Mon, Jun 15, 2015 - Page 15 News List

Pan-African trade talks set to start

NY Times news service, JOHANNESBURG

Nigerian President Muhammadu Buhari disembarks upon arrival at the Waterkloof military airbase in Pretoria, South Africa, on Saturday before an African Union summit to be held in Johannesburg.

Photo: AFP

Trade within Africa has long faced many barriers, from the physical to nonphysical: bad roads, air routes that still favor old colonial ties to Europe, corruption and poor governance. Even as African economies have grown in the past decade, trade between African nations has lagged behind their exchanges with the rest of the world.

However, African leaders meeting in Johannesburg this weekend were expected to start negotiations on an ambitious plan to create a continent-wide free-trade zone that, perhaps years or decades from now, could foster closer economic and political ties among dozens of nations.

The negotiations, which were to take place during an African Union summit meeting, come days after officials from 26 African nations signed an agreement to create the continent’s largest free-trade zone, covering a region of more than 626 million people and a total GDP of US$1.2 trillion.

The new trading zone is expected to more closely link the powerful economies of eastern and southern Africa, including South Africa, Egypt and Kenya.

The Tripartite Free-Trade Area deal, signed in Egypt on Wednesday, is to reduce tariffs and link together three regional trade groups. However, it fell short of its original goal of combining the three zones into a single one.

“What we are doing today represents a very important step in the history of the regional integration of Africa,” Egyptian President Abdel-Fattah al-Sisi was quoted as saying at the meeting in Egypt.

The agreement still must be ratified by each nation in the relevant areas, but it gave momentum to talks for an even bigger goal: The creation of a pan-African trading zone that would encompass the continent.

The African Union said it would establish the zone, called the Continental Free-Trade Area, by 2017 as a way to create long-term growth, investment and jobs.

“There has been talk about the continental free-trade agreement for many, many years, but it has been more like a shibboleth that shows you are committed to regional integration on the continent,” said Christopher Wood, an expert on economic diplomacy at the South African Institute of International Affairs.

“It seems like that is changing now,” he added. “The African Union has established negotiating principles and some outcomes and a rough time line that seems like the continental free-trade agreement is going to move from a vision to an actual plan.”

The push toward economic integration, Wood said, comes at the end of a decade of strong economic growth on the continent driven by a worldwide boom in commodities.

Instead of focusing simply on growth, African officials are now seeking to industrialize and diversify their economies, he said.

Despite long-existing regional agreements, trade inside Africa makes up just about 12 percent of Africa’s total trade, according to the WTO.

Reducing or removing tariffs is far less important than eliminating other barriers, experts said.

Poor roads make shipping goods costly. Railroads built during colonial days facilitate the distribution of goods not to other African nations, but to ports with ships bound for Europe. Flights that connect African nations with former colonial rulers slow down the movement of people across the continent.

African Union Trade and Industry Commissioner Fatima Acyl said at a news conference in Johannesburg that the agreement reached last week in Egypt was an important step toward negotiating the broader pact.

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