Africa’s Free Trade Zone: A Pie in the Sky?
African heads of state have ambitious plans to create a free trade zone, encompassing 26 countries and more than 600 million people on the continent. But economic experts warn the project is a bold step that comes with a plethora of legal, administrative and political hurdles. Others suggest the plan might be a pie in the sky.
'The free trade agreement is an incredibly complex undertaking by any measure,' warned Liepollo Pheko, international trade expert and managing director of economic consultancy Four Rivers in Johannesburg.
She was in conversation with South African Minister of Trade and Industry Rob Davies — one of the key advocates of the scheme — at a public debate held at the Centre for the Book in Cape Town, South Africa, on Nov. 3.
Earlier this year, African heads of state had announced plans for a one trillion dollar free trade area (FTA) across three existing regional economic communities, namely the Common Market for East and Southern Africa (Comesa), the East African Community (EAC) and the Southern African Development (SADC).
The FTA, which currently has a GDP of 650 billion dollars, will enable the duty- and quota-free movement of goods by 2014, of services and business people by 2016 and an Africa- wide economic and monetary area by 2025.
Supporters of the scheme, like Davies, hope the agreement will dramatically increase inter-regional trade and reach a GDP of 1.5 trillion dollars within the zone by 2015.
'The FTA will lead us on a new growth path that is significant in terms of job creation and industrial development,' believes Davies. He expects economic output within the zone to expand by 50 percent over the next five years, with an average annual economic growth of 5.5 percent. 'Africa’s GDP per capita will expand by 30 percent,' the minister further predicted.
But trade experts like Pheko are less optimistic about the proposed economic agreement. A major concern is how countries will handle the huge amount of paperwork associated with inter-regional trade, she explained, as the FTA does not have an institutional location to handle administration.
Pheko also warned of potential legal issues, given that a number of regional trade blocs already exist in Africa, all with different rules and regulations and at different stages of integration. 'Not only could those blocs slow down the building of a free trade area. All of them have struggled to take advantage of free trade agreements even on a smaller scale,' she cautioned.
Another big question will be how to integrate geo-political hotspots like Zimbabwe, Sudan, Somalia and Libya in such a trade agreement. 'It remains to be seen if we will be able to negotiate the economic asymmetries on the continent,' added Pheko.
© Inter Press Service (2011) — All Rights Reserved. Original source: Inter Press Service