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									                   AMPRIP TRADE FORUM
                    Agricultural Marketing Promotion and Regional Integration Project
                   ISSUE NO.7 OCTOBER 2008                                 NEWSLETTER
                    Issue NO.8 October 2008                                             Newsletter

                      Trade Performance
“Agriculture… offers great promise for growth,          strategies to increase production for export.
poverty reduction and environmental services, but       This simply means that for trade to be
realizing this promise also requires the visible hand   successful there is need to create an enabling
of the State – providing core public goods, improving   environment which will foster it, and part of
the investment climate, regulating natural resource
management and securing desirable social
                                                        this enabling environment includes existence
outcomes” (World Bank, World Development                of valuable and tradable merchandise.
Report 2008b: 2).                                       Formulation of policies which promote trade
                                                        by countries is yet another essential factor
                                                        that forms an enabling environment for trade
Trade is the buying and selling of goods
                                                        growth. Therefore, it is essential that
and/or services, and is facilitated through a
                                                        countries adopt policies that promote trade
market system. Trade between countries is
                                                        and help them benefit from it. COMESA,
referred to as export and import of goods
                                                        which was formed to promote regional
and/or services. Whether intra or extra,
                                                        economic integration through trade and
trade forms the basis for foreign exchange
                                                        investment among its member states, has
earning and ultimate economic growth and
                                                        therefore tried to create this enabling
development. That is, the more goods a
                                                        environment through various projects imple-
country export the more foreign currency
                                                        mented in the region. The COMESA member
that it will earn and hence the bigger will
                                                        states agreed to create a common market
its foreign exchange reserve be. Thus, for
                                                        which would see removal of trade barriers
this to become a reality countries should
                                                        and introduction of a Common External
increase their production for export.
                                                        Tariff CET) by December 2008. Since the
However, the UNCTAD May 2008 report
                                                        introduction of this Common Market in the
on Economic development in Africa has
                                                        region, COMESA has endeavored to
revealed that African countries have not
                                                        implement projects that are aimed at
diversified their exports towards more
                                                        achieving its regional economic integration
dynamic primary commodities and
                                                        objective through steering production for
manufacturing goods which are less prone
                                                        export. The Agricultural Marketing
to the vagaries of international markets.
                                                        Promotion and Regional Integration Project,
Africa as a whole has even lost its export
                                                        AMPRIP is one such project which has been
market share from 6 per cent of world
                                                        dealing with agriculture trade growth in the
exports in 1980 to about 3 per cent in 2007.
                                                        COMESA region for the past three years.
Thus, despite the substantial rises in export
                                                        Funded by African Development Bank, ADB
earnings in recent years, Africa is yet to
                                                        and COMESA, the project’s sector goals fit
recover its lost market share. The report
                                                        into COMESA’s goal of promoting economic
identifies Africa’s weak supply response as
                                                        growth and foster regional economic
the most important impediment to the
                                                        integration, with the objective to enhance
continent’s export performance, which
                                                        safe intra– and extra– COMESA agricultural
suggests that future export strategy should
                                                        marketing.
focus more on sector specific development
AMPRIP’s mandate was to ensure
                                                                                     Global COMESA Trade Performance
improvement of Agricultural marketing
information and agribusiness opportunities,                                 180,00
                                                                            0
strengthening of Agricultural marketing                                     160,00
                                                                            0
                                                                            140,00




                                                    Value in US$ millions
institutions, harmonization of Sanitary and                                 0
                                                                            120,00
                                                                            0
Phytosanitary measures and food safety                                      100,00
                                                                            080,00
standards, as well strengthening of Sanitary                                0
                                                                            60,00
and phytosanitary institutions among the                                    0
                                                                            40,00
                                                                            0
                                                                            20,00
member states. All these are tailored at                                    0 -
ensuring that the region’s agriculture                                               199 1998 1999 2000 2001 200   2003 2004 2005 2006
                                                                                     7                       2
marketing and food security situation are                                                                Yea
                                                                                                         r
improved.                                                                            Total Exports      Imports    Total
                                                                                                                   Trade


Present Situation                                Source: COMSTAT database


                                                 In terms of domestic trade there has been a
Both intra- and extra- Regional trade has        rise in trade and trade earnings have
improved and is actually seen to be on the       expanded from US$4.6 million in 2004 to
rise in the recent years. Although the the       US$6.5 million representing 30% rise in total
balance of trade (or net exports), which is      intra COMESA trade earning and accounting
the difference between the monetary value        for a 45.12% share of total trade in the
of exports and imports over a certain period     region. Increases in exports have occurred in
of time, is still negative (implying that the    sugar, tobacco, tea, rice and sesame seeds
COMESA region still importing more than          which are high value products in the region.
it is exporting - indicating a trade gap).       Kenya, Zambia, Uganda, Egypt and Malawi
These trade gaps that still exist imply that     have continued gaining especially high
there is still need to further develop the       shares of these export earnings compared to
trade sector as well as the other institutions   other states of the region.     .
that are accompanied with it.
                                                 Significant increases in imports have also
Extra- regional export trade in agriculture      occurred in the regional markets. The internal
raw materials has been on the rise in the past   demand has been fostered by growth in grain
decade. This is a major development in           imports, particularly maize and rice, by such
COMESA’s trade structure. In fact the region     countries as Sudan, Democratic Republic of
has been enjoying a strong economic              Congo, Kenya, Djibouti, Somalia and
performance across its major sectors. Total      Burundi. The regions trade gap has continued
trade has been increasing reaching US$97.7       to reduce and is projected to continue
billion in 2006 from a level of US$24 billion    declining in the coming years, especially if
in 2004. Trade in agricultural raw materials     an enabling environment for trade is
has significantly increased, raising             continued to be advocated for among
COMESA’s trade earning from US$ 1.62             member states.
billion in 2004 to US$ 1.8 billion in 2007.      “Now, improving market access and therefore mar-
This rise in export earnings can be attributed   ket share entails the need to adapt to increasing
to the increase in production for export,        global integration and its associated challenges of
which has expanded by 16.4% from a total         increased competition. A major implication of these
production of 60 million metric tones in         challenges for producers is that they must increase
1997 to 71 million metric tones in 2008.         their participation in global value chains to be able
                                                 to access the markets of regional and international
                                                 markets, as well as other emerging economies.”
      2
                                            Intra COMESA Trade Perfomance                            food while they concentrate on production of
                                                                                                     cash crops. As for AMPRIP, promoting
                           7,000
                                                                                                     regional trade and not withstanding, food
 V alue in US $M illions



                           6,000
                           5,000                                                                     security remains core to enhancing the
                                                                                     Total Exports
                           4,000
                                                                                     Imports
                                                                                                     region’s economic development. In fact, the
                           3,000
                                                                                     Total Trade     region is fully aware of the important role
                           2,000
                           1,000
                                                                                                     staple crops such as maize, cassava, beans
                              0                                                                      and bananas play in contributing to food
                                                                                                     security and incomes of the rural people. In
                                   97
                                        98
                                             99
                                             00
                                                       01
                                                            02
                                                            03
                                                                      04
                                                                           05
                                                                                06
                              19
                                       19
                                            19
                                                 20
                                                      20
                                                           20
                                                                20
                                                                     20
                                                                          20
                                                                               20
                                                            Year
                                                                                                     this regard, COMESA has made sure that
                                                                                                     issues of staple crops trade, production and
Source: COMSTAT database                                                                             productivity including the welfare of small-
                                                                                                     holders who produce them are attended to.
Way Forward- COMESA’s
Programme to Address the                                                                             Regional implication
Trade Gap Situation.
                                             What seems to continue occurring is that
Successful trade requires the region to be   much as trade seems to be improving, there is
food secure. That is, before addressing      still a lot that COMESA member states need
issues of trade it is important that the     to do to further improve trade and increase its
region start first by ensuring that          share of the world market which seems to be
production for consumption is prioritized    reducing year by year. Following statistics
and primary, so that excess produce can be given above, agriculture trade is increasing
exported. Once food production is            only in specific products such as sugar,
addressed, then cash crop production can     tobacco, tea, rice and sesame seeds and not in
be enhanced. Agriculture trade coupled       other products. This means that only
with trade in other commodities such as      industries dealing with the aforementioned
minerals as well as other tradable           products are expanding more than the others
merchandise will increase the market share limiting growth to these industries only. Now,
for COMESA on the market and ultimately improving market access and therefore
reduce the trade gap which is currently      market share entails the need to adapt to
high. COMESA has been implementing           increasing global integration and its associ-
projects which have been dealing with food ated challenges of increased competition. A
security in the region while designing       major implication of these challenges for
strategies to enhance both regional and      producers is that they must increase their
international trade. The Alliance for        participation in global value chains to be able
Commodity Trade in Eastern and Southern to access the markets of regional and
Africa, ACTESA is one such project being international markets, as well as other
implemented in the region as a practical     emerging economies.
program that would enhance trade in
regional staple crops as a way of enhancing Participation in these chains gives producers
regional food security and assisting to link access to information about markets and
smallholder farmers to reliable commodity enables buyers to obtain information about,
markets. ACTESA is in a way promoting        and develop confidence in, the supplier.
regional food security through promoting     However, for the products that are not being
trade in staple food so that areas with      exported due to barriers there is need for
limited food supply can have access to       producers to improve their standards so that

                                   3
they meet the international standards setThe WTO, the international body dealing with
by the World Trade Organization, WTO.    rules of trade between nations, addresses these
For specific products, however, the      issues through the agreement on SPS measures.
entry of producers, processors and       Issues of SPS have continued to affect trade
traders into the value chain depends on  negatively, as some countries do not adhere to
product characteristics, technical       them while others have set their standards too
requirements, market structures and the  high just to bar others from exporting to them.
organization of trade. The determining   That is why for as long as COMESA member
factor in market entry is the capacity tostates are at different levels of harmonization of
upgrade and produce according to         their SPS measures in the three SPS areas of
                                         food safety, plant protection and animal health,
specific requirements relating to quality,
health and environmental standards, as   both regional and international trade will
well as consumer preferences and tastes. continue to under perform. Therefore, Govern-
(Source: UNCTAD Economic Develop-        ments, in collaboration with exporters’
ment Report 2008)                        associations, should set up capacity-building
                                         programmes to assist with trade standards,
Dealing with SPS issues                  Information bureaus should be set up to give
                                         information on requirements for participating in
Presently, COMESA member states do global value chains, and to promote the use of
not adequately access international      opportunities in dynamic markets.
markets for agricultural products due .
largely to weak adoption and             Trade information
implementation of harmonized SPS
measures, in spite of established WTO Information plays an important role in as far as
requirements. Even producers in the      trade stands, as players need to know where
region encounter difficulties in meeting commodities are available and at what price. In
these standards. This notwithstanding, the past it was difficult for traders to access
standards have an important and          regional information about tradable goods as
positive role to play in the development well as their purchase price. COMESA under
and expansion of world trade. For        the AMPRIP introduced a web based Food and
example, the compliance with sanitary Agriculture Marketing Information (FAMIS) to
and phytosanitary standards enables the bridge the gap in information lapses which
effective management of risks            traders in the region faced. Today, traders can
associated with the spread of plant and obtain regional agriculture marketing
animal pests and disease. Compliance information from the FAMIS website regarding
with these standards also helps to       any commodity. All they need to do is simply
stimulate value addition, innovation and log on to the web. Moreover, agriculture
product differentiation. Ineffective SPS commodity exchanges have also come up with
measures put countries at risk of being information exchange centers to help
affected by transboundary plant and disseminate market information to producers
livestock pests and diseases and these both locally and regionally. AMPRIP is working
hinder agricultural trade.               with these agriculture commodity exchange
                                         centers especially in Malawi, Kenya and Uganda
                                         to help strengthen them.

This publication was made possible by the support of the African Development Bank, ADB.
          Published by COMESA IPPSD Division contact: COMESA Secretariat,
                         P.O Box 30051, Lusaka 10101, Zambia
                        Tel: +260 1 229725, Fax: 260 1 225107
      4                        Email: secgen@comesa.int

								
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