Africa’s biggest trading bloc on the cards

IT SEEMS that Africa’s biggest trading bloc could be on the cards. The European Union (EU) has just agreed to a regional finance package, worth about R7.7-billion – which is also expected to help the East African Community (EAC), the Common Market for Southern and Eastern Africa (Comesa) and the Southern African Development Community (SADC) to consolidate. This followed the endorsement by the East African heads of state of the proposed merger of the three regional trade blocs into a single free trade area (FTA) in June this year. Modalities of the merger are due to be discussed at a special tripartite summit to be held in Kampala in October. According to information released to FTW by the Trade Law Centre (tralac), the EU has agreed to finance the creation of the larger trading bloc to give momentum to the region’s competitiveness in the global arena. The move is also aimed at restricting the outbreak of numerous intergovernmental trade spats. The finance package was announced at a meeting between the EU and Eastern and Southern African states, convened by the Inter-regional Coordinating Committee (IRCC), in Dar es Salaam. According to trade and development commissioner, Louis Michel, the EU appreciates the opportunities that exist in the regional integration projects and will make the finance available through the European Development Fund (EDF). “The EU is willing to bring its full political and financial support to this project,” he said. Michel warned, however, that although the prospect of a common ESA bloc is good, high transport and electricity costs in the region could hinder growth. “To highlight an example,” he said, “the cost of exporting a tonne of maize from Zambia to Tanzania is higher than the cost of exporting the same tonne from Zambia to Europe or the US.”