Picture: African News Agency (ANA)
Picture: African News Agency (ANA)

Africa must hasten regional integration

By Opinion Time of article published Nov 28, 2020

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Shannon Ebrahim

The fundamental message that Africa and Latin America should glean from the recent signing of the world’s largest ever regional trading bloc in Asia is that the implementation of regional integration must be fast tracked.

Intra-African trade needs to be accelerated within the African Continental Free Trade Area if the continent is to compete effectively in the global economy, and Latin American countries will need to do the same in their own region.

RCEP surpasses the ACFTA in size and value. The signing by 15 Asia-Pacific countries of the Regional Comprehensive Economic Partnership (RECEP), creating the world’s largest trade bloc, affecting 30 percent of the world’s population, has created a new competitive landscape in which we have to operate. There is no question that the size of the RCEP market and common rules will have a direct effect on the investment climate in emerging economies.

China, Japan, South Korea, Australia, New Zealand, Indonesia, Thailand, Singapore, Malaysia, Philippines, Vietnam, Brunei, Cambodia, Myanmar and Laos have all signalled a real commitment to multilateral trade negotiations. The deal pushes back against a protectionist trend in the US and India in particular, which sees these countries withdrawing inward and focussing on the need to become self-reliant rather than to expand free trade.

India has become more isolated as a result of pulling out of the RCEP last year over concerns that lower tariffs could hurt local producers through an influx of cheap Chinese goods. India’s concern is that China ships $60 billion more goods every year to India than it receives. India has arguably lost influence in a region where economic integration has become a top priority.

India’s Minister of External Affairs Subrahmanyam Jaishankar has defended India’s move away from trading arrangements in pursuit of self-reliance.

The fact that the US has been left out of the partnership is another indication that the US is also losing influence globally, and major economic players are moving ahead without it.

The Obama administration had pushed the Trans-Pacific Partnership (TPP) which it saw as a buffer to China, and President-Elect Joe Biden had championed the TPP as Vice-President.

But President Donald Trump refused to sign the TPP as it created job opportunities in countries like Vietnam and Mexico. Biden has been non-committal as to whether the US should join the TPP under his leadership, and prefers to rather focus on addressing the pandemic, economic recovery, and increasing investment in US manufacturing and technology. But the fact that staunch US allies like Japan and Australia have gone ahead and joined the RCEP suggests that the US is being left behind.

RCEP is undoubtedly a strategic and symbolic win for China in terms of its leadership in Asia, and countering US influence in the region. RCEP will ultimately provide a buffer for Beijing against the US, and enable it to foster stronger links with Australia, South Korea, and Japan.

This is the first time that China has entered a non-bilateral free trade agreement of this scale, and it will help China to sustain its advantages in global supply chains. RCEP will remove potential restrictions on sourcing products from China as it will put China in the same category as other countries. The Rules of Origin will set common standards for how much of a product must be produced in the region in order to qualify for duty free access.

There is a loophole in the agreement, however, whereby countries can maintain tariffs in a broad range of sectors, particularly in areas they deem important or sensitive. The agreement hardly touches agriculture, and eliminates 90 percent of tariffs, but over the period of 20 years.

Tariff reduction may be implemented over a protracted period of time, but that is the way in which the global economy is headed, and those nations which choose to erect trade barriers and impose higher tariffs on goods will find that they no longer compete as effectively as they once did.

Africa has huge potential for increasing intra-African trade, and needs to make a consolidated effort to source more of its imports from within the continent rather than from outside regions.

This will not only make Africa more self-reliant, but will greatly assist in times of crisis or pandemics when global supply chains are interrupted and African countries find they cannot source the materials and products they need.

Unfortunately current levels of intra-African trade remain low, and many African countries continue to import food from outside the continent despite the fact that there are many African countries which produce an extensive array of food products for export - South Africa being one of them. Whether citrus, wine, beef, fish, nuts, avocados or manufactured goods, we need to dramatically escalate our exports to the rest of the continent.

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