The need for African integration

http://www.thestatesmanonline.com/pages/news_detail.php?newsid=3993&section=9

*Cynthia Ohajionu<http://www.thestatesmanonline.com/pages/author_stories.php?auth=Cynthia
Ohajionu> , **02/07/2007*

As the push for free trade at the multilateral level becomes more and more
contentious, governments have been focusing on alternative paths to
achieving trade and investment liberalisation in the hopes of spurring
production and export growth.

Africa is faced with just such a challenge in announcing creation of the
African Union. The issue of market access for African countries attracted
much attention during the Uruguay Round of multilateral negotiations.
Currently, virtually all African countries have entered into contractual
preference arrangements with the European Union .

Because of historical colonial ties, the EU accounts for greater than
two-thirds of total African trade. African countries also enjoy preferential
treatment for certain export products to major markets, such as the U.S. and
Japan, under the General System of Preference.

The option of promoting trade and investment integration on a regional basis
was implemented in the 1990s by many regions of the world. They include the
North American Free Trade Agreement, the EU, the Southern Cone Common Market
of Latin America, etc.

Perhaps, aside from the EU the only other continent-wide arrangement that is
similar in its breadth and scope to the African Union is the proposed Free
Trade Area of the Americas.

In Africa alone, there are at present about thirteen different sub-regional
trade agreements. There has been a long debate by trade theorists whether
over the long run regional integration promotes broader liberalisation or
inherently leads to regional protectionism and trade diversion and,
therefore, to aggregate economic loss.

A regional trade agreement can be a good thing if it leads the member
countries further and faster towards greater openness and integration. Trade
system reforms, as well as the completion of regional integration agreements
represent processes rather than discrete events.

Fortunately, Africa can build on existing sub-regional and bilateral
arrangements in order to broaden and deepen its regional economic
integration. Creating a single regional market can increase economic
efficiency.

Regional trade agreements can help countries build on their comparative
advantages, sharpen their industrial efficiency, and act as a springboard to
integrate into the world economy. It can help strengthen the political
commitment to an open economy, improve technical, management and negotiation
skills and competence, educate the public and engage the business community.


Building closer trading links among African countries will strengthen their
capacity to fully participate in the global trading system. It will help
avoid the usual problems with small domestic markets, since producers and
manufacturers will be offered greater economies of scale and regional market
infrastructure.

Additionally, an integrated African market should provide greater access to
regional trade institutions to harness human resources and re-orient policy
instruments.

*What Africa needs, as part of the new agenda.*

According to Julius O. Ihonvbere* , *(Keynote address at The All-African
Student's Conference*)** *said* "*Africans, if they are serious must be
prepared to commit a high level of "Sovereignty suicide." African patriots
must be prepared to realize Nkrumah"s dream in a world which has little
respect for Africa and Africans".

To him, a popular state has to be initiated at the level of social discourse
and promote the collective establishment of a political environment which
would enable Africans to attain the highest points of the productive and
creative abilities. It is only under such an arrangement that democracy and
democratization, as well as economic progress can be attained in Africa.

There must be the political will to adhere to regional integration
objectives, and to give them priority over domestic considerations.

Furthermore, signatory nations must view the integration process as an
effective vehicle for integrating countries into the global economy. This
means that all countries that are willing to be part of the continental
union must buy into the notion that regionalism can create a springboard for
the process of economic liberalisation and progressive insertion into the
global economy.

In a world where, in addition to goods, human and financial capital are
increasingly flowing across national borders, Africa needs to find
mechanisms to overcome its difficulties by implementing cooperative
solutions.

It is imperative that the regional integration process be designed to foster
mutual support among member countries in their reform efforts, not
necessarily to go to the defence of any established interest groups per se,
but rather push for openness to the rest of the world's markets.

This means that it will be important to create a more positive and coherent
interaction between domestic reforms, regional systems of trade and
investment reforms, and economic structural adjustment policies.

The African Union must develop institutions that possess the political will
to adhere to any established goals and objectives toward harmonising
continental trade and investment. In my viewpoint, this is the true
challenge that faces conveners of regional integration.

A major effort must be dispensed to achieve economic policy and
institutional convergence by establishing a timetable for each nation to
achieve parallel reforms, work toward establishing regional institutions,
and make available resources to implement institutional reforms.

A major caveat is that strong regional institutions must be authorised to
develop appropriate policies independent of national interests but
accommodating of each country's peculiar conditions.

Strong regional institutions will be necessary to negotiate arrangements to
open up global markets to African countries by seeking to remove trade
impediments and subsidies imposed by other countries.

Another issue of major concern will be how Africa uses reforms following
intra-regional trade liberalisation to attract greater investment capital
into the region. But a note of caution is in order here, since given the
continent's many problems, who is to tell if these rather ambitious
processes would not be met with greater conflicts?

Therefore, a major challenge for Africa is how to educate trade negotiators
on how to negotiate based on trade and investment rules and if there were to
emerge failures of institutions, how to manage and resolve potential
conflicts.

*Advantages of African Regional Integration*

A regional trade agreement can be a good thing if it leads the member
countries further and faster towards greater openness and integration. Trade
system reforms, as well as the completion of regional integration agreements
represent processes rather than discrete events.

Fortunately, Africa can build on existing sub-regional and bilateral
arrangements in order to broaden and deepen its regional economic
integration. Creating a single regional market can increase economic
efficiency.

Regional trade agreements can help countries build on their comparative
advantages, sharpen their industrial efficiency, and act as a springboard to
integrate into the world economy. It can help strengthen the political
commitment to an open economy, improve technical, management and negotiation
skills and competence, educate the public and engage the business community.


Clearly, building closer trading links among African countries will
strengthen their capacity to fully participate in the global trading system.
It will help avoid the usual problems with small domestic markets, since
producers and manufacturers will be offered greater economies of scale and
regional market infrastructure.

Additionally, an integrated African market should provide greater access to
regional trade institutions to harness human resources and re-orient policy
instruments.

For example, common agreements can be reached to harmonise tariff reduction,
legal and regulatory reforms, the rationalisation of payment systems,
reorganisation of financial systems, and reforms of labour markets that
would enable African countries to assert their interests from a stronger and
more confident position in global markets.

It is also expected that by engaging in learning by doing, this process
would influence the countries to implement politically more difficult trade
measures that they would otherwise not have the individual political will to
undertake, such as lowering tariffs or embarking on extra-institutional
reforms.

To that end, therefore, there could exist a framework for greater
surveillance and dialogue among partner countries to discourage/reduce
potential risks of macroeconomic slippage and to create the enabling stable
environment for business to flourish.

Just as with most systems, regionally integrated markets have their down
sides. Regional integration could encourage trade diversion. There is always
the tendency for member countries to divert some of their trade that would
otherwise take place between the participants of the agreement to third
countries.

As in the EU, regional trade integration may encourage member countries to
become more inward-looking and protectionist. This phenomenon may pose a
serious threat to open multilateral regimes that are based on
non-discriminatory trade. Nevertheless, there is a prevailing view that
regional arrangements enable participants to move more closely and quickly
to trade liberalisation than it is possible at the multilateral level.

Also, if it is trade creating, then regional agreements would complement the
overall goal of achieving multilateral liberalisation.

¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤
To unsubscribe/subscribe or view archives of postings, go to the Gambia-L Web interface
at: http://listserv.icors.org/archives/gambia-l.html

To Search in the Gambia-L archives, go to: http://listserv.icors.org/SCRIPTS/WA-ICORS.EXE?S1=gambia-l
To contact the List Management, please send an e-mail to:
[log in to unmask]
¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤