TRADE: COMESA on Track with Establishing Customs Union

  • by Stanley Kwenda (harare)
  • Thursday, May 28, 2009
  • Inter Press Service

The event was twice postponed last year due to Zimbabwe’s general elections and the ensuing violence that characterised the country for the better part of the year.

But following the signing of a power-sharing agreement on September 15, 2008, leading to the formation of a coalition government, the country seems to be on a path to stability.

The summit will now be held in Victoria Falls on June 7 and 8. Big flashy banners advertising the event are now a common feature of Harare’s skyline. The Lusaka-based COMESA secretariat runs a countdown of days on its website.

COMESA secretary general, Sindiso Ngwenya, told IPS that the organisers are aware that the backdrop to the event is a global financial and economic crisis that calls for cooperation among African countries.

‘‘The summit takes place during the worst global economic recession in years. The impact is very clear as there are reduced exports, meaning governments are running current account deficits, hence the need for regional integration,’’ Ngwenya told IPS.

The summit will be held under the theme ‘‘Consolidating Regional Integration through Value Addition, Trade and Food Security’’. The highlight of the summit is the establishment of a customs union on the second day. ‘‘This will be a milestone in the deepening of regional integration,’’ Ngwenya told IPS.

The launch of the COMESA customs union will see member states that join the union adopting an agreed common external tariff (CET) to be charged to third parties. The agreed CET rates are zero percent on capital goods, zero percent on raw materials, 10 percent on intermediate goods and 25 percent on finished goods.

The customs union is being launched to advance regional integration in line with COMESA’s programme and article 45 of the COMESA treaty that requires the establishment of a customs union.

A regional trade policy is being developed for the customs union. This will address issues of policy space, sensitive products, customs management code, free circulation of goods, elimination of rules of origin, export processing zones (EPZs), trade remedies, competition policy, sanitary and phyto-sanitary (SPS) measures and technical standards programmes.

The policy will also determine revenue sharing amongst the union’s members.

Ngwenya said the heads of state and government will also review progress on the implementation of various regional protocols and accords such as the contentious economic partnership agreements (EPAs).

The summit will also review the various agreements entered into at the tripartite summit held in Kampala, Uganda, in October last year between COMESA, the east African Community and the Southern African Development Community.

The summit will engage with administrative and budgetary affairs, the seating of the COMESA inter-governmental committee, the hosting of the COMESA business forum, meeting of the council of ministers, a COMESA golf tournament, the foreign affairs ministers’ meeting and the first ladies’ roundtable.

More than 1,500 delegates from 19 COMESA member states and associate regional and multilateral organisations, such as SADC, the African Union, Commonwealth and the United Nations are expected, as well as the European Union, the World Bank and the International Monetary Fund (IMF).

Zimbabwe will host the event at a time when its coffers are empty. The new coalition government is looking for 10 billion dollars to rebuild the country’s economy.

The government is made up of President Robert Mugabe’s Zimbabwe African National Union Patriotic Front (ZANU-PF) and the two Movement for Democratic Change (MDC) parties led by Prime Minister Morgan Tsvangirai and his deputy Arthur Mutambara.

COMESA will foot the bill of the summit and has also pledged to provide aid to rebuild Zimbabwe’s economy, which has been eroded by years of economic decline.

With its 19 member states, a population of over 389 million and annual imports valued at 32 billion dollars and exports of 82 billion dollars, COMESA forms a major market place for both internal and external trading. Its area is impressive on the map of the African continent, covering a geographical area of 12 million sq km.

Since the launch of its FTA, there has been an increase of intra-COMESA trade of 734 million dollars in 1985 to 7,6 billion dollars in 2006.

The regional integration programme for COMESA member states established a free trade area (FTA) in October 2000 and aimed to establish the customs union by December 2008, a monetary union by 2015 and a COMESA community by 2025.

The FTA has 13 member states. Trade within the FTA is on a duty-free and quota-free basis. But the main challenge to the FTA is the resurgence and proliferation of non-tariff barriers which are hampering trade amongst member states.

© Inter Press Service (2009) — All Rights ReservedOriginal source: Inter Press Service

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