Status on the planned free trade zone from Cape Town to Cairo identified by the Department of International Relations and Cooperation.

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NATIONAL ASSEMBLY

FOR WRITTEN REPLY

QUESTION NO: 1748  (NW1974E)

PUBLISHED IN INTERNAL QUESTION PAPER NO 19-2011

Mr LS Ngonyama (COPE) to ask the Minister of International Relations and Cooperation:
Whether a free trade zone from Cape Town to Cairo is planned; if not, why not; if so, what are the (a) advantages and (b) disadvantages of such a trade zone that has been identified by her department?

REPLY:

Yes, a free trade zone from Cape Town to Cairo is planned. (a) The first step towards the realisation of this objective came about with the decision taken by the Heads of State and Government of Member States of COMESA, EAC and SADC to establish a Tripartite Free Trade Area at the inaugural Tripartite Summit held in Kampala, Uganda in October 2008. This was followed by the signing of a Memorandum of Understanding (MOU) on Inter-Regional Cooperation and Integration between COMESA, SADC and the EAC, signed by the Chairpersons of the three Regional Economic Communities in January 2011.
 
Further significant progress was recorded with the official launch of the COMESA-EAC-SADC Tripartite Free Trade Area (FTA) negotiations on the occasion of the Second Summit, hosted by South Africa on 12 June 2011 at the Sandton Convention Centre, Johannesburg.

In this regard, the Heads of State and Government endorsed the Declaration launching the FTA negotiations; the Tripartite FTA Negotiating Principles, Processes and Institutional Framework; the Pillars of Tripartite integration, as well as the Tripartite FTA Roadmap for the negotiations and the time-frames for the completion of the various negotiation phases that will underpin the work to be undertaken at the level of both Member States and Regional Economic Communities in the short to longer-term.

The endorsement of these important documents has provided an enabling platform to guide the negotiations in the years to come in advancing progress towards the ultimate goal of a Grand Economic Community of Africa.
 
The economic advantages implicit in the COMESA-EAC-SADC Tripartite Free Trade are clear. Presenting an expanded trade bloc, comprising 26 countries with a combined population of close to 600 million people, and a combined GDP of US$ 1 trillion by 2013, it holds the potential of unlocking Africa’s huge economic potential from the perspective of driving higher levels of intra-Africa and Inter-regional trade from its current low base of 10 percent.

South African manufacturing and export industries stand to benefit significantly from an expanded African market on the basis of the comparative advantage held as Africa’s largest and most sophisticated economy, underpinned by product diversification, good infrastructure, industrial capacity and a strong financial services sector.
From a sub-regional and broader continental economic integration perspective, there are significant economic and developmental gains to be derived from a strong and sustainable Tripartite FTA. In this regard, a larger, integrated and growing regional market will serve to attract foreign investment, as well as bring tangible benefits for traders and business people by removing obstacles to the movement of goods and people across borders.

It will provide a framework for addressing the logistics of moving goods across borders, including the efficiency of transport infrastructure, documentation, and the overall administration associated with cross-border trade.

Equally, it is foreseen that an integrated regional developmental approach, underpinned by the three pillars of market integration, infrastructure development and industrialisation will facilitate the development of regional manufacturing and production bases. This in turn, will contribute to product diversification and a departure from an over reliance on trade in primary to value added products through beneficiation. The building of manufacturing production capacity would furthermore facilitate access to value chains in the context of both South-South and North-South trade.

Importantly, the Tripartite FTA is viewed as offering an outcome to the vexing issue of multiple and overlapping membership of Regional Economic Communities that has bedeviled the regional economic integration process in SADC in particular.
(b) What are the disadvantages of such a trade zone that have been identified by her department? None.

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