Regional Regional integration in Africa: Insights into integration - - PowerPoint PPT Presentation

Regional Regional integration in Africa: Insights into integration in Africa: Insights into the new road map for a continental free the new road map for a continental free trade trade area area trade trade area area

Inye Inye N. Briggs

• N. Briggs

African African Union Union

Outline Outline

Background: Intra-African trade performance Major issues and priorities for boosting intra-African trade: An Action Plan for Boosting Intra-African Trade trade: An Action Plan for Boosting Intra-African Trade The Continental Free Trade Area (CFTA) Conclusions

Intra Intra-

• African trade performance

African trade performance

… major characteristics

Low share of intra-trade for Africa as compared to other regions (in %)

Intra-Trade per region 2009

Source: 2010 International Trade Statistics of the World Trade Organization

52% 48% 26 % 72 %

11% Intra-Asian trade Intra-North American trade Intra-South and CentralAmerican trade Intra-European trade Intra African trade

Relatively high concentration of African exports in primary products (in %) Paradoxically low trade in agricultural commodities Appreciable intra-African trade in manufactures Services trade interesting

Intra Intra-

• African trade performance

African trade performance

… major characteristics (ii)

Services trade interesting

Source: Compiled from official sources

5 10 15 20 25 30 35 40 Agricultural and food products Primary products Other industrial products Services

9,4 36,3 35,4 18,9

Intra Intra-

• African trade performance

African trade performance

… major characteristics (iii)

High tariff barriers to trade within the continent relative to the rest of the world (in %)

Exporter-Importer: Ad Valorem Equivalent (AVE) Tariff

Source: Compiled from official sources

1 2 3 4 5 6 7 8 9 Africa to Africa Rest of the World to Rest of the World World to World

8,7 3,2 3,4

Intra Intra-

• African trade performance

African trade performance …major characteristics (iv)

High non-tariff barriers to trade within the continent compared to other regions

30 35 40

*Average time for inland transport + customs procedures + port handling Source: World Bank Doing Business, Trading Across Borders 2012

5 10 15 20 25 OECD high income Latin America & Caribbean Middle East & North Africa East Asia & Pasific Eastern Europe & Central Asia Sub-Saharan Africa Average Time to Export* Average Time to import*

Intra Intra-

• African trade performance

African trade performance … major characteristics (v)

Long queues and hassles at border crossings

Kigali: The Turning Point

• AU Trade Ministers Conference Kigali (Nov

2010):Theme - Promoting Intra-African trade, Objective: find solutions to low trade

• Reality check: break with the past where the

main issues were the WTO and EPAs main issues were the WTO and EPAs

• Conclusion: Fast track a continental FTA
• AU/ECA develop modalities
• AU Summit January 2011: adopts Trade

Ministers report, dedicates January 2012 Summit to boosting Intra-African trade

Why is Intra Why is Intra-

• African Trade Important?

African Trade Important?

reducing vulnerability of African economies to international shocks. Deepening integration; Developing larger markets; fostering economic growth; Stimulating investments; and Stimulating investments; and Generating employment opportunities. Pooling African economies and markets; providing opportunities for economies of scale; improving competitiveness of the productive sectors .

AU: responding to Kigali and Summit Directives AU: responding to Kigali and Summit Directives -

• The Modalities for boosting intra

The Modalities for boosting intra-

• African trade

African trade

The Tasks - Developing Modalities for:

• Fast track CFTA
• Boosting Intra-African trade

Drafting an Issues Paper on Intra-African trade – mainly a diagnosis

• f problems/broad based recommendations

Identifying priorities Identifying priorities Developing Action Plan for boosting intra-African Trade Prioritising the priorities: the Action clusters –Activity; output/target; timeframe; levels of responsibility (national, regional, continental) Developing the Framework, Road Map, Architecture for fast tracking the CFTA

Priorities for Boosting Intra Priorities for Boosting Intra-

• African

African Trade : Elements of the Action Plan (I) Trade : Elements of the Action Plan (I)

Establishment of a Continental Free Trade Area (CFTA) (Trade policy cluster) Development and expansion of infrastructure networks on the

• continent. This requires innovative financing. (Trade-related

.

• continent. This requires innovative financing. (Trade-related

Infrastructure cluster) Strengthening Trade Facilitation to reduce cost and time for movement of goods and services across borders. (Trade facilitation cluster) Increasing access to trade financing and strengthening payments

• systems. (Trade Finance cluster)

Priorities for Boosting Intra Priorities for Boosting Intra-

• African

African Trade: Elements of the Action Plan (II) Trade: Elements of the Action Plan (II)

Enhancing productive capacity of the African Private Sector (Productive Capacity cluster) Promoting and supporting regional value chains. Developing trade information systems. (Trade information cluster) Common regional approaches to Factor mobility: harmonising labour, business/investment laws (Factor Market integration cluster) Very important complementary measures: Addressing adjustment costs associated with FTA Securing strong political commitment and leadership.

Market of over 1 billion people in Africa and generate an additional $34 billion annually for Africa. Will build on the “acquis” of the existing regional economic communities (RECs)

The Continental Free Trade Area (CFTA) The Continental Free Trade Area (CFTA) …aims to create: …aims to create:

The CFTA Framework:

• The framework has 3 components:

(i) Roadmap, (ii) Institutional architecture and (iii) Negotiating structure.

Roadmap

The Continental Free Trade Area (CFTA) The Continental Free Trade Area (CFTA)

CFTA established by 2017 COMESA-EAC- SADC Tripartite FTA established by 2014 Other RECs establish or complete their FTA by 2014 Other AU Member States outside the FTAs of the 8 recognised RECs join CFTA negotiating process by 2015 Consolidation of the Regional FTA Processes into the CFTA 2015 - 2016

African Union Summit High-Level African Trade Committee

Architecture of the Negotiations Structure

The Continental Free Trade Area (CFTA) The Continental Free Trade Area (CFTA)

Conference of Trade Ministers C-FTA Negotiations Forum

Architecture for the CFTA

AU Summit

High level African Trade committee Chairs of RECs (Heads of State)

African Court Of Justice (AU Arbitration Tribunal)

The Continental Free Trade Area (CFTA) The Continental Free Trade Area (CFTA)

(Heads of State) Conference of Trade Ministers

African Trade Forum AU Commission (DTI) ATC Secretariat Trade observatory African Business Council Monitoring and Evaluation Mechanism Tribunal) To be activated when applicable CFTA Negotiations Forum

CFTA: The challenge; the controversy CFTA: The challenge; the controversy

The Controversy: Target 2017:Doable? Ambitious? A dream? Is a continental free trade area necessary? Why 2017? Directive to fast track = being ambitious =changing ways of doing business as usual business as usual Sustaining the momentum/support for boosting intra-trade Abuja Treaty Provisions ( AEC) target 2019 for Continental Customs Union, hence the need not to breach that provision Will build on “Acquis” of current levels of RECs liberalisation (no roll back) Tripartite trail blazer (CFTA aspirations /modeled on Tripartite) Achievement of Tripartite = half the continent under common FTA regime = half the CFTA already achieved

Assembly/AU/Dec.394 (XVIII) DECISION ON BOOSTING INTRA-AFRICAN TRADE DECISION ON BOOSTING INTRA-AFRICAN TRADE AND FAST TRACKING THE CONTINENTAL FREE TRADE AREA

content

The Assembly,

• 1. TAKES NOTE of the Report of the Commission on the Seventh Ordinary

Session of the Conference of Ministers of Trade held in Accra, Ghana, from 29 November to 03 December 2011;

• 2. RECOGNIZES that the promotion of intra-African trade is a fundamental

factor for sustainable economic development, employment generation and factor for sustainable economic development, employment generation and effective integration of Africa into the global economy;

• 3. ENDORSES the Framework, Road Map and Architecture for Fast Tracking the

establishment of the Continental Free Trade Area (CFTA) and the Action Plan for Boosting Intra-African Trade, with the understanding that the High Level African Trade Committee (HATC) will provide a facilitating role and unlock any blockages that might arise and REQUESTS the Ministers responsible for the CFTA to report as appropriate to the Assembly, through the Executive Council,

• n progress;

content cont’d

• 4. DECIDES that the CFTA should be operationalized by the indicative date of 2017, based
• n the framework, Roadmap and Architecture, with the following appropriate

milestones:

i) Finalization of the East African Community (EAC)- the Common Market for Eastern and Southern Africa (COMESA)- Southern African Development Community (SADC) Tripartite FTA initiative by 2014; ii) Completion of FTA(s) by Non-Tripartite RECs, through parallel arrangement(s) similar to the EAC- ii) Completion of FTA(s) by Non-Tripartite RECs, through parallel arrangement(s) similar to the EAC- COMESA-SADC Tripartite Initiative or reflecting the preferences of their Member States, between 2012 and 2014; iii) Consolidation of the Tripartite and other regional FTAs into a Continental Free Trade Area (CFTA) initiative between 2015 and 2016; iv) Establishment of the Continental Free Trade Area (CFTA) by 2017 with the option to review the target date according to progress made.

• 5. REQUESTS Member States supported by the Commission and the Regional Economic

Communities (RECs) to drive the process of boosting intra-African trade and the CFTA negotiations through the implementation of the short, medium and long-term programmes and activities contained in the Action Plan at the national, regional and continental levels;

content cont’d

• 6. ALSO REQUESTS the Commission, in collaboration with the RECs and the

United Nations Economic Commission for Africa (UNECA), to establish a core group of experts from Member States with a view to developing a framework by December 2012 for conclusion of a draft agreement on Rules of Origin;

• 7. CALLS UPON UNECA, the African Development Bank and other relevant

development partners, to support the implementation of the Action Plan and development partners, to support the implementation of the Action Plan and the establishment of the CFTA;

• 8. REQUESTS the Commission to assess the impact on African countries, of the

proposal to extend duty free, quota free access to Least Developed Countries (LDCs) and Low Income Countries (LICs) before transmitting it to the G20.

• 9. ALSO REQUESTS the Commission to report on regular basis on the

implementation of this Decision to the Executive Council through the Permanent Representatives’ Committee (PRC).

Achieving CFTA/ implementing Action Plan: Achieving CFTA/ implementing Action Plan: The Challenges The Challenges

No pretenses it is going to be easy Experiences with RECs integration processes so far provides indication, hence the concerns by skeptics Human/institutional/financial capacity constraints to manage the processes (Negotiations, analyses, monitoring and evaluation) Critical infrastructure constraints: Major concern at Summit debates Summoning the political will to make it work Indeed, now the work begins: the unfinished business Developing a comprehensive work plan to manage the process Developing a full scale implementation strategy for implementing the Action Plan

The End