Trade blocs: ‘Choose where you belong’

WASHINGTON – Overlapping African regional trading blocs are limiting progress towards integration of the continent as a single market, South African Finance Minister Pravin Gordhan has said.

Africa currently has at least ten regional economic communities (RECs), putting most countries in multiple trading blocs.Trade in these economic groupings is mainly focused on markets outside the continent, with only about ten per cent of African exports and imports happening internally, according to World Bank estimates.This proportion compares poorly to Europe, where 60 per cent of trade is intraregional and North America, where 40 per cent of trade is internal.’Countries in more than one regional trading bloc must choose where they belong,’ Gordhan said at an African trade conference held on the sidelines of the just-ended annual meeting of the International Monetary Fund (IMF) and World Bank.’Eventually, Africa should be one free trade area with a common customs union’ he said.According to the Assessing Regional Integration in Africa IV Report prepared by the African Union, Economic Commission for Africa and African Development Bank, the European Union and US consume between 50 to 60 per cent of exports by most African RECs.Fragmentation of the African market increases costs of doing business by denying producers economies of scale that come with large scale production, imposing tariffs and other trade barriers, raising freight costs and slowing down business by imposing numerous paperwork requirements.William Egbe, President of Coca-Cola South Africa, said the beverage company currently operates 163 processing plants in Africa’s 53 countries, which he said would need only half the number if the continent was a single free trade area.’That imposes costs on consumers who have to buy the goods,’ said Egbe.Mistrust and perceived competition between countries has held back integration in Africa, with each region establishing its own trade bloc and locking out others.Commissioner for Economic Affairs at the African Union, Maxwell Mkwezalamba, said previous efforts to convince countries to belong to only one REC had proved futile.He said an AU conference held in the Gambia in 2006 failed to make any headway on the issue, as only one country-which he did not disclose- committed to pull out of multiple memberships.- Daily Business (Nigeria)

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