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COMESA's customs union and benefits for the bloc
Zimbabwe Coalition on Debt and Development (ZIMCODD)
June 15, 2009

http://www.zimcodd.org.zw/index.php?option=com_content&task=view&id=8

The Common Market for East and Southern Africa (COMESA) is a regional bloc that comprises countries in east, central and southern Africa as well as those in the Indian Ocean. COMESA is home to a combined population of some 400 million people, with a combined gross domestic product of about US$355 billion.

The bloc is comprised Burundi, Comoros, Djibouti, the Democratic Republic of Congo, Egypt, Eritrea, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia and Zimbabwe. The COMESA Customs Union officially was launched on the 8th of May 2009 in Zimbabwe. Members hope the customs union will strengthen economic integration and eventually lead to a single currency. This came as a follow-up to the free trade area (FTA) launched in October 2000.

The customs union will result in duty free and quota free market access, common external tariff, common customs management act, common tariff nomenclature among COMESA member states. Under the deal, all 19 countries will impose the same tariffs on goods from outside the region, with a range of tariffs from zero to 25 percent applying to different categories of goods and services. COMESA member States have experienced a dramatic increase in the volume of intra- trade from US$3.2 Billion in 2000 to US$15.2 Billion in 2008. Though there have been an increase in trade volumes within the bloc, the bloc still faces some problems such as that some COMESA member states have dual and multiple memberships as some belong to the Southern Africa Development Community (SADC), East African Community (EAC), Southern Africa Customs Union (SACU) and the Indian Ocean Community (IOC) as highlighted below.

• SADC member states include Botswana, Lesotho, Namibia, Swaziland, Mozambique, Angola, Tanzania, South Africa Zimbabwe, Zambia, Malawi, Mauritius and DRC.
• EAC member countries are Kenya, Tanzania, Rwanda and Burundi.
• SACU member states include Botswana, Lesotho, Swaziland, Namibia and South Africa
• IOC member states include Seychelles, Madagascar and Mauritius.

SADC member states signed their Trade Protocol in 2000 with the idea of liberalizing 85% of tradable products by 2008. By the time the SADC FTA came into force in August 2008, South Africa and Mauritius had already liberalized 82% of the market and currently SADC member state are working towards a Customs Union by 2010. The EAC and IOC have also their own FTAs. What is surprising is that all the above regional arrangements have signed regional or bilateral trade arrangements with the European Union (EU) under economic partnership agreements (EPAs) aimed at total liberalisation of African markets. All these regional groupings have further entered into bilateral and regional trade arrangements with the US under the African Growth and Opportunities Act (AGOA).

Burundi, Kenya, Rwanda and Uganda quit the 16-member Eastern and Southern Africa (ESA) configuration at the last minute leaving Mauritius, Malawi, Madagascar, Seychelles, Zambia and Zimbabwe to initiate bilateral interim agreements with the EU. The signing of interim EPAs among the COMESA, as ESA states nearly split the EAC, a rival regional economic community, after the countries developed sharp differences over the sugar protocol with the EU.

The defections further weakened COMESA's ability to coordinate its regional integration programmes as some of its member states joined EPA configurations coordinated by the SADC and the EAC. Each configuration is negotiating its own offers and obligations, which do not necessarily converge with those of the others. EPA configurations were however delineated without regard for the physical boundaries of regional economic communities. As a result, EPAs have supplanted rather than reinforce regional integration. The main question confronting COMESA now is not what has led some countries to shift allegiance to other groupings and others to walk a solitary path, but what impact this multilateral shake-up will have on the proposed customs union. This will result in the customs union not being in a position to coordinate and harmonise its trade policy with that of other regional groupings.

To date, the COMESA trade regime has benefited commercial traders who have the capacity and resources to go through the rigorous exercise of obtaining the necessary certification for goods to qualify for duty and quota free entry into the COMESA market. The trade arrangements however, left out a large and growing segment of small scale and cross border traders who are engaged in what has been termed informal or even illegal trade. Cross border traders are compelled to pay duty on COMESA originating goods, which should otherwise be duty-free, because of the inability to obtain the obligatory documentation to enable them to qualify for duty-free status.

Zimbabwe rushed to conclude the COMESA customs union and the SADC FTA due to its dilapidated production capacity that has been operating below 20% capacity. This has resulted in a dramatic inflow of foreign products ranging from textiles, groceries, hardware and even motor vehicles. An example is Parmalat milk, produced in Italy but is now flooding the Zimbabwean market due to opening up of Zimbabwe's market to international competition. This has driven local industries (Dairiboard Pvt Ltd) out of business leading to job losses. COMESA and SADC regions are home to over 3 million small- scale producers exporting 250,000 metric tonnes of cotton lint worth US$ 350million to the EU and US but now, nearly half of these have been driven out of business as they can not compete with the highly subsidised and developed producers in the EU. Within the Zimbabwe context 220,000 small-scale farmers located in arid and semi-arid areas depend on cotton production for their food security and livelihoods and these are now under threat from EU produce due to signing of COMESA customs union, SADC FTA and the EPAs.

For African countries and other developing countries, there is need to promote self-reliance rather than depending on the western or Asian countries for markets and assistance. African own regional integration such as integrating the SADC, EAC, ECOWAS, IOC, SACU and COMESA is a noble strategy as long as this does not result in opening the entire continent to competition from the developed Western and Asian producers and companies. Africa needs to revert to protectionism to protect its own infant and small-scale producers and farmers and in this regard promote local manufacturing of its own produce rather than rely on exports of raw materials that are fetching lower prices at the global markets whereby African producers do not determine the price of their produce but have to abide by what such institutions as the WTO determine. Protection of local producers will guarantee decent employment for African graduates and curb the brain drain that has continued to enrich developed countries at the expense of Africa's development.

* Richard Mambeva is the Research and Rural Livelihoods Programme Officer at ZIMCODD

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