Tripartite Free Trade Area shifts gear

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WINDHOEK – Namibia, along with with 25 countries from the Common Markets of East and Southern Africa (COMESA), East African Community (EAC), and Southern African Development Countries (SADC) , has been involved in trade negotiations for the past three years to establish a Tripartite Free Trade Area (TFTA).

The Tripartite Free Trade Area once achieved will provide a market of 600 million people with a GDP of US$1 trillion,

Maria Immanuel, Trade and Investment Policy Analyst at the Namibia Trade Forum (NTF) has disclosed.

Immanuel explained that the objective is to establish a large single market with free movement of goods, services and business persons. This is expected to boost intra-regional trade by removing tariff barriers between these regional economic communities and harmonising customs procedures and trade facilitation measures.

Immanuel said the current negotiations focus on market integration which will be carried out over two phases. The first phase was the one that had been ongoing for the past three years focusing on trade in goods.

Phase two would focus on trade-related aspects such as trade in services, intellectual property rights, competition policy, trade promotion and competitiveness.
Immanuel emphasised that the current negotiations in trade in goods were aimed at liberalising movement of goods. She noted that negotiating countries would exchange tariff concessions based on reciprocity. “The aim is to liberalise as many goods as possible, effective immediately once the agreement has been ratified. The liberalisation of tariffs between the three regional communities will allow countries to open up their markets to each other in order to boost intra trade in the tripartite region,” said Immanuel.

Namibia is reportedly negotiating as part of the Southern African Customs Union (SACU) because of the common external tariff with members’ states Botswana, Lesotho, South Africa and Swaziland.

Immanuel explained that the tripartite countries had adopted the acquis principle meaning that tariff offers could only be exchanged between countries which do not have existing preferential arrangements with each other.

SADC countries will therefore offer each other tariff concessions based on what is already achieved in the region.and will not necessary exchange new tariff concessions since SADC already established a free trade area in 2008, she explained.

She added that since most COMESA members are also party to the SADC trade protocol, SACU would be left to negotiate tariff elimination with COMESA’s non-SADC members as well as the EAC members (Kenya, Uganda, Rwanda, Burundi and Tanzania) as well as Egypt.

SACU hopes to engage in tariff negotiation with Ethiopia, one of Africa’s fastest growing economies.

The parties are said to have agreed to eliminate all existing non-tariff barriers and not to impose any new ones while working on measures to simplify and harmonise trade and customs documentations and procedures.

The tripartite trade in goods negotiations were expected to be completed in June 2014 but due to unforeseen financial constraints the negotiations are now nine months behind schedule.

The 3rd Tripartite Summit of heads of state and government originally scheduled to take place in Egypt this month was postponed to February 2015. An agreement establishing the tripartite free trade area is to be launched at that meeting. Some countries including Namibia earlier indicated their reluctance to sign the agreement in the absence of tariff offers and relevant trade rules.

“Practically speaking, one cannot have an FTA without tariff liberalisation, Rules of Origin as well as Trade Remedies and Dispute Settlement mechanism,” said Immanuel.

As Namibia prioritises its industrialisation agenda under the “Growth at Home” framework, the tripartite free trade areas will come as an opportunity for Namibia to expand its regional market access. Namibia’s new potential markets will be Kenya, Uganda, Rwanda, Burundi, Egypt as well as Ethiopia.

Immanuel said the expansion of regional markets would stimulate domestic industries through the development of regional value chains. This, she said, will mean Namibia needs to expand or grow its industrial base in order to be able to fully benefit from regional market access arrangement.

“Through our consultation with the private sector, it was identified that exports of products such as beer, cement, salt, pharmaceutical products, dairy products and fish (horse mackerel) have the potential to be exported and expanded into East Africa and the Egyptian markets,” said Immanuel.

This trade arrangement will provide Namibia with an opportunity to diversify its international market access. It is therefore important for Namibia to invest in its manufacturing sector by focusing in the production and supply of goods and services which offer a competitive advantage.

By Staff Reporter