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 area trade trade area 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 26 % Intra-Asian trade 72 % 48% Intra-North American trade Intra-South and 52% CentralAmerican trade Intra-European trade Intra African trade 11% Source: 2010 International Trade Statistics of the World Trade Organization

Intra- Intra -African trade performance African trade performance … major characteristics (ii) 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 � Services trade interesting 40 35 30 25 20 15 35,4 10 36,3 18,9 9,4 5 0 Agricultural and food Primary products Other industrial Services products products Source: Compiled from official sources

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 9 8 7 8,7 6 5 4 3,4 3,2 3 2 1 0 Africa to Africa Rest of the World to Rest of World to World the World Source: Compiled from official sources

Intra Intra- -African trade performance African trade performance … major characteristics (iv) High non-tariff barriers to trade within the continent compared to other regions 40 35 30 25 20 Average Time to Export* 15 Average Time to import* 10 5 0 OECD high Latin America Middle East & East Asia & Eastern Sub-Saharan income & Caribbean North Africa Pasific Europe & Africa Central Asia *Average time for inland transport + customs procedures + port handling Source: World Bank Doing Business, Trading Across Borders 2012

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 of 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.

The Continental Free Trade Area (CFTA) The Continental Free Trade Area (CFTA) …aims to create: …aims to create: 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 CFTA Framework: • The framework has 3 components: (i) Roadmap, (ii) Institutional architecture and (iii) Negotiating structure.

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

The Continental Free Trade Area (CFTA) The Continental Free Trade Area (CFTA) Architecture of the Negotiations Structure African Union Summit High-Level African Trade Committee Conference of Trade Ministers C-FTA Negotiations Forum

The Continental Free Trade Area (CFTA) The Continental Free Trade Area (CFTA) Architecture for the CFTA AU Summit African Court Of Justice High level African Trade committee (AU Arbitration Chairs of RECs Tribunal) Tribunal) (Heads of State) (Heads of State) To be activated when applicable Conference of Trade Ministers Monitoring and CFTA Negotiations Forum Evaluation Mechanism AU Commission (DTI) ATC Secretariat African Business Trade observatory African Trade Forum Council

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, on progress;