Tripartite Free Trade Area shifts gear

December 8, 2014, 12:57pm
Maria Immanuel, Trade & Investment Policy Analyst at Namibia Trade Forum.

 

Tripartite Free Trade Area shifts gear

 

Namibia with 25 countries from the Common Markets of East and Southern Africa (COMESA), East African Community (EAC), and Southern African Development Countries (SADC) Regional Economic Communities (RECs) have been involved in trade negotiations for the past 3 years. The negotiations aims to establish the Tripartite Free Trade Area (TFTA) which will create a market, estimated at 600 million people with a GDP of U$ 1 trillion.

 

Anchored on the three pillars Market Integration, Industrial Development as well as Infrastructure Development, the objective is to establish a large single market with free movement of goods and services and business persons. This is expected to boost intra-regional trade by removing tariff barriers between the RECs and harmonising customs procedures and trade facilitation measures. 

 

Maria Immanuel, Trade & Investment Policy Analyst at the Namibia Trade Forum (NTF), says the current negotiations focus on Market Integration and will be conducted over two phases. The first phase has been ongoing for the past three years focusing on Trade in Goods. Phase two will focus on trade-related aspects such as Trade in Services, Intellectual Property Rights, Competition Policy, Trade promotion and Competitiveness.

 

Negotiations status:

Immanuel says, the current negotiations in Trade in Goods, aim to liberalise movement of goods. She adds that negotiating countries will exchange tariff concessions based on reciprocity. "The aim is to liberalise as many goods as possible, effective immediately once the agreement has been ratified. The liberalisation of tariff between the three RECs will allow countries to open up their markets to each other in order to boost intra trade in the Tri-partite region," says Maria Immanuel. Namibia is reportedly negotiating as part of the Southern African Customs Union (SACU) due the common external tariff with members’ states Botswana, Lesotho, South Africa and Swaziland. 

 

The Tri-partite countries have adopted the acquis principle (“that which has been agreed”) as one of the negotiating principles. "Essentially this means that tariff offers can only be exchanged between those countries which don’t have existing preferential arrangements with each other," says Maria Immanuel. 

SADC countries will therefore offer each other tariff concessions based on what is already achieved in the region. As a result, SADC countries will not necessary exchange new tariff concessions since SADC has already established a free trade area in 2008. The same principle applies to other Regional Economic Communities involved in the TFTA negotiations. Maria Immanuel explains that since most COMESA members are also party to the SADC trade protocol, SACU is left to negotiate tariff elimination with COMESA's non-SADC members as well as the EAC members (Kenya, Uganda, Rwanda, Burundi and Tanzania) as well as Egypt. 

 

Maria Immanuel cites the example of Tanzania which is party to the SADC trade protocol. Here the acquis principle will prevail whereby the basis of negotiations will be based on the SADC free trade area. This means that, tariff offers to the EAC will only be made to the other four countries. Moreover SACU hopes to engage in tariff negotiation with Ethiopia – presently one of the fastest growing economies in Africa.

 

The parties are said to have agreed to eliminate all existing non-tariff barriers to trade, and not to impose any new ones, while working on measures to simplify and harmonise trade and customs documentations and procedures.

 

The way forward:

The Tripartite Trade in goods negotiations were envisaged to be completed in June 2014. Due to unforeseen financial constraints negotiations are however nine months behind schedule. The 3rd Tripartite Summit of Head of States and Government originally scheduled to take place in Egypt this month was postponed to February 2015. It aimed to launch the Agreement establishing the Tripartite Free Trade Area. Some countries including Namibia earlier indicated their reluctance to sign the agreement in the absence of tariff offers and relevant trade rules. "Practically speaking, one cannot have an FTA without tariff liberalisation, Rules of Origin as well as Trade Remedies and Dispute Settlement mechanism," says Maria Immanuel.

 

Namibia’s offensive interest in the Tripartite FTA:

As Namibia prioritises its industrialisation agenda under the “Growth at Home” framework, the Tripartite FTA will come as an opportunity for Namibia to expand its regional market access.  Namibia’s new potential markets will be Kenya, Uganda, Rwanda, Burundi, Egypt as well as Ethiopia. Maria Immanuel says the expansion of regional markets would stimulate domestic industries through development of regional value chains. This, she says, will mean Namibia needs to expand or grow its industrial base in order to be able to fully benefit from regional market access arrangement. 

 

"Through our consultation with the private sector, it was identified that exports of products such as beer, cement, salt, pharmaceutical products, dairy products and fish (horse mackerel) have the potential to be exported and expanded into East Africa and the Egyptian markets," says Maria Immanuel with products already exported to these markets set to benefit from lower to zero customs duties.

 

This trade arrangement will provide Namibia with an opportunity to diversify its international market access. It is therefore important for Namibia to invest in its manufacturing sector by focusing in the production and supply of goods and services which offer a competitive advantage.

 

About the Namibia Trade Forum:

The Namibia Trade Forum is an agency of the Ministry of Trade and Industry. The company was launched on 06 June 2006 as a “Section 21 company”. Its main objective is to institutionalise Public/Private dialogue and cooperation with emphasis on international and domestic trade as well as investment policies as stipulated by the fourth National Development Plan (NDP4). NTF serves as the highest Public/Private partnership on international and domestic trade, and investment matters of government.