Boosting Intra-African Trade and Establishing the Continental Free Trade Area (CFTA) BACKGROUND NOTE

Transcription

1 AU ATPC UNECA AfDB Boosting Intra-African Trade and Establishing the Continental Free Trade Area (CFTA) BACKGROUND NOTE June, 2012

2 1.0 Background and Context The Africa Trade Forum 2012 (ATF II} is a follow-up to the inaugural Africa Trade Forum (ATF I) which was held on November2011 in Addis Ababa, Ethiopia. The strategic objective of ATF I was to promote and enhance multi-stakeholder policy dialogue and advocacy on trade in Africa, by mobilising different trade constituencies across Africa and from around the world, to debate and exchange views on key issues relating to intra- African trade, and Africa s trade with the rest of the world. The Forum which was attended by high level government officials and representatives from the private sector, civil society, academia, parliament, Regional Economic Communities (RECs), development partners and the media, was acknowledged as highly successful, based on formal evaluation reports by participants. More significantly, the outcome of the Forum provided substantive input into the preparations for the January 2012 African Union Summit of Heads of State and Government with the theme; Boosting Intra-Africa Trade. The Summit formally endorsed a Framework, Road Map and Architecture for fast tracking the establishment of the Continental Free Trade Ares (CFTA) and an Action Plan for Boosting Intra-African Trade (BIAT). The Summit Decision on the CFTA and the Action Plan for the BIAT (Assembly/AU/Dec.394 (XVIII), specifically calls upon UNECA, the ADB and other relevant development partners to support the implementation of the Action Plan and the establishment of the CFTA. In addition, the Summit Declaration (Assembly/AU/Decl.1 (XVIII) expressly requests the AUC, UNECA, ADB and other relevant agencies, to take appropriate measures including studies, technical support to RECs and sensitization of Member States and partners, for the effective implementation of the CFTA Road Map. In the light of the above, it is evident that a clear path has been charted for the AUC, UNECA, ADB and other collaborating partners to provide strategic guidance and support for the implementation of an ambitious programme of action for the development of trade in Africa. Within this context, the Africa Trade Forum which is a joint initiative of UNECA, AUC and the ADB, has been designated as one of the supporting structures and building blocks for the establishment of the Continental Free Trade Area (CFTA). The ATF to be organised annually, is expected to serve as a Pan-African platform for dialogue, reflection and discussion on the progress and challenges of implementing the agenda on continental market integration. It against this background that the second Africa Trade Forum (ATF II) is to be organized under the theme Boosting Intra-African Trade and Establishing the Continental Free Trade Area (CFTA). The Forum is scheduled to be held from September 2012 in Addis Ababa, Ethiopia. 1.1 Boosting Intra-Africa Trade and Establishing the CFTA Notwithstanding the challenges constraining Africa s participation in global trade, it is generally acknowledged that intra-african trade is significantly weak compared to trade within other regions. On average over the past decade, trade amongst African nations is estimated at about % whilst 40% of North American trade is with other North American countries, and 63% of trade by countries in Western Europe is with other Western European nations. 2

3 Enhanced intra-african trade should provide many opportunities within the continent to promote specialisation amongst African countries; develop regional value chains to enhance diversification and competitiveness; and consolidate and integrate production infrastructure and processes across borders to achieve economies of scale. African countries therefore need to aggressively pursue comprehensive regional trade policies as a collective development and transformation strategy. From a continental strategic standpoint, stronger and deeper regional integration in Africa will not only help to promote sustainable economic growth and development, it will also enhance Africa s effective participation in the global economy, and make it less vulnerable to external shocks. It would promote exports to regional markets, build experience to enter global markets and provide a framework for African countries to cooperate in developing common services for finance, transport and communications. It is within this context, that the creation of a Continental Free Trade Area (CFTA) which would provide the basis for establishing a continental Customs Union and eventually the setting up of the African Common Market would substantially expand intra-african trade by breaking down tariffs and non-tariffs barriers, and enhancing mutually advantageous commercial relations through trade liberalization schemes. The grand African CFTA will unleash the entrepreneurial dynamism and spirit across a continent without trade barriers and will represent an excellent opportunity for accelerating the achievement of the continental vision of an African Economic Community. Notwithstanding the immense benefits to be derived from a Continental Free Trade Area, it is acknowledged that with or without the CFTA, the implementation by African member States of a variety of proactive, remedial measures to address the current challenges militating against the free flow of trade in Africa, would significantly enhance the level of intra African trade. These measures form the basis for the Action Plan on Boosting intra Africa Trade. Both the Action Plan and the CFTA agenda, are intended also to deal with other problems such as the overlapping memberships of RECs, varying commitment levels of member States to the regional integration agenda, as well as limited financial and human resources. These considerations outlined above, provide the context and strategic framework for the planned deliberations of ATF II. 2.0 ATF II Objectives and Expected Outcomes The strategic objective of ATF II is to provide a comprehensive, integrated and inclusive platform for intense policy dialogue between various trade constituencies to deliberate and agree on common approaches and strategies for implementing the Action Plan on Boosting intra- African Trade and the establishment of the CFTA. The specific objectives of the Forum are to: 1. Review key challenges in implementing the Action Plan on Boosting intra African Trade (BIAT) and establishing the CFTA. 2. Deliberate and agree on an implementing strategy for the Action Plan on BIAT and establishing the CFTA. 3. Discuss and agree on specific inputs into the African Ministerial Conference on Trade. 3

4 Major Expected Outcomes of the Forum are: 1. Adoption of a Strategic Implementation Framework for the Action Plan on Boosting intra- Africa Trade and establishment of the CFTA 2. Strengthened commitment by African member States and trade constituencies to build effective strategic partnerships for implementing the BIAT and establishing the CFTA 3.0 Forum Structure The Forum will involve a combination of Plenary Sessions and Breakout Discussions, as well as a parallel Exhibition Event and Business to Business Exchange Programme (B2B Exchange) for the private sector, which will run through the entire period of the Forum. The Forum structure is designed to provide a platform for participants to engage in a dialogue on big ticket thematic issues in plenary sessions and to have more interactive and focussed discussions on specific sub-themes in breakout sessions. Each Plenary Session will have a Keynote Speaker, followed by a high-level panel discussion by renowned practitioners and experts facilitated by a moderator. An opportunity will be given to participants to field some questions. The Breakout Sessions on the sub-thematic issues would also have panel presentations with inputs from discussants, followed by an interactive discussion by participants in the Forum. The Breakout Discussions would provide an opportunity for a more comprehensive exchange of views between Forum participants on specific issues facilitated by moderators. The discussion in each Plenary Session will be guided by a Background Paper whist each Breakout Session will be guided by an Issues Paper. An outline of the issues and topics to be discussed is presented below. 4.0 Forum Proceedings It would be recalled that during ATF I it was agreed that being the inaugural Forum, all the key issues relating to intra African trade would be discussed, with the understanding that in subsequent years, the ATF will focus on specific thematic issues. In this regard, ATF II will focus on four sub-themes selected on the basis of what is generally considered as the most critical components or clusters in the Action Plan on Boosting intra African trade namely, enhancing productive capacities, trade facilitation, infrastructure for trade as well as trade and investment finance. These sub- themes are elaborated below: Enhancing Productive Capacities and the Improvement of Industrial Performance Increased trade flows depend largely on enhancing levels of production and productivity. It is generally acknowledged that some of the most critical factors influencing production include technology for production, quality standards, entrepreneurial and management development, value chains and productive networks. It has been long established that many African countries still specialize in few primary commodities, while most of their imports consist of manufactures. African member States need to reduce their reliance on exports of raw materials to move up the value-chain by producing manufactured goods or process raw materials. If Africa is to follow 4

5 this development path geared towards greater global integration and enhanced intra-african trade, then industrialization is key to the transformation of African economies. The plenary theme for this cluster on Productive Capacity will be Enhancing and diversifying production capacities in Africa and adding value to Africa s primary commodities. The subthemes will address the following; A. Improving Technology for Production and Promoting Quality Standards B. Developing Entrepreneurial and Management Capabilities C. Promoting value chains and production linkages Trade Facilitation A major factor accounting for the low level of intra-african trade has been the numerous constraints associated with trade facilitation. These include complicated customs requirements and procedures, unfavourable domestic trade regulatory environment, poor transport and logistic service provision and infrastructure networks, physical barriers, harassment and corruption along trade and transit corridors, as well as limited knowledge and understanding of trade facilitation instruments and measures by public sector officials, private sector operators and other trade constituents.. Besides contributing to delays and loss of time in conducting business, these constraints impose high transaction costs for African traded goods and services, thereby undermining their competitiveness. Although significant efforts have been made at the national and regional levels in addressing some of these constraints, critical challenges still remain that impede progress in facilitating intra African trade. The plenary theme for this cluster on Trade Facilitation will be Eliminating trade barriers through improved trade facilitation, while the sub- themes will address the following: A. Simplifying and harmonising customs procedures and documentation. B. Improving transport and logistic services and maritime traffic facilitation C. Managing transit trade and mobility across borders 4.3. Infrastructure for Trade Trade related infrastructure includes roads, railways, ports and airports, telecommunications, energy, and water. Efficient infrastructure has been shown to be a critical requirement for boosting trade volumes and exports. Africa faces serious infrastructural bottlenecks and is known to have the least developed infrastructure and the highest cost of related services. This has affected the competitiveness of Africa s exports and consequently contributed to significantly low volumes of intra African trade. Transport costs in Africa are among the highest in the world and poor transport infrastructure is responsible for 40% of transport costs in coastal countries and 60% in landlocked countries. Energy constitutes a major component of the infrastructure resources required to support trade. However many sub-saharan African countries continue to experience crisis conditions in 5

6 national energy supply and indeed it is evident that energy is the biggest infrastructure challenge in Africa. Telecommunications and ICT in general can also facilitate trade in a variety of ways, including enhancing efficiency in managing business processes and thereby reducing cost,, enhancing coordination of trade-related activities, as well as enhancing access to information and knowledge and thereby improving decision making. Although there has been a significant improvement in the deployment of ICT technologies and applications in many African countries, there are still a number of challenges that need to be overcome if ICT is to drive trade in Africa. The plenary theme for this cluster on Infrastructure will be Enhancing Infrastructure for Trade in Africa, while the sub-themes will focus on the following:- A. Impact of Physical Infrastructure (Roads, Air and Railways) on intra African Trade B. ICT and Telecommunications Infrastructure as an enabler of Trade in Africa C. Energy Resources and the development of intra African Trade 4.4 Finance for Trade Enhancing access to trade and investment finance and establishing the framework for viable continental payment systems is a critical requirement for boosting intra African trade. Poorly developed financial markets and lack of widely available trade and investment finance for African businesses, has been a major hindrance in enhancing trade. For exporters, the availability of trade credit provides the necessary safety net in terms of meeting demand and getting paid. The paucity of credit and finance and insurance limits businesses liquidity and undermines their ability to obtain production inputs. In general it limits the potential for intra-african trade and constrains diversification efforts in Africa. The plenary theme for this cluster on Finance for Trade will be Addressing financial needs of economic operators through improved trade and investment finance. The sub- themes will cover the following:-. A. Trade Finance in promoting intra Africa trade. B. Insurance for Trade C. Building productive capacity through enhanced access to investment finance. 5.0 Participation The Forum will bring together representatives from key trade constituencies in Africa and from around the world, including policy makers and high level government officials, private sector operators, civil society, parliamentarians, development partners, academia and researchers, RECs, corridor management institutions and the media. 6

7 6.0. Exhibition Event and Business to Business Exchange Programme An integral part of the Forum will be a comprehensive 3-day Exhibition Event which will showcase export products from Africa, raw material inputs, technology suppliers (both hardware and software), public and private sector support institutions and service providers. The Business to Business Exchange Programme will provide a platform and an opportunity for the private sector to discuss specific and actual business deals and commercial transactions with counterparts from within Africa and the world in general. This will involve a structured, one-on-one, pre-programmed interactive sessions between a variety of economic operators including but not limited to producers/manufacturers, buyers, suppliers, financiers, investors and other service providers. The two sets of activities will be co-hosted by the Forum organizers in collaboration with the Pan-African Chamber of Commerce and Industry (PACCI) and the Business Councils of the RECs Venue and Date The Forum will be held at the United Nations Conference Centre (UNCC) in Addis Ababa, Ethiopia from September Registration and Logistics Participants will be required to register online on the Forum s website or fill the attached form and to jkaronga@uneca.org or Tiblett@ueca.org or register directly through the ATPC office: African Trade Policy Centre United Nations Economic Commission for Africa P.O.Box 3001 Addis Ababa, Ethiopia Tel: ( ) Fax: ( ) Deadline for Registration is the 15th of August Block hotel reservations will be made at selected hotels (to be indicated on the Forum website) and those intending to take advantage of such reservations should indicate their preference at the time of registration. Participants are also free to make reservations with other hotels of their choice. For Participants coming from countries with an Ethiopian Embassy, introductory letters to the Embassy will be provided when registration is completed and accepted. All other registered participants coming from countries without an Ethiopian Embassy will receive their visas on arrival. A detailed Information Note for Participants on other administrative matters will be circulated before the Forum. 7