COMESA develops instruments for implementing Digital Free Trade Area

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Common Market for Eastern and Southern Africa (COMESA) Secretary General Sindiso Ngwenya said, in an interview with Daily News Egypt, that the Egyptian initiative to establish logistical centres in a number of African countries is a laudable initiative.

Ngwenya added that the COMESA will be pursuing specific trade programmes in 2018 and these include the Digital Free Trade Area (DFTA), which is a comprehensive trade facilitation programme, for trade in services and small-scale cross-border trade.

Does COMESA have new programmes to support exports and promote trade exchange between the COMESA countries?

Yes. The COMESA Business Council (CBC) is a specialised agency of the Common Market for Eastern and Southern Africa that is representative of the private sector in the region. The CBC brings together the national chambers of commerce and trade promotion organisations in the COMESA region. Through the CBC, the private sector is informed about trade opportunities in other COMESA member states and is thus able to form business links.

In addition, COMESA is developing instruments for the implementation of the Digital Free Trade Area, which comprises e-commerce, e-legislation, and e-logistics. It will include an electronic certificate of origin, which will facilitate and expedite the export process.  Implementation of the DFTA will be done in phases, beginning in 2018.

There are other established institutions to support trade and investment in the COMESA. They include the Trade and Development Bank (formerly PTA Bank) which provides trade finance as well as project finance.  The COMESA Clearing House provides facilities for settling payments for intra-COMESA trade and services, without resorting to letters of credit. The African Trade Insurance Agency is another organisation that provides political and commercial risk cover for investments and exports, while PTA reinsurance company ZEP-RE provides reinsurance services.

How should trade exchange between COMESA countries be promoted?

COMESA attained free trade status in October 2000 with nine member states and this number has since risen to fifteen. The removal of tariffs for trade in products that comply with the COMESA Rules of Origin provides an advantage, which promotes trade and exchange of products between COMESA member states.  A crucial means of promoting trade exchange between COMESA countries would be through improving the availability of information on trade opportunities among the member states. It should be noted that in 2014, a study done by the secretariat on intra-COMESA trade potential identified the lack of information on trade opportunities as a key factor contributing to low intra-COMESA trade, which is currently below 10% of total trade. It is through robust and up-to-date market intelligence information that buyers and sellers in the COMESA region can be linked, given that the market is dynamic, with new firms entering and exiting.

COMESA member states hold annual international trade fairs, which provide an opportunity for companies to exhibit and market their products, and thus promote trade in the region. In addition, member states undertake trade missions where they identify market opportunities between themselves.

What are the problems hindering trade between those countries?

Some of the key challenges that hinder trade between COMESA member states include high transport costs between them, the prevalence of non-tariff barriers, supply side constraints, low levels of trade complementarity between COMESA member states, and strong trade links with developed countries that are the dominant export markets for several COMESA member states.

Does COMESA promote Egyptian exports in the region? What will be the volume of Egyptian imports from COMESA by the end of October 2017?

COMESA provides a favourable trading environment for Egyptian exports through the COMESA Free Trade Area in which 15 member states are currently participating, providing duty-free, quota-free access for Egyptian products to 14 of those countries. In addition, COMESA assists in the resolution of any non-tariff barriers that may arise which impact Egyptian exports. For instance, in 2015, the COMESA secretariat facilitated a joint on-the-spot verification mission which resulted in the resolution of non-tariff barriers for mill white sugar and LG product exports to Kenya. The resolution of the NTBs paved the way for Egyptian exports of the concerned products to Kenya on a preferential tariff basis.

In 2016, Egypt’s imports from the COMESA region were worth $643.8m and this was an increase compared to 2015 imports worth $ 593.6m. Furthermore, in 2016, Egypt’s exports to COMESA were worth $1.8bn, which translates to the largest share of the intra-COMESA export market, specifically 22%, an increase from the previous year’s share of 21%.

Does COMESA work with Egypt on programs to ensure export shipments to Africa? If yes, what are the procedures to ensure shipments?