Deal being inked to allow 26 African countries access to better trade terms
Parliament is in the process of ratifying an agreement to establish a tripartite free-trade area that will bring 26 African countries into a single market governed by preferential free-trade arrangements.
The agreement was ratified by the select committee on trade and international relations of the National Council of Provinces on Wednesday and will be considered by the portfolio committee on trade and industry of the National Assembly in two weeks time.
So far 22 countries have signed the agreement which was launched in Egypt in June 2015 with SA signing in July 2017. It will enter into force once it has been ratified by 14 member states. So far only Egypt and Uganda have ratified it.
The agreement is built on the three existing trading blocs: the Common Market for Eastern and Southern Africa (Comesa), the Southern African Development Community (Sadc) and the East African Community (EAC).
The countries included in the tripartite free-trade area — seen as a critical driver of regional integration on the continent — have a combined population of 626-million and a total GDP of $1.2-trillion. Once the tariff negotiations are finalised, the deal will offer exporters preferential or zero tariffs into the markets of member countries.
Some countries that fall within the tripartite free-trade agreement (TFTA) such as Rwanda, Ethiopia and Tanzania, are among the fastest growing economies on the continent.
Briefing the select committee department of DTI chief director Wamkele Mene said SA’s trade with TFTA countries represents 16% of its trade with the world and amounted to $27,6bn in 2017.
He said SA wanted to move swiftly towards ratification to signal its commitment to regional integration. Once it entered into force the agreement would allow SA to increase its share of the African market and provide it with access to a larger, more integrated and growing regional market.
"This will have positive spinoff effects on industrial development, investment and job creation," Mene said.
He noted that the agreement would facilitate the harmonisation of trade regimes, the free movement of business persons (being negotiated separately by the department of home affairs), joint implementation of regional infrastructure projects and programmes, development of regional value chains and legal and institutional arrangements for regional cooperation.
The agreement is based on a recognition of the differentials in the levels of economic development of participants and is structured on a variable geometry regarding the pace of liberalisation across the different regions.
Mene told MPs that negotiations on rules of origin were 60% completed and were expected to be concluded in mid-2019. Rules of origin are necessary as the TFTA region does not have a common external tariff to regulate the treatment of goods from outside countries. Rules of origin would be a mechanism to prevent non members of the region flooding the market through a member with the most liberal trade regime.
Negotiations on tariffs are under way while negotiations still have to commence on the investment chapter of the agreement. Mene said SA would argue for the inclusion of core provisions of SA’s Protection of Investment Act.