Focal area 1: The Tripartite Free Trade Area (FTA)
The decision to develop a Tripartite Free Trade Agreement (FTA) Roadmap and to roll out this Tripartite FTA was endorsed by Heads of State and Government at their first Tripartite Summit held in Kampala in October 2008.
Chairman of The Tripartite Task Force and Secretary General of the EAC, Amb. Juma V. Mwapachu, summarises the benefits of a FTA as follows -
"The main benefit to be secured from the Tripartite FTA is the establishment of a larger market, with a single economic space. Such economic space will be more attractive to investment and large scale production. Estimates indicate that exports among the 26 Tripartite countries increased from USD 7 billion in 2000 to USD 27 billion in 2008, and imports grew from USD 9 billion in 2000 to USD 32 billion in 2008. This phenomenal trade increase was in large measure spurred by the free trade area initiatives of the three organizations. Strong trade performance is expected from the promotion of small and medium scale enterprises that produce goods and services. Besides, the Tripartite economic space will assist to address current challenges resulting from multiple membership by advancing the ongoing harmonization and coordination initiatives of the three organizations to achieve convergence of programmes and activities. This way, the Tripartite will greatly contribute to African continental economic integration." (From the report of the chairperson of the Tripartite Task Force - Amb. Juma V. Mwapachu - Secretary General, EA)
The Tripartite FTA will build on the FTAs that are already in place in COMESA, EAC and SADC. The Tripartite FTA is intended to cover all 26 Tripartite countries, these being Angola, Botswana, Burundi, Comoros, Democratic Republic of Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Lesotho, Libya, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Rwanda, Seychelles, South Africa, Sudan, Swaziland, Tanzania, Uganda, Zambia and Zimbabwe.
Since the Heads of State took their decision on the Tripartite FTA the Tripartite Task Force, led by the Trade Sub-Committee, has prepared a Draft FTA Roadmap and a Draft Agreement establishing the Tripartite FTA, including annexes on non-tariff barriers, rules of origin, customs co-operation, transit trade and transit facilities, trade remedies, competition policy and law, standards, sanitary and phytosanitary (SPS) measures, movement of business persons, Intellectual Property Rights, services negotiations, dispute settlement and institutional arrangements.
The FTA roadmap presupposes that the 26 countries will need to engage in negotiations but also recognises that there are already in place Preferential Trading Arrangements (PTA) and FTA trading arrangements among the 26 countries. This means that not all 26 countries will need to negotiate with each other. For example, there should be no negotiations on tariffs or sensitive products among the 5 EAC countries or among the 14 COMESA FTA countries or among the 13 SADC FTA countries that are already trading on FTA terms.
The roadmap also presupposes that negotiations for the Tripartite FTA should be guided by the following overarching principles:
Duty-Free and Quota-Free Market Access
The final objective of the Tripartite FTA is to achieve Duty-Free and Quota-Free treatment on all products and without quantitative restrictions on goods that meet the Tripartite Rules of Origin.
Standstill Provisions and Incremental Liberalisation
Tripartite countries should present their national tariffs and declare customs duty rates for all tariff lines at the start of the negotiations and should undertake not to raise customs duties on imports from other Tripartite countries before, during or after the negotiations, and to continuously reduce non-zero customs duties so that they are completely eliminated as part of the Tripartite FTA.
Most Favoured National Treatment
After the conclusion of the Tripartite FTA, Tripartite countries should accord each other Most Favoured Nation (MFN) treatment. Tripartite FTA arrangements should not prevent country members from maintaining or concluding preferential or free trade agreements, either separately or together, with third countries provided such agreements do not go against the letter or spirit of the Tripartite Free Trade Agreement.
After the conclusion of the Tripartite FTA, member countries should accord the same treatment to products manufactured in other Tripartite countries once imported into their territory as that accorded to similar locally manufactured products.
State of the Tripartite Free Trade Area | Progress (from the report of the chairperson of the Tripartite Task Force - Amb. Juma V. Mwapachu - Secretary General, EA)
When the Heads of State and Government of COMESA, EAC and SADC met in Kampala on 22 October 2008, the political leaders directed the Secretariats of the three organisations to prepare all the legal documents necessary for establishing the single Free Trade Area (FTA) and to clearly identify the steps required for its establishment. At their meeting on 9th November 2009 in Dar es Salaam, the Chief Executives of the three Secretariats cleared the draft FTA documents for transmission to the Member States for consideration in preparing for the next meeting of the Tripartite Summit.
The Member States are in the process of reviewing the documents and proposing improvements. It is expected that when the Tripartite Summit next meets, the Heads of State and Government will pronounce themselves on the way forward on the establishment of the single FTA. The main FTA document is in the form of the draft Agreement for establishing the Tripartite FTA. It has 14 Annexes covering various complementary areas necessary for effective functioning of a regional market.
The main proposal is to establish the FTA on a tariff-free, quota-free, exemption-free basis by simply combining the existing FTAs of COMESA, EAC and SADC. It is expected that by 2012, all these FTAs will not have any exemptions or sensitive lists. However, there is a possibility that a few countries might wish to consider maintaining a few sensitive products in trading with some major economic partners. For this reason, provision has been made for the possibility of a country to seek permission for maintaining some sensitive products for a specified period of time.
Some of the complementary areas covered include:
- Promotion of customs cooperation and trade facilitation;
- Harmonisation and coordination of industrial and health standards;
- Combating of unfair trade practices and import surges,
- Use of arbitration settlement mechanisms;
- Use of simpler and straightforward rules of origin that recognise inland transport costs as part of the value added in production;
- Relaxation of restrictions on movement of business persons taking into account specific country sensitivities;
- Liberalisation of certain priority service sectors on the basis of existing programmes of the three organisations;
- Promotion of value addition and transformation of the region into an information- and knowledge-based economy through a balanced used of intellectual property rights and information and communications technology;
- Development of cultural industries on the basis of the rich cultural heritage in the region particularly in the arts;
- and Development of sector strategies to increase productive capacity and link producers to buyers and consumers.
The Tripartite FTA will be underpinned by robust infrastructure programs designed to catalyse the regional market through interconnectivity (facilitated for instance by all modes of transport and telecommunications) and to promote competitiveness (for instance through adequate supplies of energy).
The FTA proposal incorporates a roadmap towards the operationalisation of the FTA. It is proposed that there should be a preparatory period for consultations at the national, regional and Tripartite level from early 2010 up to June 2011. Member States will use this period to carefully work out the legal and institutional framework for the single FTA using the draft documents as a basis. It is expected that each REC will discuss the Tripartite documents, and that the Tripartite meetings at various levels will deliberate and reach concrete recommendations. By June 2011, there should be a final Agreement to establish the Tripartite FTA, ready for signature in July 2011. Upon signature of the FTA, Member States will have about six months, up to December 2011, to finalise their domestic processes for ratifying the Agreement, establishing the required support institutions and adopting the relevant customs procedures and instruments.
So far, the approval process has faced some delays due to the inability to set an agreeable date for the Tripartite Summit to meet. It is proposed that once this approval process is accomplished, the Tripartite FTA should be launched in January 2012. Throughout the preparatory period, strong sensitisation programmes will be mounted for the public and private sectors and all stakeholders including parliamentarians, business community, teaching institutions, civil society, and development partners to secure optimum buy-in of the FTA.
It is important to note that whereas the Secretariats of COMESA, EAC and SADC circulated the first version of the draft Tripartite FTA Agreement and its Annexes to their respective Member States in December 2009, these documents have since been re-worked by the Secretariats of the 3 RECs to improve their technical content. A Tripartite-wide workshop was held in Nairobi in January 2011 to update the Tripartite Member States on the improvements made to the documents. The 12th Tripartite Task Force meeting will finalise the latest version of the revised FTA documents which will form the basis for discussion in the forthcoming Tripartite Policy Organs meetings scheduled for late March in preparation for the 2nd Tripartite Summit of Heads of State and Government scheduled for early April 2011.