Abstract
In the course of their evolution on the stylized path of economic integration, African RECs face a number of implementation challenges, beginning with a range of typical domestication issues for trade agreements. A fundamental problem is that African regional trade arrangements (RTA) are all based on two GATT/WHO clauses which do not require full internal liberalization. The chapter analyses how RTA implementation on this basis has led to a general logic of exclusions and exemptions in Africa’s trade relations and traces how entrenched empirical practice meant to serve developmental purposes—protection of the weakest economic actors—often caters to vested interests. Inconsistency is aggravated by special features such as bilateral country-to-country agreements within and across RECs, REC overlaps, and the complicated architecture of customs unions. In view of these features, it is difficult to say where present-day African RECs basically stand in their evolution. Therefore, the chapter looks at key indicators in order to gauge trade integration statistically. It is determined that the degree of trade integration is still low by any measure. The continued and as yet under-researched importance of informal cross-border trade (ICBT) is discussed. All evidence considered, African RECs remain contested in theory and practice.
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Notes
- 1.
About fifteen years ago, the UN Economic Commission for Africe tried in the 2nd ARIA report to create a comprehensive picture of such implementation steps. Although the assessment does not exactly follow exactly the sequence given above, the picture of full, partial or unknown implementation appeared extremely varied and is expected to still be like that (UNECA 2006).
- 2.
See below for the creative application of this rule of thumb in EU-ACP EPA negotiations.
- 3.
See the full listing in the World Trade Organization’s Regional Trade Agreement Information System http://rtais.wto.org/UI/publicPreDefRepByWTOLegalCover.aspx.
- 4.
Lunenborg has calculated for the ITC that 31.5% of tariff lines and 25.3% of import values of developing country FTAs notified to the WTO under the Enabling Clause after 2007 and until 2016 have remained dutiable, while the same quotas were 6.6 and 12.1% for FTAs under GATT Article XXIV (Lunenborg 2019). Even when assuming that dutiable intra-REC imports of the Enabling Clause FTAs will continue to fall over the lifetime of the agreements, they stretch the definition of a ‘free’ trade area.
- 5.
The terms ‘sensitive’ and ‘excluded’ products are used interchangeably here.
- 6.
The end of the last decade again saw this kind of unruly CET management in the EAC as member states rediscovered needs for stronger protection of ‘local industry’. A council of ministers agreed in 2018 on massive external CET changes which have subsequently been implemented with more or less rigour, with Tanzania being as usual most protectionist in the EAC. This move occurred along with erratic internal protective moves, using rules of origins as non-tariff barriers. The issue continued into 2019 with cement, sugar and tobacco. Tanzania accused Kenya of using irregular duty-free imports from outside Africa to weaken its producers. As an extension of the sugar conflict, confectionery from Kenya was denied duty-free entry into Tanzania—a unilateral move in defiance of the findings of a joint verification mission. Confectionery is surprisingly important to demonstrate the absence of an essential ingredient: trust.
- 7.
In order to give a realistic picture, it should be noted that in countries with imperfect internal tax administration REC-internal border checks also serve as convenient collection points for VAT and other national duties. Harmonized tax systems do not exist for communities very advanced on the ladder of economic integration, such as the EU, not even for VAT. Yet here, member states do not use border controls for revenue collection. At this stage, it becomes obvious how deficient internal revenue authorities mortgage the advancement of external trade integration, within an existing REC.
- 8.
See GIZ Factsheet “The Common External Tariff (CET)”, Abuja, undated.
- 9.
In this case, South African authorities carry out the task on behalf of SACU, though the new SACU protocol of 2002 stipulates otherwise.
- 10.
Brexit negotiations provide a perfect example for the importance of a customs union with a single customs territory. As the Republic of Ireland and North Ireland were not only in the EU but also within a common customs territory, all border checks between the two parts of the island were abandoned. Reinstated border controls would not have presented a problem for countries in other customs unions in the world, however the situation in Ireland with its peculiar political heritage was different. Negotiators searched desperately for innovative solutions for maintaining a joint customs territory across the English Channel, but without a customs union.
- 11.
At higher formal stages of integration, measures of trade in services and of actual labour and capital mobility would have to be added. Apart from the UNECA integration index, we are not aware of any such comprehensive statistics, except for estimates of worker migration.
- 12.
Interestingly, Africa also attracts about 3% of world foreign direct investment—to the extent that real FDI is properly captured in statistics, which is extremely difficult as systematically analysed by Kratzsch (2018).
- 13.
Double (or triple) counting of bilateral trades inflates the intra-REC shares, as it drives the numerator more. For the reasons given above, it would seem nearly impossible to eliminate such double counts because it would necessitate attributing trade flows from A to B to just one REC, depending on the tariff regime applied. This notwithstanding, Chidede and Sandrey have tried to identify these double counts and arrive at sizeable amounts, albeit only for the eight AU-officialised RECs: 7% for intra-African exports and 9% for intra-African imports since 2001, slightly decreasing over the last years, probably because of the departures from COMESA (Chidede and Sandrey 2018).
- 14.
HS is the Harmonized System of the World Customs Union for classifying traded goods.
- 15.
It is different for estimated effects of the sensitive products list of EAC. Kenya benefits most here. The true problem is for Rwanda and Burundi. In particular Rwanda fully opened up to EAC trade, but the country had little to offer to the region, so only imports grew and created an ongoing crisis of the trade and current account balance which the government and Rwanda Development Board is trying to counter with a deliberate industrial policy effort.
- 16.
The rich work of Kate Meagher on cross-border networks and entrepreneurs in West Africa with a focus on Nigeria is testimony of this (Meagher 2007; 2010), and more recently (2015).
- 17.
It is characteristic for the prevailing informality in West African trade that the warehouse-state of Benin (and other small West African states) was at times presented as an interesting ‘model’ to generate massive resources for developmental purposes see Bach (2016: 56 sqq.).
- 18.
We quote the lead author of UNCTAD 2013, Patrick Osakwe, with a more recent paper when it comes to the contours of transformative regionalism.
- 19.
One representative academic text at the time was the volume edited by Oyejide, Elbadawi and Collier (1997).
- 20.
Among many: (Schiff and Winters 2003; Winters 2001; Yeats 2000), and earlier contributions of Schiff. The same pessimism about regional trade integration is tangible throughout the work of the eminent South African think tanks TRALAC and SAIIA. However, they have to maintain a constructive attitude, as they are constantly consulted for high-end expertise on practical questions regarding how to advance African RECs, most recently the CFTA. The resourceful series Monitoring Regional Integration in Southern Africa, now in its 15th edition, is a testimony of this (Hartzenberg, Erasmus, Kalenga et al. 2018).
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Asche, H. (2021). The Reality of African Trade Integration—Challenges of Implementation. In: Regional Integration, Trade and Industry in Africa. Advances in African Economic, Social and Political Development. Springer, Cham. https://doi.org/10.1007/978-3-030-75366-5_3
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