Has COMESA changed down the customs union gear?

My observation is that COMESA is now interested in the idea of a Tripartite Free Trade Area (TFTA), bringing together SADC, the East African Community (EAC) and COMESA. Unlike the customs union, which requires further tariff phase-down, the TFTA is virtually just an expansion of the free trade area territory, largely through customs cooperation, standardisation of industrial and health benchmarks and other modest requirements.

COMESA seems to be dragging its feet in implementing the customs union that was launched in June 2009, with a three-year transition period. In 2012, which was supposed to be the launch year, the COMESA Summit extended the transition period for the customs union by a further two years and called for the adoption of a comprehensive roadmap for the two-year period to address outstanding issues and concerns.

New kid on the block

Two years down the line, one would have expected the summit to seriously mention timelines or a concrete way forward on the matter. However the just-ended summit made the following resolution on the customs union: “The Authority urged member states to domesticate and implement the customs union decisions… and requested member states that have not domesticated the customs union instruments to provide annual updates on the status of implementation and domestication of the customs union instruments.”

Does this sound smart? No. This is an indirect admission that they don’t want to fix a time for getting this monster going. How can you wait for an “annual update” for something that has already been postponed and is supposed to be ideally working before the end of the year?

The summit has spent less time discussing the customs union and much time on the TFTA, which appears to be the new kid on the block. On the TFTA, the summit noted with appreciation the progress made in the TFTA negotiations and “urged member states to ensure that the negotiations are completed by June 2014, in accordance with the roadmap that was agreed upon”.

Here we see timelines now being emphasised. The same June 2014 was to be the month in which the customs union was supposed to be operational. The customs union was the first to be launched anyway, before the TFTA came into play in October 2011. However, it now seems to be overtaking the customs union, which apparently is no longer sexy.

Intense competition

Still on the TFTA, the summit further resolved as follows: “The Authority called upon COMESA member states to finalise the outstanding issues particularly on tariff offers and rules of origin… and directed the secretariat to appropriately prioritise work on the infrastructure and industrial development pillars and movement of business persons.”

It doesn’t take a rocket scientist to see that COMESA is seeing the TFTA as the way to go and is scared of phasing down its tariffs in a customs union arrangement, as this will prejudice member states of revenue coming from import duties, and also result in intense competition that has the potential to destroy the local industries.

That is why it has made a smart decision on TFTA, while dragging its feet on the customs union.

The TFTA will provide an integrated market covering 26 countries in eastern and southern Africa. It will create a combined market of 600m people and a total gross domestic product of $1 trillion. The intended benefits include increased intra-regional trade, increased investment and enhanced development of cross-regional infrastructure.

COMESA should be resolute enough to decide what it needs to do, not to waste time and money on things that it won’t do. If the TFTA is the chosen way to go, then it’s better to just do away with the customs union and focus all its energies on the TFTA.

Post published in: Africa News

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