Trade Liberalization, Investment and Economic Integration in African Regional Economic Communities towards the African Common Market

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Author(s):
UNCTAD
31 Dec 2012
Pages:
77
ISBN:
9789210553780 (PDF)
http://dx.doi.org/10.18356/0728ae32-en

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This report reviews the progress in African regional integration processes, suggesting an option for revising the timeframe for accelerating continental integration. Several recommendations related to accelerating integration; the need for a development-driven regional integration; the focus on export value addition and diversification in manufactured goods and services; and, enhancing competition policy and attracting more foreign and domestic investment have been made. This report concludes that there is an urgent need to expand integration with regards to international trade.
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  • Foreword
    Achieving regional economic cooperation and integration in Africa that is people-centred and development-oriented is a key challenge, and opportunity, facing African countries in the post global financial and economic crisis period. African economic, social and cultural cohesion and union has been an unwavering objective of African countries. It gained widespread political support following the adoption of the Lagos Plan of Action in 1980 by the Summit of the Organization of African Unity (OAU).
  • Acknowledgements
    This report was prepared under the supervision of Mina Mashayekhi, Officer-in-Charge, Division on International Trade in Goods and Services, and Commodities jointly with Elisabeth Tankeu, Commissioner of Trade and Industry, African Union Commission for the Sixth Ordinary Session of the Conference of African Union Ministers of Trade, 29 October to 2 November 2010, Kigali, Rwanda.
  • Abbreviations
  • Executive summary
    Regional and continental integration constitutes a major development strategy of African countries. The 1980 Lagos Plan of Action, the 1991 the African Economic Treaty and the 2000 Constitutive Act of the African Union adopted by African countries embodied their decision and desire for achievement of continental integration through trade, economic, social and culture spheres. Over the years, African countries have instituted and implemented various regional economic cooperation and integration programmes. The vision underpinning Africa economic integration has also evolved. At the Second Conference of African Ministers in Charge of Integration (July 2007, Kigali, Rwanda), discussions on building common markets in Africa centred on “achieving integration that is people-centred and development oriented”. This vision of economic integration that is pro-people, inclusive and centred on development sets the benchmark against which to direct the course of the integration movement in African.
  • Introduction
    Regional and continental integration constitutes a major development strategy of African countries. The 1980 Lagos Plan of Action, the 1991 the African Economic Treaty and the 2000 Constitutive Act of the African Union adopted by African countries embodied their decision and desire for achievement of continental integration through trade, economic, social and culture spheres. The building blocs for African continental integration comprises the regional economic communities (RECs) established on the basis of their respective constituting treaties. A key feature of regional and continental integration is trade liberalization leading to the formation of regional free trade areas, and progressing towards customs unions and common markets which would then serve as the stepping stone for the formation of a continental African Common Market and Economic Community.
  • Economic and trade performance of Africa and RECs
    The African continent has a number of RECs and a multiplicity of cooperation organizations created to address common challenges faced by African countries. The eight RECs forming the pillars of the future African Economic Community are COMESA, EAC, SADC, ECOWAS, the Economic Community of Central African States (ECCAS), CEN-SAD, IGAD and UMA, with membership as follows
  • Progress in African regional trade liberalization, investment and economic integration
    African regional integration extends beyond trade and market integration aimed at achieving larger regional markets and more efficient production systems to enhance Africa’s competitiveness, enabling it to attract a larger share of the global market. African regional integration goals also embrace regional and continental social and political objectives, and ultimately the ambition of a United States of Africa. In this sense, the Abuja Treaty (Article 4) stresses that African economic integration will enhance: (a) economic reliance and promotion of endogenous and self-sustained development; (b) development, mobilization and utilization of human and material resources of Africa in order to achieve self-reliant development; (c) cooperation in order to raise the standard of living of African people, foster close and peaceful relations among Member States; (d) progress, development and the economic integration of the Continent; and (e) coordination and harmonization of policies among existing and future economic communities to foster the gradual establishment of the African Economic Community. Trade and market integration, culminating in the establishment of a pan-African Common Market, is a central plank of African’s economic integration. Progress towards this goal is in turn dependent on removing barriers to intra-African trade to create larger regional markets that can realize economies of scale and sustain production systems and markets. A more prosperous Africa will also benefit other nations in terms of increased trade and investment, job creation and promote greater peace and stability.
  • Accelerating achievement of the pan-African common market and economic community
    In the 30 years since the adoption of the Lagos Plan of Action, African market integration processes have seen important advances. Important progress has been attained in four of the eight RECs forming the pillars of the Africa Economic Community, namely ECOWAS, COMESA, EAC and SADC – these groupings have achieved a measure of free trade and started implementation of customs union programmes. Progress has been slow or partial in UMA and ECCAS. In the two relatively new RECs – CEN-SAD and IGAD – market integration programmes have yet to be adopted and implemented.
  • Conclusion
    African Union Heads of State and Government have agreed on accelerating implementation of the Abuja Treaty with a view to creating an African Common Market and Economic Community. An integrated African economy and continent is expected to create sustainable conditions for internally dynamic opportunities for employment creation, income-earning possibilities for peoples and enterprises, reduce poverty, improve access to basic services and encourage economic transformation toward highly industrialized and knowledge-based economies that is also resilient to external shocks. Such African integration must be people-centred and development-oriented.
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