## Regional Trade Arrangements in Africa

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### Overview of Africa’s RTAs and recent developments
- Africa is home to some 30 regional trade arrangements (RTAs).
- On average, each African country belongs to four RTAs (World Bank, 2004).
- Recent institutional and negotiation developments:
  - Revival of previously defunct arrangements, e.g., the East African Community.
  - Launch of continental institutions: the African Economic Community (AEC), the African Union, and the New Partnership for Africa’s Development (NEPAD) under the Organization of African Unity (OAU).
  - Preparations to negotiate FTAs with the European Union (EU) under the Economic Partnership Agreements (EPAs).
  - The Southern African Customs Union (SACU) negotiating an FTA with the United States.
  - South Africa has signed an FTA with the EU; the South Africa–EU FTA applies de facto to all members of SACU by modifying SACU’s common external tariff.
- Global context influencing African policy choices:
  - EU expansion, including admission of 10 new members from Central and Eastern Europe in May 2004 and prospective accession of Bulgaria and Romania.
  - Hemisphere-wide FTA negotiations in the Americas.
  - Rising regionalism in Asia with major countries (Japan, China, India, Korea) pursuing preferential arrangements.
  - Slow progress in the Doha Round; despite a framework agreement reached in August 2004, concluding the round by the end of 2005 will be difficult.

### Main findings on RTAs’ effectiveness (from the Preface)
- Overall assessment:
  - African RTAs have been generally ineffective in promoting trade and foreign direct investment.
- Key constraints identified:
  - Relatively high external trade barriers.
  - Low resource complementarity between member countries.
  - Small market size of member countries.
  - Poor transport facilities and high trading costs.
- Consequences:
  - These constraints limit both intra- and extraregional trade and reduce the potential benefits of RTAs.

### Policy implications and recommendations (summarized)
- To increase regional trade and investment, African countries need to:
  - Undertake more broad-based liberalization beyond preferential regional arrangements.
  - Streamline existing RTAs to reduce overlap and conflicting commitments.
  - Improve infrastructure and trade facilitation to lower trading costs.
  - Take early action to strengthen the domestic revenue base to address concerns over revenue losses from trade liberalization.

### Purpose and structure of the paper (as stated in the Introduction)
- The paper intends to accomplish three tasks:
  - Discuss the global trend toward regionalism, the challenges it poses for African trade policy, and the salient features of African RTAs (Chapter 2).
  - Analyze the effectiveness of the arrangements in achieving their stated objectives (Chapter 3).
  - Explore trade policy priorities and strategies for trade promotion (Chapter 4), followed by a discussion of the role of the IMF in helping African countries set priorities and accelerate trade growth (Chapter 5) and conclusions (Chapter 6).

*Regional Trade Arrangements in Africa — Yongzheng Yang and Sanjeev Gupta (IMF, 2005).*

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_Source: https://www.imf.org/-/media/websites/imf/imported-publications/external/pubs/nft/2005/rta/_rtaa.pdf_