Southern African News Features                                           SANF 09 No 01, January 2009
Region takes giant step toward African Economic Community
by Munetsi Madakufamba

Three regional economic blocs have made a giant step towards the long-conceived goal of an African Economic Community, approving the expeditious establishment of an enlarged Free Trade Area (FTA) encompassing 26 Member States in three sub-regions.

Meeting at a Tripartite Summit in late 2008 in Uganda, leaders of Member States of the Southern African Development Community (SADC), the Common Market for Eastern and Southern Africa (COMESA) and the East African Community (EAC) agreed on what many have described as an important milestone towards continental integration as envisaged by the African Union (AU).

According to the final communiqué, the historic Tripartite Summit "agreed on a programme of harmonisation of trading arrangements amongst the three RECs [Regional Economic Communities], free movement of business persons, joint implementation of inter-regional infrastructure programmes as well as institutional arrangements on the basis of which the three RECs would foster cooperation."

The Summit resolved to immediately start working towards merging the three trading blocs into a single REC with the objective of fast-tracking the attainment of the African Economic Community. In that regard, the Summit directed the Tripartite Task Force composed of the Secretariats of the three RECs to "develop a roadmap for the implementation of this merger for consideration at its next meeting".

Reaffirming southern Africa’s commitment to the tripartite cooperation process, SADC Chairperson and South African President Kgalema Motlanthe said the region "believes the time has come for COMESA, EAC and SADC to bring together our respective regional integration programmes in order to further enlarge our markets, unlock our productive potential, increase the levels of intra-Africa trade, and enhance our developmental prospects."

The creation of the grand FTA will open borders to literally half of the continent, spanning the entire southern and eastern regions of Africa, from Cape to Cairo. It will be, by any standard, a formidable economic bloc with a combined Gross Domestic Product (GDP) of US$625 billion.

With a combined population of 527 million, the grand FTA places Member States in a stronger position to respond effectively to intensifying global economic competition and will make the economic bloc more attractive to foreign direct investment.

"The process we embark upon today marks a historic step towards fulfilling our obligations under the AU and the Abuja Treaty framework of continental integration, which recognises that RECs are the building blocks for the African Economic Community," said Motlanthe, who addressed the Summit in his capacity as Chairperson of SADC.

The Summit was considered historic given that for the first time since the birth of the AU, three of the eight officially recognised key building blocks of the African Economic Community have met on how to integrate their separate programmes into a coherent overall programme within the framework of the Abuja Treaty, which establishes the continental economic community.

On modalities, the Tripartite Summit directed the three RECs to undertake a study incorporating, among other issues, the development of a roadmap within a period of six months for the establishment of the FTA, taking into account the principle of variable geometry; the legal and institutional framework to underpin the FTA; and measures to facilitate the movement of business persons across the RECs.

The Summit further agreed on a Tripartite Council of Ministers to be convened within 12 months to determine the timeframe for the establishment of the single FTA, informed by the findings of the study.

On multilateral issues, the Tripartite Summit directed the chairpersons of the Council of Ministers of the three RECs to "ensure that the Secretariats participate, coordinate and harmonise positions on the EPA [Economic Partnership Agreement] negotiations".

The same approach would apply to other multilateral negotiations including the World Trade Organization’s Doha Development Round Negotiations.

In the area of infrastructure development, the Summit launched the Joint Competition Authority (JCA) on Air Transport Liberalization which will "oversee the full implementation of the Yamoussoukro Decision on Air Transport in the three RECs commencing January 2009".

According to the communiqué, the JCA comprises seven members, two each from EAC, COMESA and SADC plus a chairperson on a rotational basis.

The leaders directed the three RECs to put in place, within a period of one year, joint programmes for the implementation of:

  • a single seamless upper airspace;
  • an accelerated, seamless inter-regional ICT Broadband Infrastructure Network; and
  • a harmonized policy and regulatory framework that will govern ICT and infrastructural development in the three RECs.
  • Within the same timeframe, the RECs are expected to "effectively coordinate and harmonize" the Regional Transport Master Plans and the Regional Energy Priority Investment Plans, as well as the Energy Master Plans of the three RECS.

The three secretariats were directed to work out a joint financing and implementation mechanisms for infrastructure development, within a year.

Regarding the legal and institutional framework, a Memorandum of Understanding (MoU) will be drafted for approval by the Council of Ministers of each of the three RECs, within a six-month period. The MoU, which will broadly cover inter-regional cooperation and integration, will define the powers of each decision making level.

The Summit agreed on a Tripartite Summit of Heads of State and Government which shall sit once every two years.

The new dispensation in regional integration will permanently resolve the longstanding overlapping membership conundrum, which had presented headaches as the three RECs moved towards deeper economic integration.

Technically, a country cannot belong to more than one Customs Union. In a Customs Union, members agree among other issues, to charge a common external tariff to third countries.

Yet COMESA, EAC and SADC have all attained FTA status, and are at various stages of establishing separate Customs Unions.

The EAC is the most advanced of the three RECs, having already launched its Customs Union while COMESA plans to have its own by December 2008.

SADC launched its FTA in August 2008 and plans to create a Customs Union by 2010.

If successfully implemented, the Tripartite Summit decisions will result in the three RECs collapsing into a single FTA with the ultimate objective of establishing a single Customs Union, a development that would partially fulfil the target of the treaty establishing the African Economic Community.

The treaty establishing the African Economic Community, popularly known as the Abuja Treaty, was signed in 1991 by leaders of the Organisation of African Unity, the precursor to the AU. The treaty envisages a continental economic zone by 2028, gradually built upon merging of the many RECs across the African continent.

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