When it was all about the G7, we were 13 places away from the top table but these G20 days we’re up there with the real shakers and movers.
Still, a G20 summit such as last week’s in Seoul, although heralded ahead of time as being potentially epoch-making, can come and go without anyone noticing why the leaders of the world’s 20 most influential countries even bothered to pitch, so little seems to have been achieved.
This time round there was a communiqué, all noble words, but, as a newsman, I’d be hard-pressed to find an angle among the worthiness. But The Guardian reported that a United Kingdom-South Africa initiative, which was adopted by the G20 leaders, was potentially the biggest outcome of the meeting.
Actively led and supported by President Jacob Zuma and British Prime Minister David Cameron, the idea is to create a massive free-trade zone across the African continent. Cameron, in his report back to the British Parliament, said that only 10% of all African trade was intra-African.
The suggestion is that Africa is so protectionist that individual countries prefer to trade with foreigners rather than with fellow Africans. Trade barriers are an obvious obstacle to growth and development — by removing these barriers the continent can benefit from greater competition and cheaper prices.
A free-trade area for the continent is both an obvious and a powerful idea. You would think that, if it got enough support and became a reality, its sponsors could win significant kudos.
Zuma’s contribution
Zuma, as a prime champion, could in time be seen to have made a greater contribution to revitalising the continent than his predecessor, “Mr African Renaissance” Thabo Mbeki.
Supporters of the initiative in the government suggest that the idea has legs. Three existing trade blocs, the Common Market for Eastern and Southern Africa (Comesa), the East African Community (EAC) and the Southern African Development Community (SADC), have already met and set up structures to take the idea forward. Comesa is home to 22 countries, the EAC five and SADC 15, although some are members of more than one trade bloc.
The current deliberations have their origin in a decision in 2008 to establish a tripartite free-trade agreement (FTA) including Comesa, the EAC and SADC. This will involve 26 countries, 568-million people and a combined GDP of $875-billion ($1540 per capita).
The National Economic Development and Labour Council (Nedlac) last month issued a tender for a South African study on the establishment of an FTA including the three existing trade blocs.
Xavier Carim of the department of trade and industry says that, if oil exports are excluded, intra-African trade rises to 22% or 23% of the total.
This is lower than the case of the North American Free Trade Agreement and a little less than that of Asia but “not as low as the 10% figure suggests”.
He says that most African trade is not in commodities but in value-added products, and extending the regional FTAs already in place on the continent has the potential to build and sustain more diverse markets in Africa.
Feasibility
Comesa, the EAC and SADC already have FTAs, but within their own regions. Carim says that creating an FTA out of the three is “quite feasible, although not without problems”.
He says that 85% of trade within SADC is now duty-free. By 2012 this is supposed to increase to 100%.
Carim says that the SADC free-trade agreement took six years to conclude and, although such an agreement including Comesa, SADC and the EAC will involve more countries and thus be more complex, significant work has already taken place within these trade blocs to improve their trade regimes, meaning that there is a base to build on.
The fact that a number of countries are already members of more than one trade bloc could also facilitate the establishment of the broader FTA.
Challenges will include beefing up and streamlining customs operations and standardising safety issues.
South Africa’s relationship with the rest of the continent will be governed by its existing membership of the Southern African Customs Union, which includes Botswana, Namibia, Lesotho and Swaziland.
The tripartite FTA has its next meeting in South Africa in the first quarter of 2011 and Carim says that the intention is to set out a road map for the way forward.
Some critics are already suggesting that South Africa will use its economic muscle to walk over weaker African countries, but Carim says countries such as Kenya and Egypt are strong players in their regions and will act as a counterpoint.
He says that, with the EU establishing its own free-trade agreements with African countries, there is also the possibility of this much stronger power exerting its influence on the continent.