Magazine article International Trade Forum

Is This Africa's Year of Trade?

Magazine article International Trade Forum

Is This Africa's Year of Trade?

Article excerpt

'Export or die' was a popular mantra used by Kenneth Kaunda, Zambia's first president from 1964 to 1991, to encourage domestic manufacturing of goods for export. This mantra is still relevant in many African countries, especially this year, which is shaping up to be Africa's year of trade. The specialized trade in raw materials is decreasing Africa's competitiveness, making diversification necessary.

As Africa's reputation as a viable location for investment increases, so does its significance in trade. Unlike the turn of the millennium, where Africa was brandished as a basket case, now, there is a renewed sense of optimism about the various improvements in social and economic indicators.

Take the 43 members of the Africa Group at the World Trade Organization (WTO) who lobby for the interests of the continent. This year's Ministerial Conference is taking place in Kenya and is the first in Africa, putting pressure on African countries to ratify the 2013 Trade Facilitation Agreement finalized by the WTO Ministerial Conference in Bali. The agreement aims to foster easier and faster movement of goods across borders.

Related regional integration--which encourages countries in close geographic proximity to, among other things, trade with one another--has been and will continue to be a top policy agenda item in Africa. Many African countries are physically small, have small domestic markets, poor standards (health, safety and otherwise) and find it difficult to compete on a global scale. Several of them produce raw materials, which have lower prices compared with finished goods. As such, regional integration has never been more important to encourage African countries to trade more within the continent, strategize to export value-added goods as well as cooperate on unified policy agenda items.

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DOHA FAILURE

The Doha Development Agenda, meant meant to lower trade barriers globally, has yet to receive consensus from members because of sector-related issues such as agriculture tariffs. Since the failure of WTO members to adopt it, there has been a proliferation of bilateral and plurilateral regional trade agreements.

The year 2015 in particular has been action-packed, with various intra-regional trade agreements such as the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP) and various African agreements.

Launched in June 2015, as an example of the latter, the Tripartite Free Trade Area (TFTA) integrated the East African Community (EAC), the Southern African Development Community (SADC) and the Common Market for Eastern and Southern Africa (COMESA). That covers a total of 26 countries and about 626 million people. The purpose of the area is to remove the overlaps that existed in the past between the various Regional Economic Communities, better harmonize the trading blocs and provide improved access to markets. At the moment the focus is on goods, and not yet services, which means there is even greater potential for growth.

On the other hand, the Continental Free Trade Agreement negotiations, which commenced in June 2015, seeks to create a continent-wide trading bloc. It would be an expansion of the TFTA.

Of course, in many African countries there are challenges that can make trade difficult, including poor infrastructure, restrictive immigration policies, corruption, failure to formalize informal trade or capture informal trade figures, and unclear border procedures. …

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