Need for greater integration in Africa
THERE is a misconception, by some, that the World Trade Organization (WTO) is a barrier to regional integration. It is one of a number of misconceptions that do not match up with the facts like the perception that the WTO is a rich man’s club.
Today the WTO has 162 members and rising at all stages of development. 43 of those members are African countries and rising. The organization now covers around 98 percent of world trade.
It is a truly global organization, one where everybody has an equal say. And it is an organization which supports regional integration in Africa. Indeed, I would say that the need for better integration across the continent is indisputable.
It’s clear in the fact that intra-african trade remains just a tenth of Africa’s total trade. Or in the fact that the cost of moving goods within Africa is twice the global average. Or in the fact that an African company faces an average tariff of 8.7 percent when selling within Africa, against 2.5 percent elsewhere.
We need to tackle these barriers. And I would argue that doing this will help drive Africa’s integration globally. The statistics I just quoted show that the vast majority of Africa’s trade is with the rest of the world.
And existing WTO rules give a great deal of flexibility for members to pursue regional agreements. This is plain in the proliferation of such agreements that we have seen in recent years. But they are not a new phenomenon.
Indeed, regional initiatives such as the Southern African Customs Union predate the multilateral system by some decades. Different kinds of trade initiatives have always coexisted with the multilateral system. It is important that they are coherent and compatible, so that they can all help to spread the benefits of trade.
The economic map of Africa today is defined by these efforts: from Southern African Development Community (SADC), Common Market for Eastern and Southern Africa (COMESA), Economic Community of West African States (ECOWAS), and the East African Community (EAC) to the Tripartite Free Trade Agreement and, in due course, the Continental Free Trade Area.
The WTO supports these efforts. And the WTO’S Trade Facilitation Agreement provides a very practical mechanism for taking them forward. This Agreement, finalised in 2013, is about simplifying and standardising customs procedures, thereby reducing the time and cost of moving goods across borders. We expect that, when fully implemented, the Agreement could reduce trade costs by an average of 14.5 percent.
The East African Community has already applied a range of trade facilitation reforms, which have delivered remarkable results in cutting the time and expense of moving goods between countries.
Rolling out such measures would unlock the potential of many traders across the continent especially small and mediumsized enterprises. But, in order to benefit from the Agreement, first it must be ratified.
The Trade Facilitation Agreement is notable for the benefits it will deliver but also because it was the first multilaterally agreed deal in the WTO’S history.
We held another ministerial conference in December last year, in Nairobi and WTO members agreed to eliminate agricultural export subsidies.
This helps to level the playing field, so that farmers in developing countries may compete on better terms.
Of course domestic subsidies still exist, so there is much work still to do. But
“It’s clear in the fact that intra-african trade remains just a tenth of Africa’s total trade. Or in the fact that the cost of moving goods within Africa is twice the global average. Or in the fact that an African company faces an average tariff of 8.7 percent when selling within Africa, against 2.5 percent elsewhere