The January 2012 African Union Summit of Heads of State and Government focuses on the theme of ?Boosting Intra-Africa Trade?. The choice of the theme is both appropriate and timely, given the challenges facing this trade, and the need to come up with strategies to improve the situation. The January 2011 AU Summit has also endorsed the recommendation of the 6th Ordinary Session of the AU Ministers of Trade held in Kigali from 29 October – 2 November 2010 to fast-track the establishment of a Continental Free Trade Area.
It should be recalled that Africa is pursuing an integration agenda as a collective development and transformation strategy leading to the eventual creation of a continental market. Regional integration helps develop larger markets, foster greater competition and improve policy stance in many areas of the development agenda. And indeed, the pressure of globalization is forcing firms and countries to seek efficiency through larger markets and enhanced competition. A modern manufacturing plant will have to produce a larger output than the low level of domestic demand that a single underdeveloped country can absorb. Pooling economies and markets together through regional integration thus provides a sufficiently wide economic and market space to make economies of scale possible.
To this end, African countries have established the African Union, created various Regional Economic Communities (RECs), and have held at heart the ideals of the Abuja Treaty establishing the African Economic Community and the Constitutive Act of the African Union. In this context, the RECs are pursuing integration through free trade, and developing customs unions and a common market.
Eventually, these efforts are expected to converge to an African Common Market (ACM) and an African Economic Community (AEC), whereby economic, fiscal, social and sectoral policies will be continentally uniform. Through such an economic marketplace, Africa can strengthen its economic independence and empowerment with respect to the rest of the world.
A major aim of these efforts is to expand intra-African trade by breaking down tariffs and non-tariff barriers and enhancing mutually advantageous commercial relations through trade liberalization schemes, because trade has made and will continue to make a tremendous contribution to the economies of many developed and developing countries. Trade enables countries to specialise and export goods that they can produce cheaply, in exchange for what others can provide at a lower cost.
Trade also provides the material means in terms of capital goods, machinery and raw and semi-finished goods that are critical for growth. This is a driving force behind economic development.
Consequently, if trade is a vehicle to growth and development, then removing the barriers that inhibit it can only help increase its impact. Thus, free trade is an important instrument for removing such impediments and promoting greater levels of trade among African countries.
African leaders are making landmark commitments to boosting intra-African trade. First was the landmark decision by COMESA, EAC and SADC to establish a single Free Trade Area. The launch of this tripartite FTA initiative covering 26 African countries, representing more than half of AU membership, with a combined population of 530 million (57% of Africa’s population) and a total GDP of $630 billion or 53% of Africa’s total GDP has galvanized interest towards a much broader Continental FTA. Accordingly, AU Ministers of Trade, at their 6th Ordinary Session in Kigali in November 2010, after due assessment of the progress made in the implementation of FTAs and Customs Unions in the various RECs, recommended the fast-tracking of the establishment of an African FTA to unlock the trade potentials of the continent and position it adequately in the global trading arena.
African leaders and stakeholders are optimistic that increased trade through initiatives such as the Grand COMESA-SADC-SADC FTA and other potential inter-RECs’ FTAs will quickly transform into a continental free trade area, the benefits of which could be enormous. It will enlarge markets for goods and services, eliminate the problem of multiple and overlapping memberships, enhance customs cooperation and broader trade facilitation, promote harmonization and coordination of trade instruments and nomenclature, and broader relaxation of restrictions on movement of goods, persons and services. The collaboration and cooperation of RECs through the Continental FTA should further improve regional infrastructure and consolidate regional markets through improved interconnectivity in all forms of transport and communication as well as promote energy pooling to enhance the regions’ competitiveness. Finally, the continental FTA will help fast track the realization of the Abuja Treaty’s vision of an African Common Market, and ultimately, the African Economic Community (AEC).
francis1897 answered the question on January 12, 2023 at 13:21