States urged to upscale utilisation of COMESA Free Trade Preferences
LUSAKA – Partner States in the COMESA Free Trade Area have been urged to upscale utilisation of the preferences provided under the free trade area [FTA] regime.
Currently, it is estimated that the intra-regional utilization rate of the FTA preferences, by COMESA Member States averages 48.4 percent relative to 77 percent on North-South trade
Assistant Secretary General of COMESA, Dr Kipyego Cheluget says this has affected the region’s agility to handle external shocks, noting that the FTA was created to build resilience through deepening trade integration among member countries.
The FTA preferences include the removal of all tariffs and non-tariff barriers enabling the free movement of goods and services produced within COMESA.
Currently, 16 countries are participating in the COMESA FTA including Burundi, Comoros, Djibouti, Egypt, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Tunisia, Uganda, Zambia, and Zimbabwe.
Addressing the 7th Meeting of the COMESA Trade and Trade Facilitation Sub-Committee recently, Cheluget said it was critical that countries implement the FTA in a manner that promotes the effective use of the tariff preferences under regional integration by firms and other importers.
“The high prevalence of persistent Non-Tariff Barriers [NTBs] and high compliance costs of Non-Tariff Measures have created a prohibitive intra-trading environment in the region,” he noted.
It is estimated that imposing one additional NTB is equivalent to effecting at most a tariff of 5.8 percent. Between 2018 and 2020, Cheluget said, it took an average of 1.5 years to resolve a reported NTB in COMESA region. Thus, the introduction of additional Sanitary and Phytosanitary and Technical Barriers to Trade measures leads to more trade compliance costs. This makes it even harder for businesses to prosper.
“There is great potential which demonstrates the existence of a scope to deepen our trade integration, create more space for business prosperity and fortify the resilience of our economies,” said Cheluget.
Noting that the regional economies had barely recovered from the impact of the COVID-19 pandemic when the Russian- Ukraine conflict started, Cheluget said these episodes of external shocks have demonstrated the region’s vulnerability by disrupting critical supply and value chains.
“The consequences are apparent in the upward pressure on oil, fertilizers, and food prices,” he said.
The current COMESA Medium Term Strategic Plan [MTSP 2021-2025] aims at increasing intra-regional manufactured exports to at least 25 percent of total exports by 2026 which is now at about 10 percent.
Based on 2019 trade statistics, the region has the potential to increase intra-trade by US$ 100.1 billion if all extra-COMESA trade could be diverted to the region. According to a recent study, if at least 50 percent of the current extra-COMESA trade is diverted to the region, intra-trade could expand by US$ 50.5bln.
The three-day virtual meeting was attended by trade experts from COMESA Member States.
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