African free trade zone planning is under way
African trade officials convened in South Africa this week to announce the start of negotiations on a continental free trade zone that would incorporate 26 countries and cost almost a trillion dollars.
Freetown, Sierra Leone
Trade officials from across Africa met in Johannesburg this week to announce the formal start of negotiations toward a free trade zone that would stretch the length of the continent, incorporating more than 500 million people, 26 countries, and nearly a trillion dollars of economic output.
The proposed deal, which would eliminate many trade barriers between participating countries, would merge three existing trade blocs in eastern, central, and southern Africa. It would include Africa's two biggest economies (South Africa and Egypt) and its fastest growing (the Democratic Republic of Congo, Zimbabwe, and Botswana).
The project, which has been dubbed the “African Grand Free Trade Area,” is a bold idea, but not a new one. African leaders first made their plans for a 26-country trading bloc public at a summit in Uganda in October 2008. Since then, they have made little progress toward that goal.
“We all know that this is a very long process,” says El Hadji Diouf, the executive director of the African Agency for Trade and Development, a Geneva-based think tank. “But an FTA like this would be a very good thing for the African community.”
“If they have strong political leadership, they will get there,” Mr. Diouf added. “I don’t think they have a choice: Development comes about through a better flow of trade.”
Commerce within Africa remains limited. Just 10 percent of the continent’s trade is conducted between African countries, while the rest goes overseas. That low volume is a result of Africa’s weak infrastructure, dense red tape, and corrupt border officials, among other challenges.
“Today, there are 40 to 50 barriers from one African border to another,” the prominent Sudanese businessman Mo Ibrahim told a business conference in Paris in March. “In such a context, it is obvious that if you carry perishable foodstuffs, they will be lost before you reach your destination. We need to break up those barriers and guarantee the free movement of people and goods."
Rob Davies, South Africa’s minister of trade and industry, said in a media briefing on Monday that the first stage of the “Grand FTA” negotiations will focus on eliminating tariffs and other traditional barriers to goods trade, while a second round will tackle more delicate issues such as intellectual property and trade in services.
“The timeframe for this is three years,” he said, according to a report from Agence France-Presse.
Once finalized, the FTA should be opened up to all of the continent’s regions, said Diouf of the African Agency for Trade and Development.
“It is important that this process doesn’t exclude other African countries,” he said.
African nations are not alone in seeking out a regional approach to freeing up trade. Coalitions like Mercosur, the South American customs union, and ASEAN, the Southeast Asian economic group, are also planning to deepen and broaden their economic integration.
These robust regional forums contrast starkly with the 153-country “Doha Round” trade talks at the World Trade Organization, which are now limping into their second decade and have yet to produce any tangible results.