Writes Leo Odera Omolo
TOP government official have expressed fears and concern that plans to merge the three regional economic blocs into one East and Southern Africa bloc in order to establish a Free Trade Area might run into trouble due to logistics and mistrust between the partners.
It has been revealed that officials have warned that the merger plan is unlikely to be achieved in the targeted three years due to overlapping membership among the Southern African Development Community {SADC}.Other blocs in the plan are the East African Community{EAC} and the Common Market for East and Southern African Common Market {Comesa}
The Kenya’s Director of Economic Affairs Richard Sindiga has been quoted extensively by the influential EASTAFRICAN weekly latest edition as attributing mistrust; delays and lack of legal framework from the SADC partners have derailed negotiations on the harmonization process.
The three economic blocs brings together 26 countries with a market close to 600 million people with an estimated gross domestic product{GDP} of USD 624 billion, are pushing for a free trade area..
In June, the blocs agreed on a three phase’s road-map including a preparatory phase of between six months and one year. Phase one which was to start immediately would involve negotiations on the trading of goods and would take and would take place between 24 and 60 months.
The phase two of the agreement would address border-crossing and non-tariff barriers such as imports bans and permits that cuts into competitiveness. The last phase would deal with actual integration.
The EAC has a Customs Union while four out of the five EAC member states of Rwanda, Burundi, Kenya and Uganda are also members of the Comesa and only Tanzania is a member of SADC. As for Comesa, eight of the members are in SADC.
“This arrangement, according to Richard Sindiga, Kenya Director of economic affairs, is hindering smooth trading within the region as it discourage investors and development partners because they find it cumbersome to deal with different policies governing various regions even when some of the are cross-cutting.”
Government officials are saying that 19 countries are already in a Free Trade Area with similar rules of origin, therefore it means effective negotiations will be between the five countries that are in SADC.
According to Mr Sindiga the main issue being negotiated are harmonization of the imported contents of goods to the more than 60 per cent of the cost, insurance and freight value of the cost of materials used in the production; value addition requirement; and change I tariff classifications.
Comesa and EAC both have similar criteria for export goods approved by the Council of Ministers ,as goods are subjected to 25 per cent value addition in Comesa and 35 per cent in EAC .SADC rules of origins are mostly product specific and change as stipulated in the Protocol.
“Many companies operating in the region finds the threshold of 35 per cent value addition to attain,” said Director Sindiga, adding that up to 20 per cent of member surveyed with the East and Southern African region find the value added origin conferring a criteria a problem.’
“Thus creates an environment if uncertainty and inconvenience for business as it implies rules can change abruptly, an aspect that discourages the smooth flow of trade among the member countries”. Sindiga adds.
Ends