged governments to engage all major stakeholders in infrastructure development, including but not limited to public private partnerships.

Participants taking note of the fact that the establishment of the Continental Free Trade Area agenda is government driven, said it would require the participation of civil society actors, private sector, parliamentarians and development partners, therefore, as part of their commitment to promoting the trade and development agenda, journalists attending the Forum took the step to form a network they named, Journalists for Trade and Development in Africa (J-Trade Africa).

Participants concluded with recommendations aimed at addressing some major impediments to boosting intra-African trade in the areas of investment finance; enhancing productive capacity and improving industrial performance; enhancing trade facilitation; infrastructure for trade and the establishment of the Continental Free Trade Area.

Among other issues, participants urged member states to identify specific strategic sectors to promote value chains and productive linkages and introduce requisite legal and regulatory frameworks to support value chain development. In addition, countries were urged to establish a comprehensive industrial policy that includes industrial performance.

The need for a cost-benefit analysis was requested of the ECA and its partners, the African Union Commission and the African Development Bank, as an “important component to promoting the CFTA, in particular among countries that have expressed concerns regarding loss of revenue.”

The need to engage the regional economic commissions in the CFTA negotiations was emphasized, as well as the importance of underpinning the CFTA on the principle of variable geometry.

Among other issues, participants urged member states to identify specific strategic sectors to promote value chains and productive linkages and introduce requisite legal and regulatory frameworks to support value chain development.

Mr. Alan Kyerematen, head of the Africa Trade Policy Centre described the forum as the “kind of mobilization needed towards the achievement of this vision (establishment of CFTA).”

By Emmanuel K. Dogbevi, back from Addis Ababa, Ethiopia