Need for greater in­te­gra­tion in Africa

Lesotho Times - - Leader - l Azevêdo is WTO Di­rec­tor-gen­eral.

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

roberto Azevêdo

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