Definition Trade liberalisation involves removing barriers to trade between different countries and encouraging free trade. Non-tariff barriers are factors that make trade difficult and expensive. For example, having specific regulations on making goods can give an unfair advantage to domestic producers.
But is this truly the case?
The decision to develop a Tripartite FTA occurred in October where it was agreed that FTA would be guided by the following overarching principles : Standstill Provisions and Incremental Liberalisation: Tripartite countries to present national tariffs and declare customs duty rates for all tariff lines at the start of the negotiations and should undertake not to raise customs duties on imports from other Tripartite countries before, during or after the negotiations, and to continuously reduce non-zero customs duties so that they are completely eliminated as part of the Tripartite FTA.
Most Favoured National Treatment where Tripartite countries should accord each other Most Favoured Nation MFN treatment where there is no prevention by country members from maintaining or concluding preferential or free trade agreements, either separately or together, with third countries provided such agreements do not go against the letter or spirit of the Tripartite Free Trade Agreement.
Member countries to accord the same treatment to products manufactured in other Tripartite countries once imported into their territory as that accorded to similar locally manufactured products.
Further cooperation between member countries will include the harmonisation and coordination of industrial and health standards; combating of unfair trade practices and import surges, relaxation of restrictions on movement of business persons; development of cultural industries in the region and the development of sector strategies to increase productive capacity and link producers to buyers and consumers.
Enhances intra-regional trade and investment FTAs encourage member countries to increase trade with each other.
Further, it allows projects, particularly in infrastructure, to be designed from a regional perspective allowing for greater efficiencies and cost-sharing between governments. Private sector can also design the development of plants, factories and large industrial facilities more strategically.
Increased price competitiveness The introduction of new players in home markets means expensive goods are replaced with cheaper goods due to competition.
Every country is bound to benefit due to different areas of specialisation Ideally, each country has a comparative advantage in different areas of production and this allows partner countries to gain as a result of specialisation.
Countries with similar economic structure stand to gain from each other Integration can facilitate intra-industry trade between economies that produce similar products. Economic and political reform FTAs can lock member countries into economic and political reforms particularly if those policies or rules are stipulated within the agreement.
Makes Africa economically stronger and more attractive Africa is currently fragmented into 47 small economies each with its own regulatory structure and each of which present small potential markets. Integration will make Africa a larger more integrated and larger market making it more attractive to investors both within and outside the FTA.
Facilitates the flow of illicit trade It is not a stretch to surmise that as borders come down and the flow of goods, services and people is facilitated across nations, illicit goods can more easily get through the porous borders as well.
Increased security threats While FTAs may allow better coordination between security arms of member governments, the relaxation on borders and free movement of people may allow individuals from terrorist organisations as well as criminals to more easily expand their activity beyond the borders of one country into another.
Can Magnify Inequalities Africa is varied with regard to the stage at which each country stands in terms of economic development, size and strength. Therefore, nascent industries may fail given the access to local markets by economies in which such industries are more developed.
This dynamic will have to be carefully managed. Because member countries get preferred access, unscrupulous traders may seek to gain entry into markets by repackaging external goods as those for member countries.
This may present a new avenue of collecting illegal dues, particularly by government officials. Corruption remains a monster on the continent and FTAs may present a new and lucrative avenue through which this beast is fed.
Therefore, it is clear that Africa can both gain and lose from FTAs. It is important that Africans enter this era of economic integration cognizant of these dynamics in order to ensure the process goes as smoothly as possible, that losses are minimised and benefits are maximised.Trade liberalisation.
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