Work Programme of TRID: Review of activities and prioritise for the 2006-2007 biennium

Committee on Regional Cooperation and Integration

Fourth Session
Addis Ababa, Ethiopia
24-25 March 2005

I. Challenges and Accomplishments in Trade Promotion

Trade has been widely acknowledged as a vital engine for economic growth and poverty reduction. In contrast to exponential expansion of global trade over the last two decades, Africa's share of global trade has fallen sharply. Therefore, reversing the trend of marginalization in the global economy by effective participation is considered as the single most critical challenge in this area. Despite the fact that ECA and other actors have been working on trade promotion, and have made several important contributions in the area of research, policy advocacy and technical advice, the results are not commensurate with the efforts thus far.

Effective integration into the global economy requires, on the one hand, Africa overcoming non-competitiveness of its industry; the narrow export base of its economies; and small fragmented domestic markets; and other supply-side constraints. Africa needs to effectively participate in the ongoing/future international trade negotiations especially to improve market access. To this end, ECA's Geneva Interregional Advisory Services (GIAS) has been providing trade negotiation-related technical assistance and capacity building to African countries through the continuous assistance and technical support to the Geneva African Group (AG) in the preparation of their negotiating positions in the DDA as well as in the preparation of their proposals and submissions on various WTO issues under negotiation. In addition, the GIAS in collaboration with the AU has also supported three separate retreats for the African WTO Geneva Group to brainstorm on WTO issues.

In support of NEPAD's trade objectives, ECA has operationalized the African Trade Policy Centre (ATPC) that has rendered advisory services on such issues as accession to the WTO and negotiations on the trade protocol of the ACP/EU Agreement; national and sub-regional forums for stakeholders on trade issues; and support to the African WTO Geneva Group. The ATPC played a key role for major meetings such as the second and third High-Level Brainstorming Meetings of African Trade Negotiators. It also contributed to the capacity building in trade promotion through publishing a series of relevant policy-oriented research.

In the context of the failure of Cancun Conference, ECA took initiative to assist countries of the region to develop and refine strategies for further negotiations. Followed by a post-Cancun expert group meeting, ECA organized an expert group meeting on the Status of Multilateral Negotiations: Cancun and its Consequences on Maghreb Countries. The meeting discussed the impact and consequences of the failure of the Cancun WTO Conference on Maghreb countries. The meeting also outlined mechanisms for harmonizing of trade policies within UMA in order to enable the countries form a common negotiating position for Maghreb countries.

In response to Member States' request based on fruitful results of previous two Meetings, ECA organized the third High-Level Brainstorming Meeting of African Trade Negotiators entitled WTO Post-Framework Meeting (November 2004). The meeting undertook a comprehensive evaluation of the outcome and implications of July Package for African countries, and identified key areas in the various modalities to be negotiated, particularly for agriculture and non-agricultural market access (NAMA). The Meeting mapped out a strategy for future negotiations in those areas based on research provided by ECA and key partner institutions, thereby assisted African countries to refine their strategies for further negotiations under the DDA.

To analyse the impact of the WTO July Package (agreement) on African countries, TRID organized an expert group meeting on Market Access (November 2004 in Tunis). The meeting discussed emerging evidence from trade policy research, conducted by TRID and other institutions. The main accomplishment of the meeting was providing experts with the opportunity for in-depth deliberations that fed into the Tunis Roadmap that charts out the areas of focus during the modalities stage of the WTO negotiations.

During the period of review, ECA has also focused on the Economic Partnership Agreements (EPAs) negotiations between ACP/EU countries. It is not only because expected benefits will not materialize spontaneously but also the implementation of EPAs is deemed to impose a number of severe challenges for ACP countries that include: managing the expected losses of fiscal revenue; coping with more competition expected to be entailed under the principle of reciprocity; and ascertaining net benefits in LDCs. In response to these challenges, ECA undertook a comprehensive impact assessment of EPAs on which Africa can build an effective strategy and positions for successful negotiations with the EU.

To enhance negotiation capacity of each sub-region and RECs, ECA (TRID and Sub-Regional Offices) organized four sub-regional Expert Group Meetings in Central, Western, Eastern, and Southern Africa. The main objective of these meetings was to examine the main challenges facing the region with regards to the on-going multilateral trade negotiations for the EPAs with the European Union, and at the WTO.

Through those expert group meetings, Member States in CEMAC (Dec. 2004), ECOWAS (March 2005), COMESA (March 2005), and SADC (April 2005) were made aware of the potential implications of the EPAs for their individual economies and the sub-region. Specific contributions were also made through focuses on the potential impacts of the EPAs reciprocity principle on regional integration in these sub-regions. Moreover, the meetings also shed light on Doha process and the implications of the July Package on agriculture and non-agricultural market access with scenarios of different formulas for tariff reductions. Further to four sub-regional meetings, ECA is to organize a continent-wide meeting to draw common Africa positions for the future negotiations.

II. Regional Integration: challenges and accomplishments

Given the small size of domestic markets, most African countries cannot benefit from economies of scale. Small and fragmented markets coupled with underdeveloped infrastructure have imposed high transaction costs on African industries and businesses. Cross-border trade and investment flows have been stagnant due to lack of coordination and cooperation between countries. Progress towards integration has been very slow, with an array of institutional and political issues needing urgent resolve. Hence, challenges facing the continent remain enormous that include overlapping of membership and mandates in RECs, need for integration of institutions, and macroeconomic policy-convergence.

ECA launched a major new publication, Assessment of Regional Integration in Africa (ARIA), which is the first comprehensive document assessing regional integration in Africa. The publication was produced with advice from a Steering Committee including ECA, OAU/AU and AfDB, and with support from the European Union (EU) and the World Bank. For tracking progress towards regional integration in Africa from the early years to the creation of the AU, ECA developed innovative performance indicators, which provided a clearer comparative picture of the relative pace of integration at the sub-regional and continental levels. The ARIA I qualitatively analysed the content and impact of various policies, plans and interventions. In addition to institutional aspects, the assessment covered integration performance in major sectors such as trade, money and finance, infrastructure, natural resources, etc. The quantitative analysis helped anchor the report with credible statistical measures. The report is serving as an objective tool for analysing and spurring member States towards greater action for integration.

ECA has focused on fostering the Regional Economic Communities (RECs) since the AU has declared RECs as the main building blocs of African integration. As such, the Commission and its Sub-Regional Offices (SROs) work closely with the main RECs to harmonize membership strengthen policy and build technical capacity to pursue regional integration. In this context, ECA is collaborating with the AU for the proposal on the rationalization of RECs planned to be submitted to African Heads of States for a decision.

ECA's ARIA II entitled Rationalization of RECs, will assist African leaders make an informed decision through its in-depth analysis on the costs of current duplication, the benefits of rationalization, and appropriate modalities for rationalization. Based on technical analysis of a comprehensive questionnaire, the report produces policy recommendations and best practices for rationalization, which will help Member States, optimize use of limited resources.

III. Strengthening Transportation Infrastructure

Strengthening infrastructure on the continent is critical, in particular transportation so as to enhance regional integration and promote intra-African trade. Despite efforts to integrate transport, gaps still exist in policies and implementation across RECs and countries, which cause high costs of doing business in cross-border transaction and impediments for factors and goods movement.

ECA has been instrumental in the preparation and adoption of competition rules for air transport liberalization in RECs such as ECOWAS, CEMAC, COMESA, SADC, and EAC. For effective implementation of the Yamoussoukro Decision (YD), ECA built SSATP programme with 11 partners in 28 countries, and chairs the SSATP programme. For the implementation of YD, ECA also assisted to mobilize resources to strengthen the Secretariat of ECOWAS and CEMAC.

The Annual General Assembly meeting of SSATP was organized in cooperation with the SSATP and the Ethiopian government (September 2004). The meeting produced useful conclusions that include: improving collaboration with RECs; increasing participation of countries in the programme; and including road safety in the SSATP action plan.

Furthermore, in collaboration with ECOWAS and CEMAC, ECA organized the Third Meeting of the Coordination and Monitoring Committee for the Implementation of the YD in West and Central Africa(Gabon in November 2004). Through the impacts assessment of the implementation of the YD in those respective sub-regions, the meeting discussed and recommended some solutions to the challenges facing member countries.

Given consensus that coordination and feasible action plan in RECs is critical for effective implementation of the YD, ECA in cooperation with SSATP and the RECs held a joint technical coordination meeting (February 2005) to review REC's transport action plan within the framework of SSATP. A main achievement of the meeting was an establishment of `transport coordination committee' for RECs with an elected chair to coordinate the transport programme between the RECs under SSATP.

TRID provided a forum for the exchange of experiences on the practices of multi-modal transport through an ad-hoc expert group meeting. The meeting examined perceived obstacles in the continent and consolidated the recommendations and conclusions of a study on "the development of multi-modal transport in Africa" prepared by ECA. Based on those recommendations, the meeting adopted a future plan of action in order to enhance the use of this mode of transport.

ECA undertook a study on the best practices related to commercialization, privatization, and corporatization of rail, air, road and maritime transport. By examining the current situation of the continent, the study contributed to establish best practices for those countries that are still lagging behind in particular, private sector involvement in transport infrastructure and services provision.

The vision of a well inter-connected Africa, however, has not yet turned into reality. The final evaluation called for follow-up work in the sector, and much of the focus is now on NEPAD for that work, particularly for intra-regional connections. ECA played a major role in the preparation of NEPAD's infrastructure Short-term Action Plan.

Committee of Trade and Regional Integration

ECA had the fourth session of the Committee on Trade, Regional Cooperation and Integration (March 2005) that considered matters pertaining to ECA's activities in support of trade promotion and economic integration process in Africa. In this regard, the Committee reviewed the major activities undertaken during the current biennium and work priorities for the next biennium of 2006-2007. The Committee focused on promotion of intra-African trade by reviewing three reports: i) regional cooperation and integration means of overcoming major obstacles to intra-African trade; ii) trade facilitation to promote intra-African trade; and iii) implementation of regional integration programmes at the national level.