eBusiness Weekly
The COMESA, SADC and the EAC trade groupings signed a Free Trade Area Agreement on 10 June 2015 in Sharm El Sheikh, Egypt after a 14-year gestation period that began in May 2001 in Cairo, Egypt.
This new club was christened the Tripartite Free Trade Area, TFTA. Conflicts arising due to overlapping membership informed the establishment of the bloc as the separate blocs each had their own rules and programmes, which affected their trading activities.
The initial intention for the TFTA besides being a solution to the challenges arising from the overlapping memberships was also to set up the TFTA as a launch pad for a regional free trade area for the 26 countries within the three trade groupings.
A very encouraging comment arising from an article where I was patting the Zimbabwean Trade principals to consider vying for hosting the secretariat of the newest FTA in Africa, the CFTA made me wonder if it was still necessary to continue pursuing the TFTA.
The following statement from the writer made me even more inclined towards the idea of hosting the all-inclusive CFTA Secretariat.
The comment mentioned above went as follows ‘[15:45, 8/6/2018] +27 **********: I imagined that hosting the Secretariat will be costly, but your article has allayed some of those fears.(sic).
Another comment from TK convinced me that the issue of hosting the Secretariat is indeed a very topical issue. TK said ‘ [15:44, 8/6/2018] +27 ********: Thanks Getrude. Last I checked Zimbabwe is not among the countries bidding to host the AfCFTA Secretariat. I think there are three countries so far, Senegal, Ghana and Swaziland . . . If my memory serves me well.
Even though the Trade Expert who made the above comment is very close to the CFTA processes and he advised that the window for bidding had not been officially launched by the AUC then, he did allude to the importance of noting that other countries were already canvassing in advance.
This may mean that these other competitors are aware of the immense potential benefits which could arise from hosting the CFTA Head office. In addition, this is clearly a sign of the vote of confidence in the CFTA itself.
Zimbabwe will definitely lose nothing if she keeps her options open on this one.
It is obvious that Zimbabwean Trade Principals will ratify the CFTA, whether this will be a wise move or not, is debatable, I have witnessed a lot of well-informed discussions around opening the borders or not on a local Trade Forum that I am part of.
Despite these strong anti-FTA sentiments, the issue remains that our Trade Principals will ratify the CFTA at some point. I’m sorry.
As a result, Zimbabwe needs to seriously reconsider if membership of an FTA like the TFTA may not unnecessarily deplete its efforts to benefit from the CFTA more effectively?
The main plan of the Tripartite was to create a single market for the 26 countries who were members of the SADC, COMESA and EAC agreements. This was going to be achieved through the following objectives:
“To enhance the integration among the Tripartite Member/Partner States for their mutual benefit and the benefit of the Member/Partner States themselves;
To pursue the development of common programmes which will enable all parties to effectively and efficiently utilise the available resources for concrete actions to achieve the objectives of their mandates;
To harmonise trade and investment regimes and in particular to: establish a Free Trade Area amongst COMESA, EAC, and SADC; enhance inter-REC economic co-operation; enhance cooperation on with multilateral and bilateral partners; coordinate negotiations of multilateral issues; promote industrialisation; and enable inter-regional investment;
To harmonise infrastructure programmes focusing on: developing joint inter-regional infrastructure, and co-operation on transport and communications and financing of regional infrastructure projects;
To facilitate the movement of business persons in the Tripartite region; and
To develop joint programmes that enhance cooperation and strengthen coordination in industrial and competition policies, financial and payment systems, development of capital markets and commodity exchanges’’. Source COMESA Q & A Publication, 2015 /2016 edition.
Now the CFTA objectives are largely similar the only differences being mainly in dictum and emphasis on certain areas.
The players of the AfCFTA are more 47 by now but expected to be 55 in the end. TFTA had 26 members. The more notable and some domineering member states trade wise like Egypt, South Africa, Nigeria, Rwanda are members of both groupings.
We can use our numbers to negotiate better concessions with the so called big brothers on the CFTA platform.
Why should we choose to exhaust ourselves by playing the same team multiple times when the choice is ours? What do we stand to gain?
Personally, I also believe there has been no strong commitment with the TFTA implementation. It has taken too long to take off. Fourteen years to sign the FTA!
Member States were not enthusiastic with the project during the preliminary stages.
So let us dump it and concentrate on the CFTA which has taken off encouragingly.
TFAs with their large potential markets and free flow of capital are likely to encourage investments which are one of our economic targets as a nation.
However, being a member of too many trade groupings may discourage investments due to potential jurisdictional conflicts.
According to John Eudes Ruhangisa in his book published in 2005 “The presence of multiple regional courts with overlapping functions and jurisdiction may by itself defeat the whole purpose of establishing the respective regional organisations as economic zones to spearhead and accelerate the growth and economy of the people.
It is not an incentive to foreign investors, who prefer certainty and predictability of decisions in the event a dispute emerges calling for judicial intervention.
In this kind of situation there is no certainty or predictability, especially given that one is not even sure of which court one should go to if a dispute arises’’.
Our local border agencies are already bearing the negative effects of multiple FTA memberships. It increases their costs of providing services. For example, ZIMRA needs to invest in more information technology infrastructure to support the increased data needs.
This is where we find the Asycuda system being slow or facing a lot of downtime if the correct infrastructure is not put in place.
In addition, this also puts a strain on the skills. Both Information Technology and Technical skills need to be increased. For example, SI 117 of 2016 Customs & Excise (European Community) EC and Eastern & Southern Africa ESA) States Economic Partnership Agreement EPA)(Suspension)(Market Access Offer) Regulations were only uploaded into the ZIMRA Asycuda system recently almost two years after they were promulgated.
Any importer who wanted to utilise the preferential rates had to go through a tedious manual process with ZIMRA.
It was really not of ZIMRA’s making.
Lastly, the financial strain on the economy as a whole obviously increases the more FTA’s we ratify.
The staff required to run with the TFAs, the international trips, and all the other negatives mentioned above should surely encourage us to streamline our TFA memberships.
The TFTA is one unnecessary TFA which must go.
Disclaimer: This Article is not meant to create a consultant/client Relationship. Readers are advised to consult their Consultants for specific advisory services.
About the author: Gertrude Mawire is a Fiscal Compliance and Investment Advisor based in Harare. She writes in her personal capacity. Gertrude, a member of ZNCEE ( customs & excise experts) holds an MSc in Finance & Investments (NUST) Bachelor of Business Studies (UZ), IOBZ Diploma various other Certificates. She can be contacted on [email protected], [email protected] and 0712437256, 0772336936.
