Continental Free Trade Area: boosting intra-Africa trade

Dr San Bilal

Committee on Economic Development, Finance and TradeACP-EU Joint Parliamentary Assembly

Brussels 4 December 2015

Africa:• Rising Africa narrative?• End commodity boom?• Economic transformation• Improved business

environment• Towards deeper integration

(linear model?)• Harmonisation of the RECs,

TFTA & CFTA• Costly instability (Arab Spring,

Mali, CAR, CdI, Bokho Haram, Burkina, South Sudan…)

• EPAs• Agenda 2063…

Changing African and global context

Global context:• Globalisation• Changing trade:• WTO MC10 (Bali package)?• Global Value Chains• Aid for Trade• Mega-trade deals (TTIP,

TPP, RCEP, FTAAP)• Emerging countries, BRICS• 2030 Agenda• …

Challenges• Diversity of interests

(public/private, national/regional, etc.) and power

• Low trade complementarity (similar trade patterns)

• Costs of cooperation: agenda, institutions, implementation

• Integration creates winners and losers (compensation/distributive mechanisms?)

• Credibility: implementation gap

Benefits and challenges of integration

Benefits• Larger markets: facilitating

trade, common/harmonised rules, generating economies of scale

• Economic solidarity, convergence, stability

• pooling resources• Higher international stand:

coalition, attractiveness (FDI, trade)

Page 4ECDPM

Diversity of RECs & more

• TFTA (COMESA-EAC-SADC)• Other ROs: SACU (21), UEMOA(10), … IOC

TCI= Trade Complementarity Index at the time agreement signed (EC 42 in 1962; Mercosur 24 in 1994; NAFTA 58 in 1994; ideal trading partners = 100

TCI

812

7

11

Source: www.regionswatch.blogspot.com, 2010

Regional Integration in Africa• Low level of

intra Africa trade

• On average: 13.1% in 2010 compared to more that 60% in Europe or 35% in NAFTA

• Informal economy/trade

Page 6ECDPM

Africa “Thick” Borders

Enabling African Trade:Africa’s performance in regional comparison

CFTA key steps

• Pan-Africanism

• African Economic Community: 1980 Lagos Plan of Action & 1991 Abuja treaty

• January 2012 Summit: Adoption of decision to establish a Pan-Africa CFTA by 2017 + endorse the Action Plan for Boosting Intra-Africa Trade (BIAT)

• June 2015 Summit: CFTA negotiations officially launched

• AU: CFTA by 2017; intra-Africa trade: 12% in 2013, double (24%) in 2022, and 50% in 2045…

© BIAT, 2012

Continental Free Trade Area (CFTA)

Boosting Intra African Trade (BIAT) Action Plan: key pillars

• Trade policy• Trade facilitation• Trade-related Infrastructure• Trade Finance• Trade Information• Factor market integration

Opportunities• From vision to reality• Strong focus on African

intra-trade / inter-RECs, creating new dynamics

• Boost RECs integration agenda

• Focus on trade facilitation, NTBs/TBTs

• Part of Agenda 2063: integrate trade in development/transformation agenda

Reality check: challenges & opportunities

Challenges • Diverging & conflicting

interests among 54 African countries

• Slow progress of COMESA-EAC-SADC TFTA: easier to agree on principles than concrete liberalisation commitments

• Coherence with other RECs• Capacity and

implementation constraints• 2017 deadline likely to be

missed

The ACP dimension of the CFTA

• Exchange of experiences on integration

• Coherence of EPAs, to promote, not undermine regional integration

• All-ACP trade-related concerns and capacity building

• Political momentum: RECs, AU, ACP = politics matter most!

• Part of All-ACP Trade Cooperation Framework

Thank youwww.ecdpm.org

Page 14

Dr San BilalSenior ExecutiveHead of the Economic Transformation and Trade ProgrammeEditor of ECDPM GREAT Insights (http://ecdpm.org/great-insights/ ) Brussels officeE-mail: sb@ecdpm.org Twitter @SanBilal1 http://ecdpm.org/people/sanbilal/

Subscribe to ECDPM information: http://ecdpm.org/subscribe/