Members of the Tripartite Free Trade Area (TFTA) in Africa have completed more than half the work needed to finalise the rules to govern how products imported from nonmember countries are treated within the area.
Called the rules of origin, these arrangements will be critical to prevent nonmember nations from flooding the free trade area via the member with the most liberal trade regime.
Rules of origin are necessary as the TFTA will not have a common external tariff to regulate the treatment of goods from outside countries.
Department of trade & industry chief director Wamkele Mene told the National Council of Provinces select committee on trade and international relations on Wednesday that negotiations over the rules were 60% complete and were expected to be finalised in mid-2019.
Parliament is in the process of ratifying the agreement for the TFTA, which will bring together 26 African countries into a single market governed by preferential free-trade arrangements. The agreement was ratified by the select committee and will be considered by the trade and industry portfolio committee in two weeks. So far, 22 countries have signed, with SA doing so in July 2017. It will enter into force once 14 member states have ratified it. So far, only Egypt and Uganda have done so.
The agreement is built on the three existing trading blocs: the Common Market for Eastern and Southern Africa, the Southern African Development Community and the East African Community.
Mene said the biggest challenge was to agree on policy, with some countries arguing for a general rule that would allow all products from outside countries to be eligible for TFTA preferences. SA opposed this approach on the grounds that it would limit the region’s ability to industrialise as there would be no requirement for value addition to the imported products.
SA’s position is that products from outside countries should only benefit from preferential tariffs when exported to other countries in the region if there has been value addition within the country that first imported it.
The ultimate agreement was that there would be common product-specific rules of origin for each of the more than 7,000 products in the tariff book.
Mene said negotiations on tariffs were under way. Once the tariff negotiations are finalised, the deal will offer exporters preferential or zero tariffs into the markets of member countries. The countries in the TFTA have a combined population of 626 million people and a total GDP of $1.2 trillion.
SA’s trade with TFTA countries was 16% of its world trade, $27.6bn in 2017, Mene said.
The agreement would facilitate the harmonisation of trade regimes; free movement of business persons; joint implementation of regional infrastructure projects; regional value chains; and regional co-operation.