Issues Paper on the FTA Tripartite

Issues and Challenges for the Proposed Tripartite
Free Trade Area in Eastern and Southern Africa
By Dr. Evarist Mugisa
Team Leader/ Trade Economist
Technical Support Unit
Ministry of East African Community Affairs
Kampala, Uganda
E-mail: emugisa@meaca.go.ug, mugisae02@gmail.com
Kampala, November 2011

CONTENTS
ACRONYMS AND ABBREVIATIONS.........................................................................ii
I INTRODUCTION....................................................................................................1
II THE MAIN REGIONAL ECONOMIC COMMUNITIES IN THE EASTERN
AND SOUTHERN AFRICAN REGION..............................................................3
The Common Market for Eastern and Southern Africa ............................................3
The Southern African Development Community .....................................................4
The East African Community ...................................................................................5
III OVERLAPPING MEMBERSHIPS IN THE REGION AND THEIR
DRAWBACKS ......................................................................................................10
IV THE FEASIBILITY OF THE PROPOSED COMESA-SADC-EAC FREE
TRADE AREA ......................................................................................................13
Understanding a Free Trade Area ...........................................................................13
The Benefits of Rationalisation and Harmonisation and a Free Trade Area...........15
V CHALLENGES TO HARMONISATION OF TRADING ARRANGEMENTS
AND ESTABLISHEMENT OF FREE TRADE AREA IN THE REGION ....18
VI CONCLUSIONS ....................................................................................................22
REFERENCES................................................................................................................23

ii
ACRONYMS AND ABBREVIATIONS
BLNS Botswana, Lesotho, Namibia and Swaziland
CEPGL Economic Community of the Great Lakes Countries
CET Common External Tariff
CM Common Market
COMESA Common Market of Eastern and Southern Africa
CU Customs Union
EAC East African Community
ECCAS Economic Community of Central African States
ECOWAS Economic Community of West African States
EPA Economic Partnership Agreements
FDI Foreign Direct Investment
FTA Free Trade Area
GDP Gross Domestic Product
IGAD Inter-Governmental Authority on Development
IOC Indian Ocean Commission,
LDC Least Developed Countries
NFTA North American Free Trade Area
PTA Preferential Trade Area
REC Regional Economic Community
RISDP Regional Indicative Strategic Development Plan
ROO Rules of Origin
SACU Southern Africa Customs Union
SADC Southern African Development Community
TDCA Trade, Development and Cooperation Agreement

I INTRODUCTION
Regional integration as a concept is not new. It goes back to the days of John Meade, J.
Viner, J. Vanek, R. G. Lipsey, Cooper and other economists. The debate about regional
integration is attracting the attention of politicians, academicians, researchers, business
executives, etc. Today, however, the debate tends to be rather polarised between
proponents and critics of regional integration. Those who support it, point out the benefits
of integration – trade creation, improved terms of trade, competition, etc. The critics, on
the other hand, argue that such arrangements are discriminatory, can lead diversion of trade
from more efficient producers outside the arrangement to less efficient ones within the
arrangement, and involve neighbours with similar geographical conditions, so that trade
complementarities between them are few.
In spite of these arguments, however, it appears the proponents of regional integration are
gaining the upper hand. Along with efforts towards globalisation of markets and the
liberalisation of trade, countries are now moving towards regionalism. Integration of
economies and enhanced political cooperation has become the major preoccupation of
many countries worldwide. In the 1980’s and 1990’s, there was unprecedented creation
and consolidation of regional economic blocs1
.
Africa has also embraced regionalism (or regional integration) as a strategy for sustainable
economic development. In fact regional integration and cooperation were accepted by
African governments since the early 1960s at the height of the “Pan African movement”.
The Lagos Plan of Action provided the conceptual framework through which economic
integration would be realised. Today, there are 14 regional economic communities (RECs)
on the continent, each with its own mandate, vision and mission (Karingi and Fekadu,
2009). The most prominent in Sub-Saharan Africa are ECOWAS, COMESA, the East
African Community (EAC), the Inter-Governmental Authority on Development (IGAD),
the Indian Ocean Commission, and the Southern African Development Community
(SADC). These organisations are among those designated by the AU as building blocks for
the African Economic Community.
One of the characteristics of RECs in Africa is multiple and overlapping memberships,
which has led to calls for their rationalisation. A Tripartite Summit of the heads of state of
COMESA, EAC and SADC held in Kampala in October 2008 discussed the implications
and disadvantages of multiple and overlapping memberships in the eastern and southern
Africa. It recommended the harmonisation and rationalisation of the activities of the three
RECs to the point of establishing a Free Trade Area (FTA). The purpose of this paper is to
identify issues and challenges arising from this decision. The paper is structured as
1
The North American Free Trade Area (comprising USA, Canada, and Mexico), the Asian Pacific
Rim, the Association of South East Asian countries, the Caribbean Common Market (CARICOM),
the Andean Free Trade Association, the Latin American Free Trade Association (LAFTA) the
unification of the European Free Trade Association (AFTA) with the European Community, etc are
cases in point.

2
follows. Section II examines the three main RECs, articulating their integration agendas
and achievements so far. Section III discusses the drawbacks of overlapping membership.
Section IV looks at the benefits of the proposed rationalisation and harmonisation in the
context of the Kampala November 2008 Tripartite Summit. In Section V, the paper dwells
at the challenges that stand in the way of the proposed arrangements. Section VI concludes.

3
II THE MAIN REGIONAL ECONOMIC COMMUNITIES IN THE EASTERN
AND SOUTHERN AFRICAN REGION
The Common Market for Eastern and Southern Africa
The Common Market for Eastern and Southern Africa (COMESA) is currently the largest
regional grouping in Africa consisting of 19 countries in Eastern and Southern Africa. The
predecessor to COMESA – the Preferential Trade Area (PTA) for Eastern and Southern
Africa – was established in 1982. The PTA, which was intended to take advantage of a
larger market and to promote greater economic cooperation among the countries of the
region, was the first step towards the ultimate goal of forming a REC. The treaty
establishing the PTA called for the gradual reduction and eventual elimination of customs
duties and non-tariff barriers. It also provided for the transformation of the PTA into a
common market within 10 years after entry into force of the treaty. This objective was
fulfilled with the establishment of COMESA. The treaty establishing COMESA was signed
in Kampala in 1993 and entered into force in 1994.
The COMESA Treaty contains two key principles which set it apart from its predecessor.
Firstly, it allows for variable geometry or multiple speeds, making it possible for a group
of countries to move faster in the regional economic integration process than other
countries. Secondly, it also provides for the imposition of sanctions on countries that
default on implementation of agreed COMESA programmes and for the settlement of
disputes arising from the interpretation or implementation of the Treaty (GTZ, 2005).
COMESA’s main objective is the promotion of regional economic integration through
trade and investment. It aims to facilitate the removal of structural and institutional
weaknesses of member states so that they can achieve sustainable economic growth. The
focus areas for cooperation are trade in goods and services, payment and settlement
arrangements, investment promotion and facilitation, infrastructure development and peace
and security.
The COMESA agenda provides for the formation of a Free Trade Area (FTA), to be
followed by a Customs Union (CU) and eventually and an economic union. The first step
was achieved with the launching of the FTA in October 2000. Trade within the FTA was
to conform to relatively simple rules of origin (ROO), but only 14 out of the 19 member
states participate in it2
. The COMESA FTA has been credited with the rapid increase in
intra-COMESA trade, which grew by 30% in 2007 alone over 2006 to US$ 8 billion.
According to Karingi and Fekadu (2009) in 2000 – 2006 intra-COMESA trade grew on
average at 20% annually.
2
Egypt, Djibouti, Malawi, Kenya, Mauritius, Madagascar, Sudan, Zambia, and Zimbabwe were
original signatories, while Rwanda and Burundi joined the FTA in January 2004.

4
COMESA launched a CU in 2008. The transition to this goal began in 2004 following the
decision by the Council of Ministers of COMESA to launch the CU in 2008 (COMESA,
2006). The key elements of the CU include: (i) a common external tariff (0% for raw
materials and capital goods, 10% for intermediate goods, and 25% for finished products),
(ii) a 3–year period for member states to align their national tariffs with the CET (this may
be reviewed for a period of not exceeding 5 years), and (iii) flexibility to allow member
states with the 5% tariff band to continue to apply it in the transition period. COMESA also
has rules and regulations – competition law and policy, harmonisation of product standards
and adoption of regional standards, regional safeguards and trade remedies, development
support measures, etc – to support trade and investment in the CU.
COMESA has plans for eventual formation of a Common Market (CM) in the medium
term. This includes a common investment area to be created in accordance with the
Common Investment Agreement, allowing for the harmonization of the different
investment regimes in the various countries. COMESA has also plans to establish a
Monetary Union (MU) in 2016. The major challenges to be addressed by COMESA in the
medium term towards the establishment of a CM are setting up of a COMESA Common
Investment Area and the application of the principle of the free movement of people.
The Southern African Development Community
The Southern African Development Community brings together 14 member states and
started as and organisation of the former Frontline States3
to resist the influence of South
Africa in the region, and was transformed into a development community only in August
1992 following the signing of the Treaty of Windhoek4
. The vision of the SADC is “one
of a common future, a future in a regional community that will ensure economic well-
being, improvement of the standards of living and quality of life, freedom and social
justice and peace and security for the peoples of Southern Africa” (Koesler, 2007).
SADC’s approach to regional integration focuses on relaxing the supply side constraints to
trade through regional cooperation in various sectors – infrastructure, agriculture,
transportation and human resources (IMF, 2004). The SADC Trade Protocol signed in
1996, which is the force driving the integration agenda in the region, aims at liberalisation
of all trade by 2012. The SADC Trade Protocol has the following implementation goals:
 Tariff liberalisation, which is asymmetrical: In the context of this goal, SADC
members fall into three categories, namely SACU members5
, developing countries6
, and
least developed countries7
. The SACU members offered to front-load their tariff reductions
to within five years of adoption of the Protocol, bringing their tariff rates for products from
non-SACU SADC countries down to zero (with the exception of some products designated
3
Angola, Botswana, Lesotho, Malawi, Mozambique, Swaziland, Tanzania, and Zimbabwe
4
South Africa joined SADC in 1994; the DRC and Seychelles acceded in November 1997.
5
South Africa, Botswana, Lesotho, Namibia and Swaziland.
6
Mauritius and Zimbabwe.
7
Malawi, Mozambique, Tanzania and Zambia.

5
as sensitive). The developing countries agreed to start their tariff reductions earlier than the
non-SACU members, while the LDCs were allowed to back-load their reduction
commitments. Tariff reduction was supposed to be carried out on the basis of four
categories: category A – consisting of goods subjected to immediate tariff elimination; B
– comprising goods of significant customs revenue whose tariffs are removal over an eight
year period (by 2008); C – goods regarded as sensitive with tariffs to be eliminated in 2008-
2012; and E- exclusions, comprising goods that can be exempted from preferential
treatment under Articles 9 and 10 of the Protocol.
 Trade liberalisation to be accompanied by the elimination of non-tariff barriers to
allow for the free movement of goods.
 Liberalisation of services: This was planned to cover six broad service sectors and all
modes of supply: transport, energy, communications, finance, tourism, and construction.
This would build on substantial liberalisation and harmonisation achieved under various
service-related protocols to-date. There have been a number of measures taken to pave the
way for further liberalisation of trade in services in SADC according to Article 23 of the
Trade Protocol. Already, there is an annex on trade in services, setting out the framework
for liberalisation of trade in services between SADC members. The ultimate goal of
liberalisation is to ensure that each member treats the services originating from other
members, and the suppliers of such services, as its own services suppliers.
 Ratification of the finance and investment protocol: This seeks to harmonise policies
on taxation, stock exchanges, insurance, exchange control payments and clearing systems
and macroeconomic convergence. However, progress in this area has been rather slow and
remains only a key long term goal.
 Rules of origin: The protocol also provides for rules of origin, which have been
described as the most contentious and unresolved issue on SADC’s regional integration
agenda, especially for clothing and textiles (Drapper et al, 2007). SADC members have
agreed to have product-specific ROO on all goods. However, the danger is that these ROO
are seen as restrictive and could be a barrier to both regional trade and international
competitiveness as they will be costly to monitor and enforce.
SADC’s future plans for deeper integration are spelled out in the Regional Indicative
Strategic Development Plan (RISDP), which seeks to align the strategic objectives and
priorities with the policies and strategies to be pursued in attaining full integration into a
full-fledged common market over a period of 15 years. It spells out the broad agenda and
targets for deeper integration by 2015. Consistent with this, SADC launched its FTA in
January 2008 and seeks to have a customs union in 2010 and a common market in 2015
(SADC RISDP, 2003).
The East African Community
The EAC – comprising of Uganda, Kenya, Tanzania, Rwanda and Burundi – is one of the

6
most dynamic and evolving RECs in Africa. It has been attracting interest from policy-
makers and researchers because of its steady implementation of an ambitious regional
integration agenda, since its re-establishment in 1996. In terms of the classical stages of
integration – starting with a PTA, followed by an FTA, a CU, a CM, and culminating into
a PF – the EAC is ahead of COMESA and the SADC. The EAC has so far been able to
achieve deeper integration compared the other two, given that it is already a CM.
The EAC’s objective the EAC is to “fast track” integration among the Partner States, by
establishing a CU within 5 years, followed thereafter by a Common Market, a Monetary
Union and eventually a Political Federation. The objectives of EAC integration are to
develop policies and programmes for widening and deepening cooperation among the
Partner States in political, economic, social and cultural fields, research and technology,
defence, security and legal and judicial affairs. However, the vision of a fast-track
integration group within COMESA was, undermined by Tanzania’s withdrawal from
COMESA in 2000.
The integration process in the EAC has progressed well starting with the signing of a
Customs Union Protocol in 2005 as the entry point to the Community. Following a five-
year transition period, the EAC is now a full-fledged CU. Under the CU, the Partner States
agreed to, and implemented, an internal tariff programme, common rules of origin,
elimination of non-tariff barriers, a three-band common external tariff (0% 10% and 25%
for raw materials, intermediate goods and finished products). Other provisions cover
dumping, subsidies and countervailing measures, settlement of disputes, competition, duty
drawback, remission of duties and taxes, customs cooperation, etc.
The EAC CU does not directly address the issue of Kenya’s membership in COMESA’s
FTA and Tanzania’s in the SADC FTA, but stipulates that “the Partner States shall
honour their commitments in respect of other multilateral organisations and
organisations to which they belong” Art 37 [1]). However, a “common policy in the
field of trade” is envisaged (Art. 37 [2]). For that purpose, “the Partner States shall
formulate a mechanism to guide the relationships between the Customs Union and
other integration blocks, multilateral and international organisations upon signing of
this Protocol” (Art. 37 [3a]) Article 14 and Annex III provide for the rules of origin for
intra-EAC trade of goods not originating in the Community, i.e. COMESA and SADC in
particular. Art. 47 (4a) further stipulates that “Partner States may separately conclude
or amend a trade agreement with a foreign country provided that the terms of such
an agreement are not in conflict with the provisions of this Protocol”. The other parties
have to agree to such agreements or amendments (Art. 47 [4e]).
The EAC Partner States agreed to negotiate, as a bloc, FTA agreements with SADC and
COMESA. These are planned to be concluded when the EAC becomes a fully functioning
CU in 2010. The individual Partner States’ trade preferences with COMESA and SADC
therefore represent temporary exceptions from the CET. In November 2009 the EAC
Partner States signed a Common Market Protocol, whose full implementation will start in

7
July 2010. This is expected to be followed by the conclusion of a Monetary Union Protocol
in 2012, and ultimately a Political Federation8
.
The Extent of Regional Integration in the three RECs
The success of a regional economic community is measured by the extent to which it
promotes intra-regional trade. While this may not be universally accepted, nonetheless, it
is clear that the level of intra-regional trade provides a useful indicator of the level of
regional integration and regional cohesion. This section gives and overview of the trade
situation of the three RECs.
Intra-SADC Trade
One of the objectives of the SADC Trade Protocol was to increase intra-regional trade by
liberalising trade in goods and services on the basis of fair, mutually equitable and
beneficial trade arrangements. In spite of this, according to TIPS (2007), the structure of
trade in SADC has not changed since its formation in 1992, largely because the structure
of the SADC economy has remained unchanged. Most of the SADC economies are not
diversified and many depend overwhelmingly on a single sector. Angola and Botswana,
for example, depend heavily on their mining sectors.
Intra-regional trade has been growing in recent years, but it remains low, for a free trade
area. Countries have traded with the rest of the world, which limited intra-regional trade.
Much of intra-SADC trade is concentrated in SACU, while most international trade is still
taking place under bilateral agreements among SADC member states or with former
colonial powers. As a result, the Trade Protocol has not been utilized to expectations. The
main instrument of trade liberalization as provided for in the protocol has been the
elimination of customs tariffs. Intra-SADC trade is also constrained by the poor
infrastructure in the region. The state of the road network in many countries in the region
is inadequate, which limits the quick movement of goods. Poor infrastructure in the region
has been responsible for the high cost of goods especially in landlocked countries. This is
compounded by the predominance of non-tariff barriers.
One of the features of intra-SADC trade has been the asymmetrical nature of its increase
in recent years, largely as a result of South Africa’s accession to SADC in 1994. Its
membership to SADC has had a profound impact on the organisation in general, and the
level of intra-regional trade, in particular, raising the level of intra-regional trade from 5%
in the 1980s to 20% in 2009 (UNECA, 2009). According to the IMF, intra-SADC trade
grew by about 8% annually in the period 2001-2003. However, a notable trend in all this
is that in spite of the significant growth of intra-SADC trade over the years, it has not
happened in a balanced fashion. Within SADC, the SACU countries – particularly South
8
Draper P., Durrel H. and Alves P, (2007) have expressed scepticism about the notion of attainment
of political federation in the EAC region. They see the recent accession of Rwanda and Burundi –
two countries with troubled histories – as one of the complexities in this regard, which are
compounded by the unfolding crisis in Somali which has drawn in Uganda and Kenya, plus the
uncertain security and political forecasts in Uganda, etc.

8
Africa – account for most of the intra-regional trade.
Intra-COMESA Trade
The ultimate objective of COMESA is to create a fully integrated and internationally
competitive and unified region in which goods, services, capital and persons move freely.
The principal route that has been chosen in order to realise this goal is development
integration through development of trade and investment.
Intra-COMESA trade has grown rapidly, albeit from a very low base – from US$ 834
million in 1985 to US$ 14 billion in 2008. Table 2.1 below shows intra-COMESA trade
performance in 2000-2008.
Table 2.1: Intra-COMESA Trade Performance, (Millions US$) 2000 – 2008
Source: COMESA COMSTAT Database
One of the contributing factors to the growth of intra-regional trade was the launch of the
COMESA FTA in 2000, under which there was a reduction of tariffs, duty and quota free
entry for goods that qualified for exemption under the FTA. To date, the COMESA trade
regime has benefited commercial traders who have the capacity and resources to go through
the rigorous exercise of obtaining the necessary certification for goods to qualify for duty
and quota free entry into the COMESA market.
In spite of the increase, however, the share of intra-COMESA trade in total COMESA trade
remains low, standing on average at 4% for the last four years. This is attributed partly to
the fact that third country trade consists of raw material exports, some of which have had
major price increases in recent years. Hence, this surge in third country exports implies
potentially a lower intra-COMESA trade to total trade ratio. At country level, Zimbabwe
increased her total merchandise imports by 97% in 2007, which is more than four times the
regional average of 24% in that year. Total imports for Madagascar and Kenya also rose
by 43%.
The main constraints to intra-COMESA trade include dependence for most countries of a
few similar primary exports, inadequate infrastructure, and limited coordination of
macroeconomic policies among member states.
Intra-EAC Trade
Regional trade among the EAC Partner States has shown a steady increase, but remains
2000 2001 2002 2003 2004 2005 2006 2007 2008
Exports 1,497 1,319 1,882 1,670 1,804 2,583 2,702 3,950 6,357
Re-exports 200 400 267 475 531 625 268 570 599
Total Exports 1,697 1,719 2,149 2,145 2,335 3,208 2,970 4,520 6,956
Imports 1,419 1,718 2,218 2,173 2,223 3,046 3,757 4,554 7,334
Total Trade 3,116 3,437 4,368 4,318 4,558 6,254 6,728 9,074 14,290

9
low. In recent years, intra-regional exports have been rising, especially for the founding
Partner States. Similar to SADC, there are considerable inequalities, with Kenya
dominating intra-EAC exports, especially of intermediate and finished goods to the rest of
the region. Overall, however, the EAC economies are fairly open due primarily to their
high import and export GDP ratios. Their overall trade imbalances can be accounted for by
higher import ratios relative to their export ratios.
There has been a growing
formal trade in agricultural
products, especially for the
poorer EAC members. In
2000 most of intra-EAC
commodity exports for
Rwanda and Burundi, and
more than half for
Tanzania and Uganda,
were in food and live
animals (World Bank,
2009). Kenya has maintained a share of less than 10% in this category of exports. Hence,
any barrier to trade in food and live animals would impact the entire EAC, but especially
the two new members. Beverages and tobacco are now very important for the exports of
Burundi and Uganda. Inedible crude material exports (other than fuel) are important for
Burundi, Rwanda, and Tanzania. For the new members of EAC, intra-EAC exports remains
largely confined to these three major categories.
Manufacturing sector products of the more developed EAC members are increasingly
finding markets within the region and beyond. Intra-EAC exports shows increasing
diversification into more specialized manufactured goods and articles by Kenya, and
gradually so by Tanzania and Uganda. Chemicals remain important in Kenya’s exports
and have increased substantially for Tanzania. Fuels and lubricants, and machinery and
transport equipment, are significant in Kenya’s exports to the rest of EAC.
A Summary of Regional Trade
The three RECs discussed above constitute an important economic space. They have a
combined population of 764 million, and a combined gross domestic product (GDP) of
approximately US$ 1,577 billion in 2008 (World Bank, 2009). However, in spite of the
various trade-promoting initiatives between them, and progress with trade liberalisation
strategies, intra-regional trade remains limited and asymmetrical. The level of this trade,
compared to other RECs elsewhere, remains a small proportion of total trade, although it
has experienced considerable growth in recent years.
The dominant factor determining the character and extent of intra-regional trade flows is
South Africa. Without South Africa, intra-regional trade stands at 6-7%, since most
countries in the region are predominantly exporters of primary goods to the developed
Table 2.3: Exports of all Commodities to EAC (US$ ‘000)
Average 2000–6 Actual 2007a
Burundi 7,052.8 9,524.0
Rwanda 29,603.3 32,415.4
Tanzania 84,353.2 126,604.3
Uganda 97,123.4 242,196.8
Kenya 501,618.3 952,788.1
Source: COMTRADE Database.
a. Rwanda, Burundi, Tanzania, 2006.

10
industrial countries. This is a very low figure compared to almost any other REC in the
world. If on the other hand, South Africa is included, intra-regional trade flows expand to
about 20% (UNECA, 2009). One striking feature is that within the sub-region, there
appears to be some disconnect between trade and integration, both regionally and globally.
III OVERLAPPING MEMBERSHIPS IN THE REGION AND THEIR
DRAWBACKS
As the integration process unfolds in the above three RECs, one of the problems facing the
member states is that of overlapping memberships, where one country belongs to more
than one REC. In fact, this problem in the region is without parallel in the world. Seven
RECs are operating in parallel in the region9
. Table 2.1 below shows the overlapping
memberships in the Eastern and Southern African region, involving the four RECs, namely
COMESA, SADC, SACU and the EAC.
As can be seen in Table 2.1, of the SADC 14 member states, eight of them (the DRC,
Madagascar, Malawi, Mauritius, Swaziland, Zambia, Zimbabwe, and Seychelles) are also
members of COMESA. There was even a greater overlap, but Tanzania (2000), Namibia
(2004) and Lesotho (1997) withdrew from COMESA. Likewise Angola suspended its
membership, citing duplication with SADC. For the same reasons, most recently, Rwanda
(2007) withdrew from ECCAS and cancelled its application to join SADC, both in favour
of reinforcing its current memberships to the EAC and COMESA. The overlap also grew,
in that the Seychelles opted to pull out of SADC in 2004, but applied to rejoin in 2006 and
was re-admitted in 2007 (Braude, 2008).
Within the EAC its five members belong to a number of other RECs. Uganda, Kenya,
Rwanda and Burundi are also members of COMESA. Tanzania is also a member of SADC.
Uganda and Kenya are also members of IGAD, while Rwanda and Burundi also belong to
the Economic Community of Central African States (ECCAS). Furthermore, Rwanda and
Burundi also belong to an economic community called the Economic Community of the
Great Lakes Countries (CEPGL) which was only revived in 2004. There have been
suggestions to merge these RECs, but this has proved to be very politically sensitive.
Instead, efforts have been made to coordinate the work of the three RECs in order to
prevent duplication of, and conflict between, their programmes, projects and activities.
9
SADC, COMESA, EAC, SACU, IGAD, ECCAS and CEPGL

11
Overlapping membership has
sparked off debate about its
merits and disadvantages. One
school of thought contends that
multiple memberships hinder
regional integration by, among
other things, leading to
duplication of effort. According
to Aryeete and Oduro (1996), “it
is difficult to envisage how
SADC and COMESA, given their
convergence to both sectoral
cooperation and trade integration,
can live and prosper with the
overlapping membership of
South African countries”. This
line of thinking is premised on
rationalising memberships and
seems more consistent with the
Abuja Treaty, which aims at
continent-wide integration.
Indeed, overlapping
memberships are not always
useful and they can lead to a
number of problems and
uncertainties. First, a country that
belongs to two or more RECs not
only faces multiple financial
obligations, but must cope with different meetings, policy decisions, instruments,
procedures, and schedules. Customs officials have to deal with different tariff regimes,
rules of origin, trade documentation, and statistical nomenclatures. The range of
requirements increases the customs procedures and paperwork, which is in contradiction
of trade liberalisation goals of facilitating and simplifying trade. Thus, since the integration
agendas and obligations differ from one REC to another, multiple memberships often lead
to a country having to implement conflicting obligations.
Second, because countries derive legal obligations from their membership in these RECs,
there is legal uncertainty created in cases where more than one trade arrangement applies
to trade between two countries. Such uncertainties not only undermine the implementation
of these agreements, but also add considerably to transaction costs and duplication in both
regional trade and in trade with outside partners. This increases the burden on the member
states, some of which are already lacking the necessary capacity and resources. Small
10
Countries in red are participating in the COMESA FTA.
Country COMESA10 SADC SACU EAC
1. Angola x
2. Botswana x x
3. Burundi x x
4. Comoros x
5. Djibouti x
6. DRC x x
7. Egypt x
8. Eritrea x
9. Ethiopia x
10. Kenya x x
11. Lesotho x x
12. Libya x
13. Madagascar x x
14. Malawi x x
15. Mauritius x x
16. Mozambique x
17. Namibia x x
18. Rwanda x x
19. Seychelles x x
20. South Africa x x
21. Sudan x
22. Swaziland x x x
23. Tanzania x x
24. Uganda x x
25. Zambia x x
26. Zimbabwe x x
Total 19 14 5 5
Table 1: Overlapping Memberships in the Region

12
countries in the three RECs – Burundi, Djibouti, Rwanda, Malawi, etc – face enormous
capacity constraints in trying to implement these multiple regional trade agreements.
Third, the multiple and overlapping memberships have cost implications for member states
– especially where resources are limited. Using countries’ ability to meet their
contributions to the RECs as an indicator, reveals that in many cases the resource constraint
is quite binding. According to UNECA (2009), with few exceptions no REC receives full
contributions from its members, with a third failing to meet their obligations, and in some
cases more than half not paying at all! The reasons for this poor performance include (i)
countries spreading too thin among the many RECs; (ii) countries not being sure of the
gains from the RECs that are under financed, or not realising the benefits while the REC
existed; (iii) countries joining the REC without sufficient strategic consideration, leaving
political commitments not backed by budgetary support.
One area where resource constraints have been binding is staffing – in terms of both general
and professional cadres. Labour is one of the most critical inputs to the success of REC
programmes. Unfortunately, most RECs, including the three under consideration, run small
and lean Secretariats. A recent study (Mugisa et al, 2009), for example, found that the EAC
Secretariat in Arusha is thin on the ground. Other RECs have large numbers of general
staff category than the professional staff, a bias which has had a bearing on the
implementation record of the RECs’ programmes.
Fourth, while it may be possible to belong to more than one FTA, it is not possible to
belong to two customs unions. A customs union (CU) differs from an FTA in that all
members must give up control of their external tariffs and allow them to be centralised and
standardised as a common external tariff (CET), which then applies to all trade with
countries outside the CU. A country cannot realistically apply two different CETs, and
indeed, WTO rules prohibit dual membership to two CU. In the context of the region, this
therefore means the member states of the EAC, COMESA and SADC, through their
multiple memberships, are risking (if not already) violating WTO regulations.
In this regard, Tanzania’s membership in SADC complicates matters for the EAC. It will
be recalled that Tanzania withdrew from COMESA in 2000, ostensibly due to proposals
announced by the latter to reduce customs duties by 90%. Other reasons cited by Tanzania
included her desire to focus on her EAC membership, the need to implement the SADC
Trade Protocol, and the dangers to its infant industries posed by the COMESA FTA
(Braude, 2008; GTZ, 2005, Stahl, 2005). Tanzania is the only EAC member in SADC.
This state of affairs is untenable, since Tanzania cannot implement more than one CET. It
would be costly, if not difficult, for the EAC to maintain customs and ROO to ensure that
products entering Tanzania under the SADC Trade Protocol do not find their way into other
EAC Partner States. Consequently, Tanzania’s continued stay in SADC has the potential
to fatally undermine the EAC customs union.
Related to the above, all the other EAC Partner States are also members of COMESA.

13
Until recently, this did not pose any problems, since the EAC was seen basically as a fast
track to the COMESA integration agenda. Since both the EAC (in 2005) and COMESA (in
2008) launched their customs unions, the membership of Uganda, Kenya, Rwanda and
Burundi in COMESA is clearly impossible, unless the CETs of the two RECs are
harmonised.
The disadvantages of multiple memberships are therefore clear. The resulting problems of
multiple memberships and overlapping constitute what has been called “a spaghetti bowl”
that hinders regional integration by creating a complex entanglement of commitments and
institutional requirements, adding significantly to the cost of intra-regional business. As
UNECA (2006) points out, multiple memberships constrain economic efficiency and the
collective vision of African economic community – particularly the march towards the
establishment of the AEC. Therefore, rationalization and harmonization of the trade
arrangements in the three RECs, through an FTA, should go a long way in minimizing and
eventually eliminating the contradictions arising from multiple memberships and overlaps.
It will mean that countries will not have to choose one REC over another. Rationalisation
should seek to build viable, sensible regional economic communities.
IV THE FEASIBILITY OF THE PROPOSED COMESA-SADC-EAC FREE
TRADE AREA
With the understanding of the implications and disadvantages of multiple and overlapping
memberships, the heads of state of the three RECs met in Kampala, Uganda, in October
2008 to discuss the broader objectives of the three regional blocs – COMESA, SADC and
the EAC. This was later referred to as Tripartite Summit. Discussions centred around
achievement of acceleration of economic integration on the continent in line with the Abuja
Treaty and the African Union objective of the formation of one continental economic bloc.
The leaders agreed to initiate a process of coordination and harmonisation of programmes
in order to progress towards the goals of expanding trade, alleviation of poverty and
attaining the overall development objective.
The Summit provided a platform for the three RECs to form a larger free trade area (FTA)
and resolved that they “start immediately working towards a merger into a single REC …”
In the area of trade, customs and economic integration, the Summit “… approved the
expeditious establishment of a Free Trade Area, encompassing the member/ partner states
of the three RECs, with the ultimate aim goal of establishing a single customs union”.
Understanding a Free Trade Area
Regional integration agreements come in many shapes and sizes. They vary in income
levels, in openness to trade and in the share of trade that takes place in them. The main
types of integration are: a free trade area (FTA) a customs union, a common market, an
economic union, and a political union. NAFTA is an example of a free trade area, while
the EAC is a classical example of a customs union.

14
One of the main features of regionalism in recent years has been the proliferation of FTAs.
The rise in number of FTAs is driven by a number of factors – a defensive response to the
increase in trading blocs and FTAs many parts of the world, uncertainty over progress in
global trade talks under the WTO framework, the perceived need for deeper integration
with trading partners due in part to the demonstration effect of successful regional
integration accords in some parts of the world, etc. However, by their nature, FTAs are
complicated and highly controversial agreements. They have discriminatory features and
may therefore be “second best”. There are in fact no guarantees that a “free trade area” will
be a movement in the right direction of free trade, its name notwithstanding. This section
attempts to clarify the issues surrounding FTAs to help to embrace their positive elements,
while minimising the potential negative ones.
A free trade area is created as a result of an agreement between a group of countries in
which they introduce a schedule for the phasing out of tariffs and charges of equivalent
effect on goods and services traded, as well as any other hindrances to encourage free trade
between them. In other words, an FTA is a reciprocal preferential trade agreement under
which parties undertake to abolish restrictions on imports from each other, thus constituting
positive discrimination towards third parties. Thus, there are two distinguishing
characteristics of an FTA: (a) the liberalization of trade regulation for members, and (b)
the removal of trade barriers placed against members. This includes the removal of tariff,
quotas, and various non-tariff barriers, or a pledge to remove them by an agreed date in
future.
Free Trade Agreements and GATT 1994, Article XXIV
Free trade agreements represent a departure from the General Agreement on Tariffs and
Trade (GATT)/World Trade Organisation (WTO) guiding principle regarding non-
discrimination in trade, i.e. the most-favoured nation (MFN) treatment among signatories.
Article XXIV of the GATT (1994) provides some rules governing free trade in goods,
while Article V of the General Agreement in Services (GATS) gives the corresponding
rules for free trade in services. Article XXIV recognises the desirability of increasing trade
through voluntary agreements between two or more members, but it also cautions countries
that are signatories to such an agreement against raising barriers to trade, with non-
members.
As defined in Article XXIV, an FTA is a group of two or more countries (“customs
territories”), in which duties and other regulations of commerce are eliminated on
substantially al trade between them in products originating in the member countries. Article
XXIV distinguishes between a free trade area in which barriers have been removed, and an
agreement which will eventually lead to a free trade area. However, the key concepts in
this definition are not clarified. Two important concepts stand out in this regard, namely:
“substantially all trade” (i.e. the level of coverage), and the timing of FTAs.
The 1994 “Understanding on the Interpretation of Article XXIV
In order to reduce the ambiguity surrounding these two concepts, the 1994 “Understanding

15
on the Interpretation of Article XXIV” sheds some light on them. First, it recognises the
importance of comprehensive coverage, i.e. the contribution to the expansion of world
trade is increased if the elimination of duties and other restrictive regulations of commerce
extends to all trade, and diminishes if any major sector is excluded. FTAs which exempt
key areas such as agricultural trade or a major manufacturing sector through restrictive
ROO appear to violate this coverage guideline. Second, with regard to the timing of the
FTA (i.e. the time allowed for a new agreement to be phased in), the Understanding
specifies that the “reasonable length of time” of Article XXIV, “should exceed 10 years
only in exceptional cases” and “where … parties to an interim agreement believe that 10
years would be sufficient, they shall provide a full explanation to the Council of Trade in
Goods of the need for a longer period”.
The Enabling Clause
However, the Tokyo Round agreements, signed in 1979, contained more flexible and
lenient rules on preferential trading accords between developing countries. These include
the “Decision on Differential and More Favourable Treatment, Reciprocity and Fuller
Participation of Developing Countries”, also known as the Enabling Clause. Under the
terms of the Enabling Clause, developing countries are subject to less scrutiny in
complying with Article XXIV. They can potentially agree to reduce, but not eliminate
tariffs and other trade barriers or be more selective in sectoral coverage.
The Transparency Mechanism
The Doha Development Agenda includes negotiations which seek to clarify and improve
disciplines and procedures under existing WTO provisions applying to regional trade
agreements. Consistent with this effort, a “transparency mechanism” announced in 2006
provides for early announcement and notification to the WTO of any new FTA to ensure
its compliance with WTO rules. However, whether prompt notification can affect the
provisions of new FTAs remains to be determined. By mid-2006 when the transparency
mechanism was announced, the process of assessing the consistency of FTAs with WTO
rules had already created a growing backlog of cases waiting evaluation.
Regardless of WTO scrutiny, countries planning to negotiate a free trade agreement, should
know the potentially adverse economic and political effects, both on themselves, and on
their excluded trading partners, of arrangements that cover some but not all goods,
specifically an unduly long phase-in period, or divert trade from lower-cost sources.
The Benefits of Rationalisation and Harmonisation and a Free Trade Area
Many observers agree that there is merit in rationalising and harmonising the activities of
the three RECs. It must be clear from the onset that rationalisation RECs requires
addressing the overlapping institutions, duplicated efforts, dispersed resources, etc. In the
context of the three RECs – COMESA, SADC and the EAC – the main benefits of such
rationalisation are that they become stronger as overlapping functions are eliminated and
the resources are better targeted. What benefits arise from these actions?

16
 Laying the foundations of the African Economic Community: Rationalisation and
harmonisation of the integration initiatives in three RECs is consistent with the aspirations
of building the African Economic Community (AEC) outlined by the African Union (AU)
under the Lagos Plan of Action and the Treaty of Abuja. The Abuja Treaty was the first
comprehensive continental initiative to call for the establishment of the AEC by 2037. The
Treaty seeks to promote integration of the African economies, free movement of factors of
production across the continent, cooperation among the member states and coordination
and harmonisation of policies. One of the strategies for the achievement of the above
objectives is the “strengthening of existing regional economic communities and the
establishment of other communities where they do not exist” (Karingi and Fekadu, 2009).
Rationalisation and harmonisation of COMESA, EAC and SADC, would be consistent
with this strategy.
 Gains in economies of scale: Many of the countries in the three RECs have
populations of less than 15 million. They are too small to support, on their own, activities
that are subject to large economies of scale. This may be due insufficient quantities of
specialised inputs or the small size on internal markets. Rationalised RECs would
overcome this disadvantage. By rationalising and harmonising their integration agendas,
they are able to create larger markets to exploit economies of scale and thereby enhance
domestic competition, as well as raise returns on investment, and hence attract more foreign
direct investment. An FTA will allow producers to take advantage of a larger customer
base and, hence, produce at a lower average cost on all sales. Firms will even be able to
lower prices for existing customs – the “cost-reduction effect’. As a result, they will
become more competitive not only at home, but also in foreign markets.
 Linking landlocked countries to markets: Many of the countries in the region,
particularly within the three RECs, are landlocked small economies with inadequate
infrastructure11
. An FTA (and ultimately a customs union) of the three RECs
encompassing coastal countries, for example, will effectively connect landlocked countries
to the sea. Most of the landlocked countries in the region, share long-standing routes and
port facilities. The share of regional trade, especially imports, also tends to be higher for
landlocked countries than for other countries. Nevertheless, these countries stand to gain
most from reductions in the region’s trade barriers vis-à-vis the rest of the world, because
the marginal cost of imports from the region is generally higher.
 Increased intra-regional trade: One of the expected outcomes of establishment of a
larger FTA is the promotion of intra-regional trade. In spite of the trade liberalisation
regimes in the three RECs, intra-regional trade remains very low, accounting for about 6-
7% of the region’s value of total exports (ADB, 2007). In comparison, UNCTAD (2004)
shows that trade within the European Union (EU) accounted for about 60% of world trade
on average. The same applies to countries of the Latin American Free Trade Agreement
(ALENA) area, whose intra-regional trade accounted for 58% in 2004 (ECA, 2007). The
11
Ten of the 26 countries in the three RECs are landlocked countries. They are: Botswana, Burundi,
Ethiopia, Lesotho, Malawi, Rwanda, Swaziland, Uganda, Zambia and Zimbabwe.

17
respective figures for the Association of South East Asian Nations (ASEAN) and the
Southern American Common Market (MERCOSUR) are more than 20% and 20%,
respectively. Thus, the harmonisation of the RECs in the eastern and southern African
region, including through establishment of the FTA, would greatly increase trade among
them. This would involve not only reduction of tariffs, but also removal of non-trade
barriers, harmonisation and coordination of trade policies, improving trade facilitation, etc.
 Increased investment: FTA formation attracts such long-term, risk-sharing
investment flows by creating a more integrated marketplace within which multinational
corporations (MNCs) can enjoy a regional division of labour with low transaction costs
and exploit product-level economies of scale. Greater FDI flows can have important
valuable effects on the economy by attracting long-term foreign capital, providing ready-
made international customers through the foreign firms’ global networks, stimulating local
competition and putting government agencies on pressure to adopt “best practices” relating
to investment measures and regulations. But perhaps the most important benefit from FDI
for most developing countries is technology transfer.
Therefore the establishment of a larger FTA out of the three RECs will create large markets
which will be attractive for foreign direct investment. According to the UNCTAD WIR
(2009) FDI flows to the region have been asymmetrical. The main recipients in eastern
Africa were the Comoros, Madagascar, Mauritius, Seychelles, Uganda and Tanzania; in
the southern African sub-region these were South Africa and Angola. Investors think in
terms of regions when it comes to deploying their capital. A large market created through
an FTA will be more attractive to investors, especially as a result of the FTA, the region
becomes more competitive.
Indeed, there is considerable evidence to support the notion that RECs – or at least those
with large markets – have succeeded in attracting FDI. Mexico perhaps provides the best
example of this. The creation of the North American Free Trade Area – NAFTA –
guaranteed access to its northern neighbours (the US and Canada) and this had a profound
impact on FDI flows into the country. They more than doubled soon after the launch of
NAFTA. Similar phenomena were observed elsewhere – in Europe following the launch
of the Single Market Programme, in MERCUSOR, etc.
 Efficient allocation of resources: Rationalisation of the three RECs will to
elimination of waste through duplication of efforts. The savings made out of this will be
put to better use, such as financing common infrastructure, health, education and
programmes. The creation of a larger FTA would also help in mobilisation of large amounts
of financial and other resources for regional projects and programmes. This would lead to
an increase in the quality and quantity of public goods provided regionally.
 Improved productivity: As noted earlier, a REC combines markets, making it
possible to reduce monopoly power, as firms from different countries are brought into more
intense competition. Under intense competition, firms are induced to cut prices and to

18
expand sales, benefiting the consumers as the monopolistic distortions are reduced. The
establishment of an FTA out of the three RECs would lead to increased competition among
firms in the region, which would eliminate internal inefficiencies and raise productivity
levels. Since competition raises the chances of bankruptcy and hence layoffs, it also
generates stronger incentives for workers to improve productivity and increases labour
productivity across firms within sectors.
 Welfare gains: Welfare gains for the region would result from the resources saved as
a result of trade creation. Under trade creation, imports from member states will become
cheaper due to the elimination of tariffs, demand patterns will change, causing changes in
the flow trade and in output levels in many sectors. Rationalisation in the three RECs will
lead to elimination of trade barriers and the FTA will lead to the most welfare gains.
V CHALLENGES TO HARMONISATION OF TRADING ARRANGEMENTS
AND ESTABLISHEMENT OF FREE TRADE AREA IN THE REGION
In spite of the clear benefits arising from harmonisation and establishment of an enlarged
FTA, achievement of this objective is constrained by a number of factors. Indeed, the fact
that the three RECs have overlapping memberships is an indication of underlying problems
in many areas and challenges are therefore to be expected.
 Disparities in economic development and trade regimes: The three RECs with their
26 countries potentially constitute an enormous market. However, the member states are
not all uniform in terms of economic size and development. There is a clear asymmetric
product complementarity, which puts the more developed economies (South Africa, Egypt,
and Kenya) in a better position to market their exports. It also raises the concern over
possible polarization as investment may be attracted towards these economies.
Moreover, there are great disparities in the trade regimes across the three RECs. Several
countries such as Uganda, Rwanda, Malawi, Zambia, and Djibouti are ranked among the
most open in the world. On the contrary, others like Burundi, Comoros, and Seychelles are
ranked among countries with the most restrictive trade regimes in the world (IMF 2008).
Only about 9 countries have open trade regimes and these do not include the relatively
developed ones. In the circumstances, harmonization in the sense of low and uniform tariffs
will involve significant adjustment from a majority of countries, including the more
developed ones, and agreement will be complicated by the very different starting positions.
 Dependence on trade taxes: One of the trade effects of regional integration is the
reduction in government revenues from tariffs, directly through tariff cuts among members
and indirectly through a shift away from imports from non-members subject to tariffs
(ECA, 2004). The cost of this loss depends on the ease with which members can switch to
alternative was of raising funds, but can be high in countries that depend heavily on tariff
revenue.
With few exceptions, a large number of the countries in the three RECs depend on trade

19
taxes for their revenue. According to the IMF (2004), trade taxes account for over 10% of
total fiscal revenue in all the countries in the region12
. In 8 out of the 26 countries, this
figure stands at over 20%. Only in 5 countries of the 26 – namely South Africa, Egypt,
Tanzania, Uganda and Rwanda – are trade taxes less than 2% of GDP. Customs revenues
provide 6% of government revenues in Zambia and 10% in Zimbabwe (ECA, 2004). Such
a high degree of dependence on trade taxes is a major obstacle to tariff liberalization, given
that concerns over tax revenue in these countries are serious. Since an FTA involves
liberalization through a reduction in tariffs, the proposed Tripartite FTA is likely to lead to
a significant fiscal gap through the lowering of import duties in some countries. Moreover,
the new trade arrangement may lead to changes in the structure of individual economies in
the region resulting in a reduction in previously import-substituting industries which were
major sources of revenue.
 Rules of origin: One of the anticipated challenges associated with the creation of a
large FTA in the region relates to the rules of origin. Indeed, it is anticipated that in the
event of establishment of the FTA, the three RECs will seek to establish a single set of
ROOs, which would have a major effect on the current ROOs implemented by the three
RECs. Rules of origin are generally contentious in nature and are complex to negotiate and
agree upon. Kalaba, (2009) identifies eight main challenges associated with ROOs in an
enlarged FTA in the region. These are:
(i) How to bring together the three sets of ROOs and then narrow them to one, given
the differing goals of the three RECs, in addition to other trade policy instruments.
A single set of ROOs, would require unpacking all the existing measures and dealing
with them separately.
(ii) How to simplify the new ROO and make them predictable and open to uniform
interpretation, but most importantly, how to make them suitable for the majority of
businesses and stakeholders in the region who are predominantly small and medium
enterprises.
(iii) How to deal with the “sufficiently worked” SADC product specific ROOs, which
would need to undergo substantial transformation, which is compounded by the
unresolved rules on certain products.
(iv) The methodology of evaluating the value-added rule, given that COMESA and the
EAC currently use ex-factory costs (or the value of inputs used), while SADC uses
ex-works price which includes value-added materials and profits, but excludes
internal taxes paid. In the circumstances, one of the calculations of value-added
would have to be dropped.
(v) Application of the rules on “goods of particular economic importance” under
COMESA, given that this rule is substantially different from those applied in the
EAC. The rationale and criteria for this value-added rule are not clear and would add
unnecessary complication if not clarified.
12
Lesotho, Namibia, and Swaziland are the most dependent on trade taxes, where they account for
over 50% of their total fiscal revenue.

20
(vi) How to deal with the “tolerance” derogation applied under the SADC ROOs, which
is not under the COMESA or EAC ROOs. The tolerance rule is flexible with regard
to determination of origin, making it slightly less onerous when no such rule is in
place. The three RECS would have to find common ground on this derogation.
(vii) The rules relating to fisheries, in which there are deviations revolving around the
flag of the vessel and whether that rule should be maintained (as is the case in SADC)
or not. Related to this is how to deal with the nationality of the crew and officers,
given that currently SADC rules require that the crew members holding the
nationality of the country concerned should comprise at least 75% of the crew and
this is a joint condition for crew and officers. COMESA and the EAC, on the other
hand provide separate conditions for their crews and officers.
(viii) How to deal with the ROOs of other regional blocs, paying particular attention to
possible contradictions and conflicts of rules. The most significant regional bloc in
this regard is the EU with which the members of the three RECs have one or the
other arrangement. These arrangements with third parties will have a key role to play
in shaping the ROOs of the enlarged FTA13
.
 Institutional harmonization: One of the major challenges arising from the new trade
arrangement is how to deal with the current configurations. The three RECs are all legal
entities, with mandates conferred upon them by their member states. Clearly, if the decision
is to replace them with a single REC, then this necessarily means they have to be wound
up. However, to this day, the member states have not openly pronounced themselves on
this matter. Indeed, the recent events and developments in the three RECs – such as the
launching of the COMESA Customs Union in June 2009, the preparations for the launching
of the SADC Customs Union in 2010 – suggest that the Tripartite FTA would have to co-
exist with the existing RECs until such a time as all the legal instruments have been dealt
with in order not to create a vacuum.
A related matter is how to deal with the three secretariats. In each of the three RECs today
the trend is toward stronger institutions. In the EAC, for example, there are calls for more
authority being granted to the Secretariat in Arusha. Yet, dissolution of the three RECs,
would mean disbanding the secretariats. What is clear, though, is that whichever way the
RECs take – merger or rationalization – the process will also touch on their secretariats and
all the other institutions that play a supportive role such as East African Legislative
Assembly (EALA), the COMESA Court of Justice, the SADC Tribunal, etc. This may
prove a big hurdle given that there are vested interests in these institutions and these will
13
An example of a possible key challenge is related to agreements that provide for cumulation of
production. The EU has such an arrangement with the ACP countries which have initialed the EPA.
However, since not all members of the three RECs (e.g. Ethiopia, Eritrea, Comoros, etc) have
initialed, this would pose a serious challenge. Another problem with EPAs is that the possibility of
cumulation with South Africa for some products has been excluded. In that case if any of the
members of the enlarged FTA use materials imported from South Africa for a product to be exported
to the EU, then the value-added of that country must exceed that of South Africa. But the latter is
expected to be a member of the enlarged FTA and would be affected by this rule, introducing bias
against it, thus negating the objective of enlarging the FTA.

21
not be wished away through the creation of new institutions.
 The role of SACU: So far the proposals made about the future of the three RECs are
silent about the role of SACU in this process. However, it is inconceivable to imagine any
reforms about the future of these blocs without giving consideration to SACU. It will be
recalled that SACU is not only the oldest REC in the region and in Africa, but five of its
members are also members of SADC. SACU also contains Africa’s largest and most
diversified economy – South Africa. SACU compares favourably with the other three
RECs in terms of the degree of integration recorded so far. It has undertaken steps to deepen
and expand its integration agenda, notably through harmonisation of regulatory policies on
new issues such as competition, investment and intellectual property rights. Its
engagements in negotiations with external partners, such as the US and the EU have pushed
it further in this direction. For South Africa, the dominant regional power, regional
integration via SACU is a priority (Draper et al, 2007). Therefore South Africa may
strongly promote SACU’s agenda at the cost of SADC and, certainly COMESA.
At the same time, the overall question in this regard is what happens between SACU as a
whole and SADC. The problem is that for SACU and SADC to harmonise their integration
agenda, they would have to dismantle SACU’s current revenue sharing agreement, since
South Africa will not accept (and possibly cannot afford) to extend it to the rest of SADC
members. But such a decision would harm the rest of the SACU members (the BNLS) who
derive up to 50% of their core budget revenue from this arrangement (Braude, 2008).
Therefore, they will strongly be opposed to any such changes and therefore also potentially
opposed to a merger between SACU and SADC, unless there are efforts to retain the
revenue sharing framework in its current form. This would be problematic since it would
require introducing administrative barriers between the two RECs in order to collect and
distribute revenue as is done today. On the contrary, though South Africa wishes to see a
revision of the current revenue sharing agreement as it would wish to further dismantle
barriers between it and its non-BNLS SADC markets.
 Political will and stability: The success of the Tripartite FTA will require substantial
political will, given that there has been a lot of rhetoric about continental unity which has
not been matched by practical action. Indeed, there have been concerns that the proposed
roadmap for regional integration may not be realistic in view of the diversity of the
economies involved and the reality that economic integration takes time. Yet other
observers warn that care must be taken to ensure that the new arrangements deliver the
desired results. These can only be achieved if there is full implementation of the
commitments to remove tariffs and if these are accompanied by measures to address other
barriers to trade.
 EPA negotiations with the EU: All the 26 members of the three RECs are negotiating
economic partnership agreements (EPAs) with the European Union (EU) in different
configurations. EPA negotiations are likely to impact regional integration in several ways.
First, although the deadline of December 2007 passed and a number of countries initialled
framework EPAs, they are under pressure to conclude the full EPAs. This means tight

22
schedules, since progress is still limited and in reality comprehensive FTAs tend to take
time to negotiate. The EPA negotiations are complicated by the lack of a common trade
policy in the region, which is a prerequisite when they establish a CU, terms of which are
not yet clear.
As noted above, the countries in the three RECs formed regional groupings for the purpose
of negotiating EPAs. However, due to overlaps in memberships, the existing regional RECs
could not be used for this purpose, resulting in a split into two (ESA and SADC) and
subsequently the EAC. With the exception of SADC and EAC, the ESA configuration is
not in line with any existing regional organisation. This raises the question how the three
RECs can be reconciled to facilitate regional integration. EPAs imply bilateral FTAs
between individual countries in the three RECs and the EU. This poses problems when all
the SADC EPA or EAC EPA or ESA countries sign the same agreement, but in the end,
all of them end up signing different agreements. This has the potential to complicate, if not
prevent, any harmonisation of trade policies needed for future regional integration.
 The South Africa-EU Trade, Development and Cooperation Agreement: But perhaps
one of the complicating factors for harmonisation of the three RECs is the FTA –South
Africa’s Trade, Development and Cooperation Agreement (TDCA) – with the EU.
Although the agreement is between these two, today de facto it applies to the BLNS
countries by virtue of their membership in SACU. Because of the TDCA, South Africa has
only observer status in the SADC EPA negotiations and has indicated that it is not willing
to re-negotiate the terms of the agreement. In the context of the three RECs, this means that
in creating a Tripartite FTA, the TDCA will also have to apply to all the 26 countries,
which in itself creates a lot of uncertainty and compels these countries to provide the EU
with reciprocal market access. The question then will be whether these countries should
join the TDCA. The South African scenario also applies to Egypt which also has an FTA
with the EU in addition to being a member of the Arab FTA.
VI CONCLUSIONS
The above analysis brings us to the following conclusions:
First, the regional landscape in eastern and southern Africa is full of pitfalls and circles of
complexity. The problems inherent in overlapping memberships are real and could possibly
only be addressed at the regional level because that is where their ill effects are felt most.
Moving from the “spaghetti” bowl to more viable, sensible regional economic communities
is not going to be easy since there are very serious and fundamental challenges to contend
with. The need for rationalisation and harmonisation of integration initiatives has been
accepted in principle and the benefits to be derived from this recognised.
Second, the analysis of the memberships of the three RECs shows that it is not economic
arguments alone that dictate a country’s decision to belong to one or the other REC. Parallel
memberships are also due to the fact that a single bloc does not satisfy all the strategic
political and economic objectives of the country. Tanzania’s continued membership in

23
SADC is a case in point.
Third, the proposed FTA from the three RECs is a good and welcome proposition, which
recognises the similarities in their trade regimes, hence the need to harmonise them. This
implies joint planning and implementation of their programmes. Already the three RECs
have been, through their Secretariats, cooperating under a loose framework to try and
harmonise and rationalise their programmes and instruments. The proposed FTA can build
on these initiatives to move forward. In this regard, the central theme should be the need
to overcome overlapping membership, since most of the 26 countries in the three RECs are
already participating in customs unions or are in the process of negotiating two separate
customs unions.
Fourth, given the way in which the integration process has unfolded so far in the region
(and in other parts of the world), the key to understanding how the situation will develop
in the eastern and southern African region is the political calculations taken by what one
would call the “swing states”. In the context of this discussion, these are the countries,
whose decisions will have a significant bearing on a REC’s course and how the three (or
four) REC’s relate to each other. These include South Africa, Kenya, Tanzania, Angola,
Zambia, and Zimbabwe. Thus, South Africa will have a lot of influence, especially on the
SADC countries on account of its economic might; Kenya has an obvious stake in
coordinating the EAC with itself at the centre, given its economic size in the region;
Tanzania has long-standing political and economic ties with South Africa (the former
through relations with ANC during the party’s exile, the latter via extensive South African
investment), meaning that the latter would not be happy about Tanzania’s return to
COMESA; Angola is more inclined to ECCAS and is unlikely to join SACU where South
Africa is dominant; Zambia hosts the COMESA Secretariat rendering a rapture with
COMESA extremely difficult, etc.
Fifth, the major economies in the three RECs – South Africa, Egypt and Kenya – hold the
key to the success of the proposed Tripartite FTA. The negotiation and conclusion of the
Tripartite FTA will require the unity of vision regarding the objective and finality of a
regional agreement among these three countries – from the very beginning up to the end of
the process. If they do not wholly support the objective and finality of the FTA, or do not
share a common purpose, then the negotiations will either not start or will most likely not
succeed. The experience of the Free Trade Area of the Americas (FTAA) provides
important lessons in this regard. When the USA and Brazil lost interest in the process, it
crumbled, in spite of the interest shown by the majority of the 34 countries in the region.
REFERENCES
COMESA (1993) The COMESA Treaty
COMESA, EAC and SADC (2009) Draft Report on Establishing the Tripartite Free Trade
Area.
EAC (1999) The EAC Treaty
EAC (2004) The EAC Customs Union Protocol

24
EAC, COMESA and SADC (2008) Final Communiqué of the COMESA-EAC-SADC
Tripartite Summit of Heads of Government, Kampala 22nd
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Jakobeit C.; Hartzenberg T. and Charalambides N. (2005), Overlapping Membership in
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Mmatlou Kalaba (2009) Exploring the COMESA-EAC-SADC Trilateral Free Trade
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Stahl Michael (2005) Overlapping Membership in COMESA, EAC, SACU, and SADC:
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Stephen N. Karingi and Belay Fekadu (2009) Beyond Political Rhetoric – the Meaning of
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Tsidiso Disenyana (2009) Towards and EAC, COMESA and SADC Free Trade Area.
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Wolfe Braude (2008) SADC, COMESA and the EAC: Conflicting Regional and Trade
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Performance and the Way Forward. IMF Working Paper, WP/05/36.

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