East Africa To Create Free Trade Area


Addis Ababa, Ethiopia – East African leaders agree plan to create Free Trade Area – Ahead of a key African Union (AU) Summit to discuss trade, East African leaders left the venue of a tense meeting on Sudan Friday after an agreement to create a Free Trade Area and an agreed plan to consolidate infrastructure expansion.


“We have agreed on three main points… the acceleration of regional integration through regional infrastructure projects, the establishment of a Free Trade Area in the Intergovernmental Authority (IGAD) region and on the issue of Somalia,” Ethiopian Prime Minister Meles Zenawi, said.


Meles said the leaders agreed unanimously on the creation of the Free Trade Area.


“Everyone has agreed we should go on with this plan,” Meles told journalists.


The announcement marks a new milestone for IGAD, which has been best known for its interventions in the region’s conflicts, but whose efforts to promote economic progress have been at best, non-visible.


The leaders said the details of the plan were contained in a communiqué adopted during their meeting, but IGAD Secretariat officials, said the document was not ready for public viewing.


East African leaders have been discussing the plan to move on to a Free Trade Area since 2009.


But in a region where countries often apply “protectionist” policies under the pretext of shielding local farmers from the effects of a liberated trade environment, chances for earlier progress might be dim.


Ethiopia is not a signatory to the Free Trade Area (FTA) under the Common Market for Eastern and Southern Africa (COMESA) and is currently negotiating the terms of joining the World Trade Organisation (WTO), while the more liberalized Kenya is also said to over-tax alcoholic drinks.


Countries in the region have lately sought the help of consultants to enable them move on with the proposed IGAD Free Trade Area, putting special emphasis on the possible losses of tax revenues.


Ethiopian trade officials sought the help of UN agencies to undertake a study on the policy adjustments that the East African nation would require to successfully implement the Free Trade Area deal.


While most of the IGAD countries are also in the COMESA, Uganda, Rwanda and Ethiopia have traditionally resisted joining the Free Trade Area and have expanded trade deals with foreign states.


African leaders, who have started arriving in Addis Ababa, for the 18th session of the AU heads of state and government assembly, are due to discuss a continental plan for improving trade.


AU officials say continental efforts are underway to improve the road, rail and port infrastructure.


Kenya is currently in the process of developing a regional port, rail, oil refinery and road connection project to link East Africa countries and create a sea tunnel to Equatorial Guinea.


The Lamu port infrastructure has been put on a fast-track, but has been discussed with Ethiopia and  South Sudan, although it was not immediately clear which programmes would make the IGAD infrastructure plan.


The AU is currently working on a plan to ensure that the entire Africa creates a Free Trade Area by 2017


via afriquejet.com

East African States are largely closed economies

The volume of trade amongst East African economies are far lower than trade with non-regional markets