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Comesa agrees to economic merger with Southern Africa

Discussion in 'Biashara, Uchumi na Ujasiriamali' started by Namtih58, Sep 25, 2008.

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    Namtih58 JF-Expert Member

    Sep 25, 2008
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    September 26, 2008: The plan to merge 26 eastern and southern African states into a single trading bloc with a combined gross domestic product of $625 billion is complete and ready for heads of State to sign-off next month.

    The economic merger will open borders throughout the eastern side of Africa, from Egypt to South Africa, upgrading the continent’s power in trade talks, and opening doors to both African and international producers to a hugely enlarged market.

    For Kenyan producers, it is a merger that foreshadows the progressive end of protection from South African imports, and increased competition at home.

    But the pay-off, for all, will be much stronger representation of African interests at the world trade negotiating table.

    In recent trade talks, East Africa has struggled to get the best terms possible across the competing cuts of different regional groupings.

    Last year, for instance, membership of Kenya, Tanzania and Uganda in different trading blocs nearly stalled the region’s negotiations with the European Union for a new Economic Partnership Agreement (EPA).

    World Trade Organisation rules require any member states participating in such talks to belong to a single trading bloc to avoid duplication of benefits.

    Eastern Africa’s participation in the EPA talks were complicated by the fact that Tanzania, a member of the East African Community (EAC) had three years earlier dropped its membership in Common Market for Eastern and Southern Africa (Comesa) in favour of Southern Africa Development Community (Sadc) while Uganda and Kenya are members of the EAC and Comesa.

    The proposed trading bloc that will bring together the Comesa, EAC and Sadc, is also expected to help member states overcome this dual trading bloc belonging that has become a thorny issue in Africa’s engagement with other trading blocs outside the continent.

    The merger should also add competitive pressure on Kenyan producers of goods and services, who will have to face unfettered rivalry from the much stronger South African firms.

    But it is also expected to broaden the market for Kenya which is currently the top producer of goods and services in Comesa where it accounts for more than half the trade volumes.

    Plans for the merger were agreed at a special meeting held in Nairobi, this week, ahead of a tripartite summit to be held in Kampala on October 20 to speed up economic and political integration in Africa under the Africa Union (AU).

    The integration project is expected to enhance cooperation among trade, investments, and infrastructure, open transport corridors as well as promote joint projects to boost of industrialisation, agriculture and food security among member states.

    It is also expected to provide a road map to the realisation of an enabling environment for free movement of people and goods among member states with the ultimate aim of creating a single market and investment area.

    “The EAC, Sadc, Comesa summit is considered historic because for the first time, since the birth of the AU, key building blocks of the African economic community will deliberate on how to integrate their territories and start moving towards a wider integration platform based on the Abuja Treaty for the establishment of the African Economic Community,” the team that met in Nairobi says in their final document.

    Trade ministers from the EAC and Comesa have endorsed the merger plans and their counterparts from the southern bloc have similarly expressed optimism over an expanded regional market.

    “Benefits of a bigger trading bloc are expected to come from the establishment of a Common External Tariff (CET) and related trade policy areas as well as overlapping membership,” a joint communique issued by Comesa Trade ministers last year said.

    Written by Allan Odhiambo.
    Soma zaidi hapa: Bd Africa
    Na Hapa: EAC