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John Daly

John Daly

Dr. John C.K. Daly is the chief analyst for Oilprice.com, Dr. Daly received his Ph.D. in 1986 from the School of Slavonic and East European…

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Africa Takes Tentative Steps Towards Establishing a Free Trade Zone

Poor Africa – exploited in the 18th and 19th century by European colonialists intent on the Dark Continent’s riches of gold and salves, exploited in the late 20th century by their Chinese “brothers” – are they doomed forever to be under another’s domination?

A possible step out of the overlordship of foreigners occurred recently, when last month African leaders, including Ugandan President Yoweri Museveni endorsed an agreement in Johannesburg South Africa to pave the way for discussions on the creation of a continental “Grand Free Trade Zone.”

While such an agreement remains on paper, its potential is enormous, as Africa has combined gross domestic product of approximately $1 trillion and a population of about 600 million people.

But its Africa’s raw resources that make the concept so intriguing, as African raw materials do everything from powering U.S. automobiles to providing the materials for cellphones.

In Johannesburg the assembled leaders discussed a proposal that would merge the Southern African Development Community (SADC), the East African Community (EAC) and Common Market for Eastern and Southern Africa (COMESA).

The world is currently awash in various trade agreements. Besides the SADC and COMESA, these include the ASEAN Free Trade Area (AFTA), the Asia-Pacific Trade Agreement (APTA), the Central American Integration System (SICA), the Central European Free Trade Agreement (CEFTA), the G-3 Free Trade Agreement (G-3), the Greater Arab Free Trade Area (GAFTA), the Gulf Cooperation Council (GCC), the mother of them all, the North American Free Trade Agreement (NAFTA), the Pacific Accord, the South Asia Free Trade Agreement (SAFTA), Southern African Development Community (SADC), the Southern Common Market (MERCOSUR) and the Trans-Pacific Strategic Economic Partnership (TPP).

Proposed trade agreements include Commonwealth of Independent States Free Trade Agreement (CISFTA), the Union of South American Nations (CSN), the Pacific Island Countries Trade Agreement (PICTA), the Arab Maghreb Union (UMA), the Asia-Pacific Economic Cooperation (APEC), the Association of Caribbean States (ACS), the Bolivarian Alternative for the Americas (ALBA), the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), the Community of Sahel-Saharan States (CEN-SAD), the Comprehensive Economic Partnership for East Asia (CEPEA) , the East Asia Free Trade Agreement (EAFTA), the Economic Community of West African States (ECOWAS), the Euro-Mediterranean free trade area (EU-MEFTA), the Economic Community of Central African States (ECCAS), the Free Trade Area of the Americas (FTAA), the Free Trade Area of the Asia Pacific (FTAAP), the GUAM Organization for Democracy and Economic Development (GUAM), the Intergovernmental Authority on Development (IGAD), the Pacific Agreement on Closer Economic Relations (PACER and PACER Plus), the Shanghai Cooperation Organization (SCO) and the Transatlantic Free Trade Area (TAFTA.)

Just reading the above listing is eye-glazing.

But the implications of the Johannesburg discussions are enormous, as the proposed Grand Free Trade Zone bloc would include 26 countries, stretching from Cape Town in South Africa to Cairo in Egypt. The integration is expected to help African countries improve their capacity to trade, increase investments on the continent and unleash the enormous economic growth and development potential of Africa.

The idea for the formation of a free trade area among the three regional economic communities was endorsed during the first COMESA-EAC-SADC Tripartite Summit held in Kampala in October 2008 to enhance cooperation and harmonization of policies. Noticing a quickening of the tempo of the discussions, Burundi's president and EAC chairman Pierre Nkurunzinza noted that members are ready to negotiate a free trade zone by 2014.

What would the establishment of a African Grand Free Trade Zone mean for other countries?

Probably not much, initially. Africa is riven by not only national strife, but disputes down to the tribal level. An operational Grand Free Trade Zone however, could well mean that various African nations could deploy the power of their compatriots in bilateral negotiations with those seeking onerous and unfair trading terms. As the Grand Free Trade Zone would in effect have the potential to become the equivalent of a continental “union,” the greatest value of an African Grand Free Trade Zone would be to add the possible clout of a continent to any country’s efforts to level the playing field in its dealing with a foreign power, whether its Washington, Brussels or Beijing.

That said, an African Grand Free Trade Zone remains an idea on paper amidst jocular discussions in Johannesburg. Enormous difficulties face the establishment of a viable trading zone that would protect members’ interests, not the least of which are bloated and inefficient bureaucracies, corruption, erratic business practices and tariff barriers between possible member states.

That said, an African Grand Free Trade Zone has one high ideal in its favor, the aspirations of the African peoples to control their own destinies. And, despite the immense problems of bring an African Grand Free Trade Zone from paper into Johannesburg, a continent that produced Nelson Mandela should not be discounted for the power of its ideals to shape destiny.

A potential development well worth watching in the future.

By. John C.K. Daly of OilPrice.com

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  • Anonymous on July 12 2011 said:
    Poor Africa exploited by colonialist? We gave them working countries, stopped the muslim slave trade and they let everything fell apart once we left.Now the Chinese have to rebuild infrastructures for them just like we did. Who care about an African free trade Zone?Except for the north african countries (and even there) Africa is based on clans and tribes. These countries existed only while we were there(we gave them common languages and common goals) and now they are all exploding (Sudan lately and Ivory cost is probably next). To establish free trade you need to get rid of a protectionist system but what's the point if such a system doesn't exist? These people need to be left alone , to rebuild new countries based on whatever standard they want(ethnicity tribe whatever THEY WANT) not a larger entity. The EU is on the verge of collapse and Africa want to do just like them? Of course the most powerful countries want it just like Germany and France wanted the EU.
  • Anonymous on July 12 2011 said:
    Yes. And the African Union could create a unified currency called the "Afro!" What could go wrong? :-*

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