aid for trade in comesa: past experience, lessons learnt and the way forward

CTA Briefing No. 3 Can Aid Fix Trade? The New Aid for

Trade Agenda

Presentation on

Aid for Trade in COMESA: Past Experience, Lessons Learnt and

the Way ForwardBrussels

5 December 2007

James Musonda

Outline of presentation1. Background to COMESA2. COMESA’s Trade Regime3. Trade policy regulation and trade development4. Building the region’s productive capacity5. Trade-related infrastructure6. Trade-related adjustment7. COMESA Fund as an Instrument for Aid for Trade

CTA Briefing No. 3 Can Aid Fix Trade? The New Aid

for Trade Agenda

1. Background to COMESA

COMESA is a regional grouping comprising 19 MS namely Burundi, Comoros, Congo DR,Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Libya,Madagascar, Malawi, Mauritius, Rwanda, Uganda,Seychelles, Swaziland, Sudan, Zambia andZimbabwe with:

Combined GDP (2005) - US$275 BillionPopulation (2005) - 390 millionTotal Trade (2005) - US$160 Billion


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1. Background to COMESA cont’d…

COMESA’s vision is to attain a fully integratedinternationally competitive regional economiccommunity;

- a community within which there is economicprosperity with high standards of living of its people, with political and social stability and peace;

- a community within which goods, services, capital and labour move freely across borders.


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2. COMESA’s Trade RegimeCOMESA has a Free Trade Area among 13 of itsmembers and plans to launch a Customs Unionin December 2008.

The region has clear and streamlined Rules ofOrigin, trade defence regulations, a regionalcompetition policy ad regulations and a disputesettlement mechanism involving a Court ofJustice.It has a trade and development bank and sectoraldevelopment institutions.


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3. Trade Policy Regulation and Trade Development

COMESA has developed a Free Trade Areapremised on rules. COMESA has regulationsrelating to safeguards, unfair trade and anti-competitive practices;

COMESA has developed practical rules of originwhich limit trade deflection and maximiselegitimate intra-regional trade but are simple tounderstand and more importantly, to apply.


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3. Trade Policy Regulation and Trade Development

cont’d …The region has adopted international trade policytools including the HS classification and the GATTValuation Code.COMESA has also adopted trade facilitationinstruments including single Customs Declarationdocument, a carriers licence, the Yellow Card, axleload limits, harmonised vehicle dimensions. Thesemeasures and the regional integration efforts havecaused intra-COMESA trade to grow at a relativelyhigh rate.


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Trade Agenda4. Building the region’s productive capacityOne of the major challenges of the region isovercoming supply-side constraints. The regionconsiders human resource development,investment in plant and machinery, research anddevelopment as key elements of its productivecapacity.

While efforts continue, esp. through sectoralinstitutions, a lot still needs to be done to raise theproductive capacity of the region. The slow pace of integration in some countries is due to limited human capacity.


Trade Agenda5. Trade-related infrastructure

Another constraint that goes with limited productive capacity that significantly raises thecost of doing business in the region is the poorstate of the region’s infrastructure... road andrailway networks, waterways, air and sea portfacilities, energy generation and distributionfacilities , and harnessing of water.

Enormous resources are required by way of initialcapital outlays and in maintenance to sustain thefacilities.


Trade Agenda6. Trade-related Adjustment

Adjusting to regional integration does not occurwithout a cost. Economic liberalisation andstreamlining of tax structures have led to negativeresults in the economies of most COMESAcountries.

It is, therefore, essential that adjustment support beprovided to these countries if they are to continuewith further integration into the global economy,integration that’s more equitable and seen tobenefit more the poor of the world.


Trade Agenda7. COMESA Fund as an instrument for AfT

To address productive capacity and infrastructureneeds, to address adjustment costs associated withintegration and economic reforms, COMESA hasestablished a COMESA Fund as vehicle formobilising resources.

The COMESA Fund has a Adjustment Facility toaddress costs that may arise from implementingregional integration measures including tradereform and being part of the FTA and the CustomsUnion.


Trade Agenda7. COMESA Fund as an instrument for AfT cont’d…

The COMESA Fund also has an InfrastructureWindow intended to mobilise resources for theconstruction and maintenance of infrastructure,and for addressing some of the limited productivecapacity.

The COMESA Fund has been ratified and is now inforce. COMESA is, therefore, looking to resource-rich countries and development agencies tocontribute to the Fund and enable it address themany challenges the region faces.


Trade Agenda7. COMESA Fund as an instrument for AfT cont’d…

COMESA is offering the North-South Corridoras a first candidate for Aid for Trade resources toaddress trade-related infrastructure.

COMESA also has identified a number of importantinfrastructure projects that would greatly enhancedevelopment and integration once implemented.Once adequately resourced, the Adjustment Facilityof the COMESA Fund will encourage a lot morecountries to integrate further into the regional andglobal economy.


Trade Agenda


Trade Agenda

That’s all…

Thank you for your kind attention

aid for trade in comesa: past experience, lessons learnt and the way forward

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