One huge free trade area without trade
The big news of the week is the launch of the COMESA EAC SADC Tripartite Free Trade Area at Sharm El Sheikh in Egypt by the Meeting of Ministers convening there for the specific purpose of discussing trade in Africa.
COMESA is the Common Market for Eastern and Southern Africa. Over the past fifteen years, it has been founded, cancelled, re-engineered, refounded, and attempted to be revitalised in all sorts of manners. It has never really worked and it certainly has not functioned as an entity that promotes a common market in eastern and southern Africa. There is very little trade between countries in eastern Africa and countries in southern Africa.
The EAC is the Eastern Africa Community which is more vibrant than its bigger cousin but only four countries count of which two, Kenya and Uganda, are the two giants in this unequal arrangement.
SADC is the Southern African Development Community which includes all the southern African countries as well as Madagascar and some Indian Ocean islands. It is also highly skewed with South Africa as the elephant in the room and wannabe Madagascar playing catch up. All the other members together do not come near South Africa’s economic output. There is some not-insignificant trade between some countries in this block but certainly not between all of them. There is zero free trade between any of them.
Now we have the culmination of a process that was started in June 2011 and finalised in the form of this week’s launch. According to the information available, the Tripartite Free Trade Area comprises 26 countries. The reputable Trade Law Centre, Tralac, based in Stellenbosch in South Africa said “The launch will be followed by the finalisation of negotiations on tariff reduction schedules and rules of origin. Progress has been achieved in these areas with negotiations advanced between some Tripartite states, while a number of rules of origin have been agreed on. This signals that we are on track to create a market of over 625 million people with a combined gross domestic product of approximately US$1.6 trillion.”
It is an ambitious undertaking to say the least. Going by the information emanating from the Egypt meeting, the Tripartite Free Trade Area is now a new trade block, or rather, a trading initiative on paper. It is widely seen, at least in political circles, as the precursor for a continent-wide free trade area, steered by the African Union, for which the negotiations are expected to start in 2017.
But let us concern ourselves for the moment only with the free trade area that is already fact. Or is it? Let us use Angola as an example. It is connected to Namibia by only two meaningful road linkages through Oshikango and through Nkurenkuru (Katwitwi). There are other points of entry, notably at Swartbooisdrift, Ruacana, Rundu, and I believe at Eenhana but these are only for tourists or local residents. So, two vast countries with a common border of about 1200 km connect at only two points.
Let’s consider our eastern neighbour, Botswana. We also share almost 1200 km of border yet one can cross between the two countries only at Ngoma, Mohembo and Buitepos. And the crossing at Mohembo is through the Babwatwa National Park, not an conducive environment to boost large volumes of cargo.
Even between Botswana and South Africa there are only a handful of border crossing points. Further, I think South Africa and Zimbabwe share only one crossing point, Beit Bridge. From Zimbabwe to Mozambique there are only two, from Zimbabwe to Zambia two, from Zambia to Malawi, none, and I have absolutely no idea how many leading out of Mozambique, perhaps half a dozen.
The point is, trade requires transport linkages and if there are only a very limited number, then significant trade is restricted, at least the kind of trade that will improve domestic conditions in 26 countries. Of course there is the ocean, and it is quite possible to link a substantial number of the 26 participating countries by ocean, but for that one needs functional harbours. Go count them. If you are lucky you will find perhaps seventeen of which eight are in South Africa. How does one expect to run cargo for 625 million people through seventeen harbours, or even through a combination of harbours and trade corridors. They simply do not exist.
The free trade area is a very noble idea but that is all it is, an idea. If we are serious about African trade, we need first to focus on the natural trade areas, southern Africa, eastern Africa and West Africa. These must first be built up and then, perhaps fifty years from now, we can look at integrating these trade block into one big area.