Southern African Development Community Law International Essay

Published Date: 02 Nov 2017

Introduction

The concept of creating a tripartite Free Trade Area (FTA) that joins together the East African Community (EAC), the Southern African Development Community (SADC) and the Common Market for Eastern and Southern Africa (COMESA) has gained currency and incitement in recent years.

The COMESA-EAC- SADC Tripartite Summit of Heads of State and Government held in Kampala, Uganda on 22 October 2008 gave the political support needed and motivation for the creation of this Tripartite FTA. The marked date for the establishment of the Tripartite FTA is 2012 as it was believed that all necessary basic work is expected to be completed.

To achieve the aim by the finalised date, it was more suitable to explain the concept of a free trade area. An FTA is established when two or more countries agree to eliminate duties and other restrictive regulations of commerce on substantially all trade in goods originating within these economies. Special rules had to be developed and used in order to identify the originating goods. The parties to an FTA had the right to apply their individual trade policies on trade with third parties. An FTA is therefore intended at encouraging and improving trade among the participating member countries.

Since an FTA agreement allows its member to grant more favourable conditions to its trade with other parties forming part of the FTA agreement, this would appear to violate the most favoured nation (MFN) treatment principle of the WTO which forbids any favouritism. The establishment of FTAs is, however, legalized through Article XXIV of GATT, the Enabling Clause to GATT and Article V of GATS which provisions give permissible exceptions to the MFN principle (WTO, 2007). These WTO legal provisions are basically meant to encourage liberalisation of trade in goods and services among WTO members. It is important that any FTA agreement complies with and is consistent with all the WTO rules governing trade and the prescribed conditions that an FTA must meet (WTO, 2008).

There are many FTAs that are already operating on the global trading field but for Africa in particular, the dream of COMESA-EAC-SADC Tripartite FTA will be the first and the largest FTA as it will join together the three most successful and biggest Regional Economic Community (RECS) on the African continent, comprising of 26 countries with a population amounting over 500 million people.

THE TRIPARTITE FTA CONCEPT

In 1980, the Organization of African Unity (OAU) Extraordinary Summit adopted a plan named the Lagos Plan of Action. This was done to show that OAU political leaders are committed to promote Africa’s economic integration, thus, facilitating the ultimate establishment of the African Economic Community (AEC). In 1991, the Treaty establishing the African Economic Community (The Abuja Treaty) was signed by the leaders in Abuja as a concretization of the commitments of the political leaders.

Whole Africa’s economic integration is picturised in the treaty of Abuja into continental customs union by the year 2019. To achieve the continental vision, Abuja considered establishing regional economic communities (REC’s) as building blocks, which will eventually team up to set up the continental customs union.

When Abuja Treaty came forward, many RECs consisting of SADC, COMESA and EAC were already present. The treaty was required to reinforce the REC’s that already existed and also encouraging the setting up of new ones. In Article 88 of the Abuja treaty, it is clearly stated that future and existing REC’s will be operational if AEC is established as the last objective. The envisioned strategy was phased and ongoing liberalization of regional and intra-regional trade, coordination and concomitance of activities of all RECs, the setting up of Free Trade Area and a Customs Union at REC level and ensuing formation of the proposed African Economic Community.

RESOLUTIONS OF THE UGANDA TRIPARTITE SUMMIT ON THE PROPOSED FTA

The Tripartite Summit of Heads of State and Government of COMESA, EAC and SADC was held on 22 October 2008 in Kampala, Uganda in the quest of the broader aim of the African Union, that is to stimulate economic integration of the continent, with the objective to reduce poverty, attain sustainable economic development and achieve economic growth. Additionally, the committee stresses on the fact that the tripartite agreement is a fundamental building bloc towards achieving the African Economic Community as describe by the Treaty of Abuja and said that the three RECs should instantly begin to work towards a merger for a single REC with the intention of fast tracking the realization of the African Economic Community.

In the field of trade, economic integration as well as customs, the summit agreed on a quick establishment of a Free Trade Area (FTA) grouping the members and the partner states of the three RECs with the main objective of establishing a single Customs Union. The Summit also advised the three RECs to undertake a study including, to the other set objectives, the following:

the development of a roadmap for the establishment of the FTA

the legal and institutional framework to strengthen the FTA;

measures to ease the progress of businessmen across the RECs;

The report generated from the study would then be shown to a special round up of the Tripartite Council of Ministers to determine the time frame for the establishment of the Tripartite FTA.

OBJECTIVE OF THE TRIPARTITE FTA

Among all the objectives present, the main one is to set up a FTA by considering the concepts of quota-free, tariff-free and exemption-free basis. This is to be done by associating the current SADC, COMESA and EAC FTAs. To substitute intra-regional trade in regions considered to be tripartite ones, a three-way FTA was envisioned to cover some corresponding programmes in the areas listed below:

Facilitating trade and promoting cooperation of trade

Collaboration and organization of health and industrial standards

Contest discriminated trade procedures and import flows

Settlement of disputes by using agreed and peaceful mechanisms

Using basic guidelines to identify inland cost of transportation as a section of value added in production

Relaxed restrictions considering certain thoughtfulness on business person’s movement

Easing up of some main service area based on current programs of the three groups

Promoting value added and transforming the area into a knowledge-based and information economy via stable use of rational property facts and information & communication technology

Developing vigorous infrastructure plans for the purpose of merging regional market by means of interconnectivity of all means of transport and promoting competition among ample suppliers of necessary resources.

STATUS OF INTEGRATION PROGRAMMES IN COMESA, EAC AND SADC

Even though SADC, EAC and COMESA are most likely to have the same long term aims, it might not be the same for the rate of provincial integration in terms of developing trade and cooperation in the three sections. Some REC’s have evolved at a rapid rate than others in some areas. Actually there are negotiations among the three RECs with the European Union about the economic Partnership Agreements. The discussions are progressing at different levels and it is to be seen how these Economic Partnership Agreements will be accomplished in the tripartite set up. Here is a summing up of the set of circumstances in the three RECs by focusing on liberalizing trade.

COMESA

COMESA went forward in 1993, through the COMESA Treaty from the former Preferential Trade Area (PTA), which was in force in 1982. After 10 years, the PTA Treaty got transformed into a Common Market, then left room and anticipated for taking along new members. The PTA establishment and its transformation into COMESA matched with the objectives set by the Lagos Plan of Action and the Final Act of Organization of African Unity. Having a population of more than 300 million people, COMESA turned out to be the outsized regional economic community of Africa. Since that time, COMESA has attained massive progress in the agenda of liberalizing trade. This led to introducing a free trade area (FTA) as a crucial mechanism for easing up the intra-COMESA trade in the year 2000. The free trade agreement of COMESA’s success can be calculated through the perspective of intense increase in the capacity of intra-COMESA trade rising up to US$15.2 Billion in year 2008 while it was US$3.2 Billion in year 2000.

In the year 2008, COMESA’s Customs Union was finally launched in Victoria Falls, Zimbabwe, in its conference after an interruption. Despite the fact that it was a political launching, it made a noticeable significant breakthrough in the programme of the region’s economic integration. The current operationalisation of the Customs Union is now only waiting for some remaining preliminary task in progress currently.

Based on its economic cooperation, COMESA’s main aim is to establish a Monetary Union. The Regional Economic Community has this aim attached to its vision and it has to be a completely incorporated, a worldwide competitive REC with high standards of living for its population all set to unite into an economic community of Africa.

EAC

The EAC was originally established in 1967. However, there were many disparities between the original founding members, Uganda, Kenya and Tanzania, led to its collapse. In November 1999, an agreement for the re-establishment of the EAC was signed for a new EAC establishment in the year 2000. In 2007, having accepting Burundi and Rwanda in 2007 as new members of the EAC has brought with their admission a population amounting over 120 million people as well as about a GDP estimated about $41 billion.

Taking into account the irregularities within the region, the EAC, in terms of Articles 2 and 5 of its Treaty, established a Customs Union as the entry point of the EAC, before liberalizing trade amongst the member states to establish an FTA.

According to the Treaty, the main objective of regional integration in the EAC is the creation of a Political Federation in 2015. The Federation would be guided by three stages; the Common Market, the Customs Union and the Monetary Union

SADC

The SADC Protocol on Trade which was enacted in the year 2000 has witnessed most of SADC countries liberalising their trade in goods to a level that has permitted the creation of the SADC Free Trade Area in August 2008. Principally, a regional market worth approximately $360 billion a year was created by the FTA in a region with a population of over 200 million. The establishment of the SADC FTA has been beneficial, there was duty free on 85% of all intra-SAC trade and the region has committed itself to eradicating all tariffs by 2012. This aim did not appear impossible for countries which were already in the SADC FTA

Out of the 15 SADC Member States, 11 are participating in the FTA. Angola, DRC and Malawi are still to liberalise their tariffs to the required significant level while Seychelles only rejoined SADC recently. With a small delay, the regional community was in the process of preparing to launch its Customs Union in 2010. However, with a few months remaining before the year ends and with extensive preparatory work was to be done, it was increasingly becoming too ambitious a target to achieve. Nevertheless, in August 2010 it was expected that the SADC Heads of State and Government Summit would make a pronouncement on the way forward regarding the establishment of the SADC Customs Union.

The Tripartite Region and the African Union

According to COMESA (2010), I was estimated that exports among the 26 Tripartite countries grew from USD 7 billion in 2000 to USD 27 billion in 2008, and imports increased from USD 9 billion in 2000 to USD 32 billion in 2008. This unbelievable increase was mostly encouraged by the FTA programmes of the three institutions. These demonstrate that much more can be achieved by the three RECs under an FTA arrangement.

The table below shows the membership, GDPs and populations of the three RECs in the tripartite arrangement in relation to those of the African Union as a whole.

The figures in the table underline the importance of the prospective in the tripartite region and how essential element the Tripartite FTA arrangement, if successful; will be to the realisation of the African Economic Community.

BENEFITS OF ESTABLISHING THE TRIPARTITE FTA

It will be unreasonable to look only at the best part; the objective of establishing the free trade agreement Tripartite without scrutinizing the benefits that would be ensued to the partner regions or countries to the foreseen FTA. If a tripartite free trade agreement is well settled and extensively skilled, a number of benefits will be provided to the concerned parties in many related areas rather than the trade area solely. As per the point of view of partner countries, below are the benefits that they are supposed to enjoy in the FTA Tripartite.

Enlarged market and increased market access for products.

The main aim of establishing a Free Trade Area Tripartite is to have a considerably greater market by way of specific economic space as compared to the three RECS’ present. Hence, there will be production on a larger scale leading to eye catching investment.

The three particular regional economic communities; the SADC, COMESA and EAC have a population of more than 500 million people altogether and also USD 624 billion in terms of collective Gross Domestic product (GDP). In all the countries present in the regional economic countries, 26 of them represent half of the members of the African Union (AU). Their merged population comprises of 57% of the total population of the African Union. As a result, the free trade area of the tripartite will create an extended market for both the traders and producers in the partner states present in the FTA.

While taking into consideration the theories of variable asymmetry and geometry, it can be observed that the SADC and COMESA free trade agreements do not include all the SADC and COMESA member countries. The best example is countries like Malawi, Democratic Republic of Congo and Angola are not yet giving their contribution in the Southern African Development Community’s free trade agreement despite being part of the SADC. Likewise, other countries like Ethiopia and Eritrea follow the same path of not contributing wholly in the FTA of COMESA despite being country members of COMESA. The same situation is found in the Eastern African Communities (EAC). Since in each of the three regional economic communities, there are disparities in the level of liberalizing trade, some states in the tripartite area, at present, have access to only parts of the SADC, EAC and COMESA markets at Most Favored Nation rates. These rates are not shown favoritism as they are requested by all WTO members. The setting up of the three – way FTA is supposed to eradicate non-tariff and tariff restrictions and all other barriers of commerce. This will help in improving the access to market, to partner states, to the enlarged market of the three-way tripartite. If it is effectively applied, the entire member states in the tripartite FTA will be capable of trading without any barriers with almost all the African continent.

Increase in economic growth

By establishing the FTA Tripartite, there will be a probable increase in the economic growth which will arise from the enlarged regional market. Across all the sphere of influence, the economic activity is, without any doubt, much more in a larger market than in a smaller market. Such an increased activity will be advantageous, as poverty in the midst of the population of the area, will be alleviated in the whole tripartite region, resulting from economic growth. All this is done according to the treaty of Abuja’s objectives.

Elimination of challenges associated with overlapping membership

The tripartite agreement will help to tackle some current challenges, which resulted from overlapping membership, by proceeding with the ongoing coordination and harmonisation schemes of the three institutions to accomplish convergence of programs and activities. By achieving this, the arrangements will contribute enormously to the continental integration process.

Out of the 26 countries in the region of the tripartite, 13 of them belong to at least to two regional groupings (appendix 1). Lots of development has already been noted in each of the three RECs. In 2008, SADC instigated its FTA as well as scheduled the launching of its Customs Union in 2010. On the other hand, COMESA did the establishment of its FTA in 2000 and its customs union in 2009. EAC was not an exception, it did same by establishing its customs union in 2004 and is said to be currently working to set up its Common Market.

It had become a necessity to tackle overlapping trade arrangements of the three RECs were becoming more and more problematic and this resulted as deepening regional integration. The need for the RECs to merge or synchronise their programmes could be consequently exaggerated.

A country forming part of more than one FTA was not a problem and this is case has already been witnessed with some of the countries forming part of the tripartite region. These countries have deeper integration into the level of Customs Unions and problem will eventually exist as a country cannot belong to more than two customs unions because of the application of common external tariff (CET) in a Customs Union. The establishment and conciliation of the Tripartite TFA would benefits the tripartite region as a means to bring with itself harmony as well as eliminating problems related with the various memberships to the three RECs.

Opportunity for increased foreign direct investment (FDI)

From the year 2000 to 2008, an increase in the cross- border investment among COMESA was witnessed from a result of an increase in trade. This conforms to the fact that trade is one of the catalyst to sustainable economic growth and development.

Although having witnessed this increase in investment, there was still a dire need of foreign direct investment by countries n the tripartite region. This need was mostly for maintaining the stimulation of the economic growth as well as revival in countries.

The Tripartite FTA would help improve the investment climate in the entire tripartite region and thus attract new investors in fields such as mining, manufacturing, financial services, agriculture, forestry, telecommunications and energy which are fundamental for the economic development of the tripartite region.

Stimulant for increased industrialization

In the tripartite area, businesses will be more motivated if there is a consequent increased demand for products resulting from a larger market created by the tripartite FTA for the particular tripartite area. This will enable businesses to work towards foreign investors seeking partnership, in order to increase their production dimensions and get access of new companies that can manufacture multiple products with the aim of exploiting larger and newer market of Africa. After analyzing the intra-COMESA trade, it showed that the trade executed consists mainly of primary agricultural merchandise with actual trade figures showing US$15.2 Billion realized in the year 2008. The manufactured goods had a very small percentage. With FTA in those tripartite states, the level of industrialization increased to such a level that it was certain to have value added to the primary products so as to gain higher returns on the world market. With the value added concept on the raw materials of that area will ensure benefits to producers, hence, influencing positively the employment and wealth creation inside the tripartite area.

Countries in the same hallway in the region of FTA, with the possibility to develop combined infrastructural programmes, will be likely to provide more incentive for industries to expand across the whole area with improvement in connection and the manufacturers will work towards using cost benefits for their own benefit which will arise from being close to vital raw materials.

Improved competitiveness of products

By eliminating import duties under the proposed FTA, this will help countries in the tripartite region to import raw materials at a lower cost from Africa. This will consecutively decrease the production cost of goods produced for export thus making them more competitive in the both regional and international market.

Countries can specialised itself in areas where they can enjoy competitive advantage due to access to larger market. Due to the different natural and other endowments of the different countries in the tripartite region, there is variation in competitive advantage of partner state in the Tripartite FTA. Such advantages and variations can be attractive aspect for investment.

Currently, raw materials for countries in the region should be bought outside Africa and most of the time the cost is expensive for transportation and other shipping cost. The latter results in a rise in production cost which in turn affect the final price of the goods making them uncompetitive on the local, regional as well as international markets. Importing the products or raw materials from Africa under the tripartite agreements would not only lower the transportation cost but also decrease cost of production and therefore making the products more competitive at least price.

Still, for the products to be competitive in the Tripartite FTA, lots efforts will have to be made in the three regions so as to reduce cost associated with inefficiency in the production systems, border delays among others which have till now contributed to the uncompetitiveness of some of the region’s products on both local and international markets.

Exploitation of untapped natural resources

Having 49% of Africa’s total land resources, the combined COMESA, EAC and SADC region is endowed with many valuable natural resources which, with an increase in FDI, can be exploited for the benefit of the region. Currently, due to low FDI in the regions such as agriculture, forestry, mining and energy and manufacturing, some of the natural resources are still unexploited. By creating a conducive environment for investment with the help of the proposed Tripartite FTA, the region would be in a better position to exploit its previously unused natural land resources through cheaper as well as more efficiently resulting in producing goods a more valuable and competitive on international market.

Development of good infrastructure

Having a good infrastructure is undeniably an attractive factor for new investment. Moreover, having a good infrastructure not only makes cost of production low but also makes production efficiencies high. Good infrastructure is therefore essential for the success of the Tripartite FTA because if the infrastructure is not good, this can impede effective marketing, efficient and cost-effective production and decrease cross border movement of raw materials and finished goods, among other key regions. The simple establishment of the FTA will most likely stimulate investment in joint infrastructural development programmes as associate countries seek to unlock all the potential benefits of trading under the Tripartite FTA.

Purpose of the proposed FTA

For the proposed tripartite FTA to bring forward the foreseen benefits to the member countries, the tripartite free trade area is expected to pursue for protection of main areas among the others. That is, investment, trade of goods & services, the technical barriers to trade, competition policy, customs cooperation, electronic commerce, intellectual property, rules of origin and dispute settlement. A particular purpose like that would certainly make FTA a comparatively comprehensive one. It is briefly explained below, the aim for including some of the main areas as a necessity.

Elimination of tariffs and quotas on trade in goods

Since duty and quota free movement of goods is an important feature of any FTA, there was an insertion of a liberalisation of trade in goods was necessary and unavoidable in the FTA agreement. By removing tariffs on intraregional trade will result in a decrease on the costs of the acquisition of necessary raw materials and production. This will lowers the cost of products in the regions and therefore becoming more accessible to the area and more competitive on international market.

A regime of sensitive products on which duties and quota free market access is restricted should be provide by the Tripartite FTA to parties so as to protect their sensitive industries. But, a period of maximum two years should be allowed for the regime after enactment of the agreement. This period should allow for gradual tariff alignments and adjustments by the concerned parties before all trade in goods in the tripartite region becomes free.

Liberalising trade in Services

Although relatively a sector that many developing countries consider delicately sensitive and new, it is important to note that free trade in services would immensely benefit the tripartite region. Individual countries in the tripartite region have varying strengths and competitive edges in different service sectors. Allowing for free trade in services would thus promote mutually beneficial service trading arrangements between and among different countries in the FTA region. The nexus between trade in goods and services needs to be always recognised, appreciated and strengthened as without certain services even the liberalisation or freedom of trade in goods would not achieve the intended objectives.

It is gratifying to note that, in the tripartite region, the three RECs have already noted the importance of trade in services in their regions. In COMESA, the Regulations on Trade in Services were adopted by the Council of Ministers in June, 2009 while the guidelines for negotiations on trade in services were adopted by the Committee on Trade in Services in September the same year. In SADC, the importance of services and the need to liberalise trade in services within SADC are recognised in Article 23 of the SADC Trade Protocol. Discussions are underway at the Trade Negotiation Forum (TNF) for liberalising trade in services under the framework of the SADC Protocol on Trade in Services. At the EAC, trade in services is under negotiation under the framework of the Common Market Protocol which has free movement of services as a key component. The negotiations are in line with Articles 5 and 76 of the Treaty Establishing the EAC.

While services on their own are important in an economy, they also play a significant part in the entire goods supply chain. It is therefore necessary that there be efficient and cheap services in the Tripartite FTA and for this to materialise, the FTA has to liberalise trade in certain services considered essential for the whole region. Different countries in the tripartite region have different strengths and competitive advantages in different service sectors. This is good for the tripartite region in that, with liberalisation, partner countries can easily trade in services in accordance with their advantages and needs. One hopes that when properly crafted, the Tripartite FTA agreement would, among other things, provide for the liberalisation of trade in certain services across all the four modes of supply.

The inclusion of trade in services in the Tripartite FTA agreement has the support of the WTO rules. Article V of the WTO’s GATS provides for economic integration between members who may enter into agreements for the purposes of liberalizing trade in services between and among the parties to such agreements, subject to a set of conditions. When they are eventually undertaken, the Tripartite FTA negotiations would need to take into account commitments already made by the parties at the WTO and other groups. In order to provide real benefits to member, the Tripartite FTA should seek to cover more service sectors, than those in respect of which WTO members in the region have made commitments at WTO.

Investment

Foreign Direct Investment (FDI) and all other types of investment is badly needed in the tripartite region. The fields in which investment in desperately and urgently need are mining, agriculture, manufacturing, telecommunications, infrastructure development, financial services and telecommunications. With the signing of the tripartite FTA, there should be further investment opportunities that need to open up in the region of these areas. It should also enable an investment protection mechanism and framework to be established in order to alleviate any doubts that potential investors might be having. Investment needs will consequently arise in those tripartite areas to follow the mutual protection agreements that already exist with other countries that are present beyond and also in the region. Thus, the need for the tripartite free trade agreement will, among all other things, obviously provide attracting and protecting of FDI.

At the level of multi-lateral trade agreements, GATS made provision for foreign investment in services below the supply of services of Mode four. Any particular agreement in the proposed tripartite free trade agreement will have to abide by the provided principles on the Trade-Related Investment Measures (TRIMS) in the WTO agreement.

Competition policy

It is necessary to have a fair competition in the proposed FTA so as regionally as well as mutually profitable trade to be achieved. The Tripartite FTA agreement must therefore cover this important trade-related area. Having already being involved in the setting up of a regional policy under the COMESA, Tripartite region will have no problem in negotiating for a tripartite competition policy.

The Tripartite FTA will consequently use what COMESA and the EAC have already established a propos competition policy. Presently, the WTO does not have any authority on competition. However, through the WTO principles of non-discrimination, monopoly, national treatment and others as protected in the mutual agreements on trade, competition is still indirectly covered to some degree.

Technical barriers to trade (TBT)

Currently, in different countries of Africa, there are many contrasting technical standards on a range of commodities. SADC and COMESA did make some notable effort to make the standards uniform. In order to have mutual agreement and understanding on the standards, the tripartite free trade agreement needs to provide certain regional standards that will have to be adopted by all the required members. In doing so, technical barriers to trade will be removed as goods and services will travel freely from one country to another without having to conform to the different standards.

The WTO Agreement, in Article ll, on Technical Barriers to Trade (TBT), suggests the minimum level of requirements to be satisfied in any technical regulations, together with those included in the free trade agreement. Under the tripartite FTA, the balanced standards have to abide by those requirements.

Customs cooperation

The responsibility of customs in successfully implementing the Tripartite FTA is really essential. This is because only the successful implementations the Tripartite FTA arrangements will results to the expected benefits to the FTA members and customs ensuring duty free, quick and smooth cross-border movement of goods in an FTA. Border delays represent a very high component in the landed cost of both imports and exports in Africa.

To ensure efficient as well as to facilitate customs procedures, the need for a good cooperation in customs is necessary as products move across the borders in the FTA cannot be exaggerated. Still, cross border clearance of goods traded is the responsibility of the customs authorities. Accordingly, customs are responsible for issues that are related to administration of rules of origin, advance rulings, customs valuation in terms of the WTO Customs Valuation Agreement, HS classification and border enforcement. Therefore, providing a framework for customs cooperation in all these regions by the proposed Tripartite FTA would be important so that trade is facilitated in the tripartite region.

Rules of origin

FTA makes use of rules of origin so as to ensure that only goods originating from the free trade agreement are the one to enjoy quota-free and duty-free access to market in the FTA. It is important for the tripartite FTA to build a set of rules of origin that need not be too restrictive but should be effective enough to be able to identify the goods originated in FTA with that of goods not originated in the FTA. The most appropriate way to start to develop the new set of rules will be to consider the rules of origin that are currently present under EAC and COMESA as they are alike in architecture. Regarding this situation, the standardized rules of origin in the tripartite free trade agreement would mainly require to bring on board the rules of origin of SADC to turn it into a further user-friendly COMESA and EAC rules architecture. It is of a greater importance for the rules of origin of tripartite FTA to raise the value addition in the FTA area, thus, allowing for local goods to be sourced via cumulating of origin where a product can be processed progressively in more than one FTA partner countries before exportation.

To apply non-preferential trade policies, such as countervailing duties and anti-dumping, MFN treatment, safeguard measures and any other discriminatory restrictions or measures, it is of a necessity to establish both a set of the preferential and non-preferential rules of origin in line with provisions made in the WTO Agreement on Rules of Origin.

Intellectual Property

Each country has some form of laws on the protection of intellectual rights and with its acceptance and rise in importance; there is a higher need in providing more protection to such rights. Intellectual property is directly linked with innovation and in a free trade area such as the proposed Tripartite FTA, innovation is to be encouraged hence the need for protection is important. This is so because benefits can be exploited both ethically and formally by all parties to the Tripartite FTA having protection against piracy. Provision for trade in intellectual property should therefore be made by The Tripartite FTA. The principles preserved in the WTO Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS) should make the basis for such provisions in the Tripartite FTA Agreement.

Rules of origin

FTA makes use of rules of origin so as to ensure that only goods originating from the free trade agreement are the one to enjoy quota-free and duty-free access to market in the FTA. It is important for the tripartite FTA to build a set of rules of origin that need not be too restrictive but should be effective enough to be able to identify the goods originated in FTA with that of goods not originated in the FTA. The most appropriate way to start to develop the new set of rules will be to consider the rules of origin that are currently present under EAC and COMESA as they are alike in architecture. Regarding this situation, the standardized rules of origin in the tripartite free trade agreement would mainly require to bring on board the rules of origin of SADC to turn it into a further user-friendly COMESA and EAC rules architecture. It is of a greater importance for the rules of origin of tripartite FTA to raise the value addition in the FTA area, thus, allowing for local goods to be sourced via cumulating of origin where a product can be processed progressively in more than one FTA partner countries before exportation.

To apply non-preferential trade policies, such as countervailing duties and anti-dumping, MFN treatment, safeguard measures and any other discriminatory restrictions or measures, it is of a necessity to establish both a set of the preferential and non-preferential rules of origin in line with provisions made in the WTO Agreement on Rules of Origin.

LATEST DEVELOPMENTS ON THE PREPARATIONS FOR THE TRIPARTITE FTA

After the tripartite summit that took place in the year 2008, there has been some progress in achieving the implementation of some of the Summit’s resolutions for the setting up of the tripartite free trade area. Among all the achievements, the notable ones are listed below:

A roadmap study, for setting up the FTA tripartite, has been finalized by the secretariats, taking into consideration the entire institutional and legal framework and also monitoring the movement of business persons.

The draft instruments, along with the report of the study, were passed around to the member countries and were also introduced in formal meetings of partner countries at the REC level. The member countries considered the report, and encouraged each other to carry out consultations and provide their comments.

The draft instruments have been consulted by each of the three REC’s at the REC level, and by some member countries at the national level. The draft instruments that have been developed till now include the annexes and tripartite FTA agreement, rules of origin, modalities, tariff liberalization, the negotiating time table and the road map.

The secretariats of those three REC’s, carried out country missions together to seven member countries during the year of 2010, in order to assess the awareness for engaging in preparations for setting up of free trade area at national level. The visited member countries, were in support of the prompt setting up of FTA, and called for experts meetings in thematic areas, to begin straight away, well ahead of the tripartite Summit, also called for ownership of the process by the member countries rather than the process remaining a Secretariat-driven.

There has been regular meetings conducted by the tripartite Task Force, to agree on ways ahead on critical issues and was also agreed to have the next tripartite summit held in south Africa during the first three months of the year 2011.

The member countries have had tripartite workshops held on non-tariff barriers and also on rules of origin which produced the draft instruments.

The private sector also had a tripartite meeting on the rules of origin endorsing the draft annex of the latter.

Partner countries had a workshop held on rules of origin and there were certain critical issues that to be considered, mainly the origin criteria.

Meetings were held on sanitary and phyto sanitary measures by the three secretariats, also on customs operation, in order to conclude, at an advanced stage, the tripartite work program, which has not yet been done though.

Secured reasonable funding for the activities of tripartite.

On 24-25 January, a tripartite meeting was held based on the FTA agreement, strategy and vision, rules of origin, tariff liberalization modalities, and also the road map. Good progress was observed throughout the meeting sessions, except one on rules of origin, where the meeting was called for more time and another full-scale meeting of the Member countries. To deal with the tripartite matters, units were established by the secretariats, the units would appear to be far too small when taking into account, the scale of the activities that need to be undertaken.