A high price for free trade?

Throughout eastern and southern Africa, debate is raging about the region's common market, COMESA, which comes into effect, whether welcomed or not, on 31 October.

The creation of the COMESA free trade area comes into being in the wake of a tradition of high tariffs and other barriers to trade. It is hoped, that when fully operational, COMESA will create a larger market for the region's producers, greater competition and an improvement in the quality of goods produced. A larger, more integrated market should also encourage greater production and more cost-effective use of production capacity and lead to more efficient use of the region's resources. It may also help to reduce costs especially for transport and communication.

The COMESA free trade area is also being seen by its supporters as the right step towards preparing companies in southern, central and eastern Africa for the stiff competition that is likely to result from globalization. Leaders of COMESA member states say that working as a group will greatly enhance the sub-region's credibility as an investment destination and further boost the member states' bargaining power with organizations such as the European Union, the North America Free Trade Area Association, etc.

Good as the news of the free trade area may sound to some, there are mounting fears in others. These range from loss of revenue from import duty to the imminent collapse of weaker industries in the weaker economies. The Zambian Jesuit Centre for Theological Reflection, during a public debate on the COMESA free trade area in Lusaka recently, pointed out that the consequences of loss of revenue from import duty appear to have been ignored. The Centre suggests the government may resort to heavy reductions in social sector spending or to raising taxes to meet the shortfall. A Deputy Minister in the Zambia Government admitted recently that Zambia may not be able to withstand the competition in food supply after the free trade area comes into effect. Consumers may prefer high quality processed foods from neighbouring countries to inferior, local produce. The chief executive of the Zambia Bureau of Standards has expressed the same concern, saying that Zambia stands to lose out if technical measures to improve quality are not put in place.

Some members of the business community in Zambia believe Tanzania's pull out of COMESA is the result of extensive research into the pros and cons of the free trade area which have proved that there will be huge losses of revenue. Zambia's Minister of Commerce, Trade and Industry, William Harringtone, commenting on Tanzania's pull out says, "This is a decision of an independent sovereign state and one that has to be respected." There is also increasing concern within COMESA countries that stronger economies, such as South Africa (which is not a COMESA member) will take advantage of the free trade area to flood countries that are economically weak with their cheaper products. For example, there is a wide range of South African agricultural equipment and food on sale in Zambia at prices lower than those of locally produced goods. The COMESA secretariat points out that commodities coming into the free trade area must satisfy the rules of origin. Customs officials are being trained to ensure that no goods from non-COMESA member states come into the COMESA region duty free. The secretariat admits, however, that this will not be an easy task.

At the moment everyone is waiting to prove whether the old adage, "it is easier said than done" will be true. The die is cast and there is no turning back. The COMESA free trade area is on and it is real.

Back to Menu