The Southern African Development Community (SADC) has officially launched here its Free Trade Area (FTA), creating one of the largest free trade zones on the African continent with some 250 million people.
Under the theme "Free Trade Area for Growth, Development and Wealth Creation," the launch of FTA scores a significant step toward SADC's ultimate goals of a custom union in 2010, a common market in 2015 and a monetary union in 2018.
It is widely seen here that SADC will face many challenges in implementing the free trade in the bloc in coming years.
With its membership varying greatly in size, resources and capacity and within it that there are divergent national interests, only eleven of the 14 SADC member states have establish FTA, which creates a regional market worth 360 billion U.S. dollars and an economic growth rate by up to seven percent a year.
Three of SADC member states, namely Angola, the Democratic Republic of Congo (DR Congo) and Malawi are still addressing challenges facing them in the implementation of the Protocol on Trade and they will join FTA in the future.
Angola's offer of tariff reduction is technically ready and will be considered by the Cabinet before representation to SADC by August this year.
DR Congo is still working toward participation in FTA.
Malawi will consider further tariff reductions on trade commitments during the 2008/2009 national budget and will report progress by August this year.
The three countries have lagged behind the other member states in joining FTA and when they will be fully prepared in joining FTA is still in question.
FTA is launched as scheduled without the participation of Angola and DR Congo, a blemish in SADC's first step toward integration.
With the launch, FTA will allow goods originating from SADC members to enter neighboring countries free of customs duties.
To qualify for duty-free, goods have to meet certain criteria as spelt in the agreed rules of origin, which poses a real test for all SADC member states, especially for those weaker economies.
Beside, there are still some factors that impede the future implementation of FTA.
The intra-SADC trade has been growing in the past year but it is still low at around 25 percent, the bloc said.
The volume is too low for a free trade zone. Much of intra-SADC trade is concentrated in the Southern African Custom Union (SACU) while most international trade is still taking place under bilateral agreements among SADC member states or with former colonial powers.
The practices have made very little utilization of the Protocolon Trade, which was signed by SADC members in 1996 and came into force in 2000 following a ratification process.
The main instrument of trade liberalization as provided for in the protocol has been the elimination of customs tariffs and non-tariff barriers on the bulk of intra-SADC trade.
Intra-SADC trade is also constrained by lack of infrastructures, SADC admitted.
Many countries in the region have complained about the poor state of roads which is limiting the quick movement of goods.
At a recent meeting in Namibia, member states noted that poor infrastructure in the region is responsible for the high cost of goods especially in landlocked countries of the region.
They also stressed that there must be a master plan for the modernization of the railways for the region.
The increase in intra-SADC trade requires a vibrant transport infrastructure while seamless network are needed to interconnect land locked countries as well as link them to the major ports, SADC has said.
Mandisi Mpahlwan, Trade and Industry Minister of South Africa, which has taken over SADC chair from Zambia, said recently in a press briefing that infrastructure development is also an essential element for creating conditions that would advance the integration agenda of SADC and would have to be prioritised.
"It is my strong belief that the private sector has a key role to play, especially in the area of regional infrastructure," the minister said.
"This is an area that needs attention to ensure that we expand market, improve market access, and integrate national and regional markets. The lack of regional infrastructure is a major barrier to regional integration and development," Mpahlwan added.
Despite all the challenges, SADC, however, has determined in pursuing the economic integration and has already taken a solid step forward.
Source:Xinhua
|
Comment
Tell A Friend
Print Format
Save Article