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8/22/2019 Using Appropriate Examples Analyse the Implications of the Mauritian Membership to COMESA
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Using appropriate examples analyse the implications of the Mauritian membership to
COMESA
1.0 Introduction
Mauritius has over the years methodically fashioned the pre-requisites itself into a really
advantageous, safe and business friendly location of unparalleled quality for the
establishment of global entities as well as providing a conducive economic and political
environment for the development of trade among numerous countries.
Over the years, it has embraced bold reforms that have made it among the most open,
competitive and low tax economies in the world. Capitalizing on its strategic location and
relying on its sound economic base, Mauritius has positioned itself as a premier and reputable
International Financial Centre in the Indian Ocean.
It is proactively revising its legal and regulatory framework as well as its business
environment, in line with world market demand.
Some of the unique element that makes Mauritius an attractive and competitive jurisdiction
includes:
1. Political, economic and social stability.
2. Pro-business environment, with the government acting as the facilitator.
3. Preferential market access to the EU (under Cotonou Agreement), US (Under the Africa
Growth and Opportunity Act – AGOA) and Africa (under the common Market for Eastern
and Southern Africa – COMESA and under the Southern African development
Community – SADC
4. High level of protection to investors through a wide network of Double Taxation
Avoidance Treaties (DTAs) and Investment Protection Agreements (IPPAs). Mauritius is
also signatory member to a number of international, regional and bilateral conventions
and agreements.
5. Close historical, political, economic and cultural ties with countries on the competitive
edge of technology and information society (India, China, South Africa, Europe and
North America)6. Attractive package of fiscal and non-fiscal incentive and high level of facilitation
services.
7. Ease of doing business for incorporation or registration of a company.
8. Young, dynamic competitive and bilingual (English/French) workforce with good
qualifications, skills and experience.
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2.0 Regional Agreements
One of the most striking development in the world trading system since the mid-1990s is a
surge in Regional Trade Agreements (RTAs). It is well documented that countries have been
engaging in international trade since ages. Regional economic integration has a long history
in virtually all parts of Sub-Saharan Africa. Regional integration is characterized along three
main dimensions namely Geographic Scope, The substantive coverage and the Depth of
integration. From about 50 till 1990, the number of RTAs notified to the World Trade
Organization (WTO) has crossed 250 in 2003 and estimates indicate that over 300 RTAs will
be in effect by 2007 (Pal, 2004).
Figure 1 The relationship between the various levels of regional agreements.
Source Das (2001)
Most of the sub-Saharan African (SSA) countries economic performance has been
disappointingly low compared to other developing regions. This has been attributed to manyfactors, among them; is the inability for most African countries to secure access to larger
markets, inherent high trade costs among neighbours, lack of an effective framework for
regional cooperation and resource pooling, inadequate infrastructure, and the pressure from
development partners pursuing their own foreign policy objectives in the continent. As a
consequence, among other measures geared towards promoting economic growth and
development, Africa is witnessing a renewed momentum for integration. Besides, the fear of
marginalization together with the fact that, most of the African economies are too small on
their own to negotiate with powerful trading blocs, has also led to increased interest towards
regional economic integration.
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The continent has witnessed a shift from “closed regionalism” with import competing
approach to a more open approach. In a context of wanting to have in place World Trade
Organisation (WTO) consistent agreements when the Cotonou Agreement expired, the
European Union (EU) pushed hard in 2007 to define interim agreements that focus primarily
on reciprocal tariff reductions to satisfy GATT Article XXIV requirements. These requirethat the parties to a free trade agreement remove tariffs on “substantially all” trade under a
defined and reasonable timetable.
African Regional Trade Arrangements (RTAs) have largely been motivated by the
continent‟s desire to promote growth through regional cooperation. RTAs, by creating larger
markets, are thought to enable African countries to exploit economies of scale and enhance
domestic competition as well as to raise returns on investment and, hence, attract more
foreign direct investment (FDI). On average, each African country belongs to four RTAs
(World Bank 2004) and on top of the list are many Eastern and Southern African countries.
As for Mauritius, it is a member of South African Development Community (SADC),
Common Market for Eastern and Southern Africa (COMESA) and the Indian Ocean
Commission (IOC).
There is overlap of membership among Regional Economic Communities (RECs) in the
Eastern and Southern African region to an extent unparalleled anywhere else in the world.
For example, almost half of COMESA members are also members of SADC, whose
membership is smaller than COMESA's as shown in Figure 1 below. This may tend to
weaken the integration process. It leads to costly competition (even for attention and
resources); conflict; inconsistencies in policy formulation and implementation; unnecessaryduplication of functions and efforts; fragmentation of markets and restriction in the growth
potential of the sub-region. Yet, as most RECs in the Eastern and Southern African region
wish to move to a Customs Union (CU), member states with multiple memberships at present
will have to strike the balance of the costs and benefits of belonging to one or another CU
grouping.
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Figure 2: Overlapping membership in regional integration groups
2.1 South African Development Community (SADC)
The Southern African Development Community (SADC), currently with 14 members started
as development cooperation in 1980, the Southern African Development Coordination
Conference (SADCC), and was reorganized as a development community (SADC) in 1994.
SADC approaches regional integration differently by concentrating on relaxing the supply
side constraints to trade through regional cooperation in various sectors such as
infrastructure, agriculture, transportation and human resources, etc. Although, SADC trade
protocol laid less emphasis on timetables for the establishment of a customs union or acommon market, SADC reached an agreement in 2000, to create a free trade area. SACU
(Southern Africa Customs Union) being a subset of SADC was established in 1910 and
recently renegotiated between South Africa, Botswana, Namibia, Lesotho and Swaziland as
the new SACU agreement on 21st October 2002. Four of the members fall under a Common
Monetary Area, with Botswana withdrawing from its predecessor the Rand Monetary Area in
1974. SACU over the years managed to maintain virtually free internal trade behind a high
common for large revenue payments to the smaller members.
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SADC is an intergovernmental organization aimed at promoting economic development. The
objective of SADC is to foster harmonized regional development through the concerted
undertaking of economic activities on a sector-by-sector basis. Current member states are
Angola, Botswana, Democratic Republic of Congo (DRC), Lesotho, Malawi, Mauritius,
Mozambique, Namibia, Seychelles, South Africa, Swaziland, Tanzania, Zambia andZimbabwe. SADC headquarters are in Gaborone, Botswana. All SADC counties are
contracting parties to the General Agreement on Tariffs and Trade (GATT), extending MFN
treatment to each other. They are members of the World Trade Organization (WTO).
SADC and its member states are expected to act according to the following principles:
• Sovereign equality of all member states;
• Solidarity, peace and security;
• Human rights, democracy and the rule of law;
• Equity, balance and mutual benefit;
• Peaceful settlement of disputes.
2.2 Indian Ocean Commission (IOC)
The Indian Ocean Commission (IOC) is a regional organization regrouping four African
Caribbean and Pacific (ACP) states (Comoros, Madagascar, Mauritius and Seychelles) plus
one ultra-peripheral region of the EU (Reunion, an overseas department of France). Set up in
1984, the IOC is one of the first formal experiences of regional cooperation in this part of the
vast region constituted by the Indian Ocean. The approach, essentially political in nature, was
at the time part of the drive to reinforce cooperation within the Southern hemisphere. Theobjectives and missions established by the founders of the IOC were primarily to strengthen
links between the peoples of its member states and improve their standard of living,
promoting cooperation in a number of areas: diplomacy, economy, trade, agriculture, fishing,
the conservation of resources and ecosystems, culture, science and education. In terms of
development, however, these islands are not all on an equal footing and are in fact at various
levels, which are often, very far apart. Reunion is part of the developed world; Comoros and
Madagascar are members of the group of least developed countries (LDCs); while Mauritius
is classified as a newly industrialized country and the Seychelles as a middle-income country.
2.3 Common Market for Eastern and Southern Africa (COMESA)
The Eastern and Southern Africa trade bloc that is the focus of this study is the Common
Market for Eastern and Southern Africa (COMESA). COMESA, currently with 19 members
was established in 1994 as a successor of the Preferential Trade Area (PTA), with the primary
objective of achieving regional economic integration and growth - as defined by its treaty “as
an organization of free independent sovereign states which have agreed to co-operate in
developing their natural and human resource for the good of all their people”.
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COMESA free trade area was officially launched on 31 October 2000 and has currently 13
member states trading on a full duty free and quota free basis, with the remaining countries at
various stages of joining the Free Trade Area (FTA) that are in the process of abolishing
internal tariffs and quota restrictions (MCCI, 2013). COMESA has not yet adopted the
timetable for the abolition of all non-tariff barriers to intra-community trade. However, theusual non-tariff barriers such as quota restriction, licensing requirements, import permits and
foreign exchange controls have been lifted or abated in most countries (Carmignani, 2006).
COMESA was pushing ahead with its plan to adopt a common currency for regional
members by 2025.
2.3.1 Principles of COMESA
The Treaty establishing COMESA binds together free independent sovereign states which
have agreed to cooperate in exploiting their natural and human resources for the common
good of all their peoples. In attaining that goal, COMESA recognizes that peace, security and
stability are basic factors in providing investment, development, trade and regional economic
integration. Experience has shown that civil strives, political instabilities and cross-border
disputes in the region have seriously affected the ability of the countries to develop their
individual economies as well as their capacity to participate and take full advantage of the
regional integration arrangement under COMESA. It has now been fully accepted that
without peace, security and stability there cannot be a satisfactory level of investment even
by local entrepreneurs. Therefore, in pursuit of the aims and objectives stated in Article 3 of
the COMESA Treaty, the member states of COMESA have agreed to adhere to the following
principles:• Equality and inter-independence of the member states;
• Solidarity and collective self -reliance among the member states;
• Inter -State cooperation, harmonization of policies and integration of programmes among
the member states;
• Non-aggression between the member states;
• Recognition, promotion and protection of human and people's rights in accordance with
the provisions of the African Charter on Human and People's Rights;
• Accountability, economic justice and popular participation in development;
• The r ecognition and observance of the rule of law;
• The promotion and sustenance of a democratic system of governance in each member
state;
• The maintenance of regional peace and stability through the promotion and
strengthening of good neighborliness; and
• The peaceful settlement of disputes among the member states and the promotion of a
peaceful environment as a pre-requisite for their economic development.
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2.3.2 Aims and objectives of COMESA
The aims and objectives of COMESA are defined in the Treaty and its Protocols. They have
been designed so as to facilitate the removal of the structural and institutional weaknesses in
the member states and the promotion of peace; security and stability so as to enable themattain sustained development individually and collectively as a regional bloc. These are as
follows:
• To attain sustainable growth and development of the member states by promoting a
more balanced and harmonious development of its production and marketing structures;
• To promote joint development in all fields of economic activity and the joint adoption of
macro-economic policies and programmes; to raise the standard of living of its peoples,
and to foster closer relations among its member states;
• To cooperate in the creation of an enabling environment for foreign, cross-border and
domestic investment, including the joint promotion of research and adaptation of
science and technology for development;
• To cooperate in the promotion of peace, security and stability among the member states
in order to enhance economic development in the region;
• To cooperate in strengthening the relations between the Common Market and the rest of
the world and the adoption of common positions in international fora; and
• To contribute towards the establishment, progress and the realization of the objectives
of the African Economic Community.
The COMESA agenda is to deepen and broaden the integration process among member states
through the adoption of more comprehensive trade liberation measures such as the completeelimination of tariff and non-tariff barriers to trade and elimination of customs duties;
through the free movement of capital, labor, goods and the right of establishment; by
promoting standardized technical specifications, standardization and quality control; through
the elimination of controls on the movement of goods and individuals; by standardizing
taxation rates (including value added tax and excise duties), and conditions regarding
industrial cooperation, particularly on company laws, intellectual property rights and
investment laws; through the promotion of the adoption of a single currency and the
establishment of a Monetary Union; and through the adoption of a CET.
By agreeing to the above, member states have agreed on the need to create and maintain:
• A full free trade area guaranteeing the free movement of goods and services produced
within COMESA and the removal of all tariffs and non-tariff barriers;
• A customs union under which goods and services imported from non-COMESA
countries will attract an agreed single tariff all COMESA States;
• Free movement of capital and investment supported by the adoption of common
investment practices so as to create a more favorable investment climate for the entire
COMESA region:
• A gradual establishment of a payments union based on the COMESA Clearing House
and the eventual establishment of a common monetary union with a common currency;
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The adoption of a common visa arrangement, including the right of establishment leading
eventually to free movement of bona fide persons.
2.3.3 COMESA achievements
COMESA, as well as its predecessor the PTA, has achieved a lot in the area of trade,
customs, transport, development finance and technical cooperation. Impressive progress has
also been made in the productive sectors of industry and agriculture. Trade facilitation and
trade liberalization measures are bearing fruit.
• Intra-COMESA trade, valued at about $US4.2 billion, is growing at the rate of 20 per cent
per annum. Trade with third countries is growing at about 7 per cent per annum.
• Transport transit facilitation measures have resulted in a reduction of costs by 25 per cent.
• Inter -state movement of persons, goods and means of transport has been facilitated.
• In the sector of telecommunications, special emphasis has been placed on network
development to enable direct telecommunication links through more reliable infrastructure.
• Establishment of several important institutions was achieved, including the PTA Trade and
Development Bank, the COMESA Clearing House, the COMESA Re-insurance Company
and the COMESA Leather and Leather Products Institute.
• The PTA Bank has, over the years, been very active in promoting investments and
providing trade financing facilities.
• The Re-Insurance Company has, since its establishment in 1992, been able to carve out a
reasonable share of the regional insurance business and is now transacting business in some
nineteen countries.
• Investment in the region is promoted and this issue is addressed through facilitation of bilateral agreements; promoting export drives by individual member states, and identifying
specific projects, which have the potential to act as growth poles between two or more
member states.
The COMESA clearing house has introduced the Regional Payment and Settlement system
(REPSS) which allows members countries to transfer funds more easily within COMESA.
This service is also available to non-member countries. The vision behind such an ambitious
system is to stimulate economic growth through an increase in intra- regional trade by
enabling importers to pay in their local currencies whilst on the other hand exporters are able
to invoice in their local currency as well. The system operates through member countries‟
central banks to avoid any complex chains that may otherwise occur. (MCCI, 2013)
According to The Mauritius Chamber of Commerce and Industry (MCCI, 2013), the FTA has
boosted intra COMESA trade, increasing it by nearly six fold from USD 3.1 billion in 2000
to USD 17.4 billion in 2011.
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2.4 Mauritius Implications
The following table depicts the membership of Mauritius in several regional trade
agreements.
The European Union (EU) is the main destination for COMESA members‟ products. These
countries products are exported to the EU under several initiatives, namely the Everything
But Arms (EBA) initiative and the Cotonou Agreement (following the Lomé Convention).
Under both these agreements some of these countries have preferential market access in the
EU. Lome (I-IV), the Cotonou Agreement and more recently the Economic Partnership
Agreement (EPA) have tremendously contributed towards the development of the Mauritian
economy.
Mauritius was an adherent of both the Sugar Protocol – giving duty-free access to sugar
exports from African, Caribbean and Pacific (ACP) countries into the European Union (EU)markets at a guaranteed price, and the Multi-Fibre Agreement (MFA) – setting quotas for
developing countries which export Textile and Apparel to the EU. On one hand, Mauritius
secured a lion‟s share portion of the sugar export to the EU while on the other hand, given
that our MFA quotas were not binding, many Taiwanese and Hong-Kongese firm expanded
their production of garments in the country. Mauritian firms benefited in terms of foreign
expertise and technology spill-overs. In the late 1990‟s, the Sugar sector and Textile sector
were the two main pillars of our economy making up respectively about 25% and 50% of
total exports.
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After 1995, the country experienced its first „external shock‟, in terms of erosion of
preferences, when the World Trade Organisation (WTO) was institutionalized. With the
creation and rising importance of the WTO as a regulator of trade, the world went through a
period of liberalization whereby all quotas, tariffs and preferential agreements were gradually
being abolished so as to promote free and fair trade practices. The MFA was dismantled onthe 31st December 2004 while guaranteed prices under the Sugar protocol was slashed by
36%. Mauritius had to face tougher competition for its exports of sugar and apparel products
and could no longer depend exclusively on these sectors as a vehicle for growth. Policy
makers decided to move away from traditional exports and started to promote tourism
services as a new pillar. Now, some other sectors such as “Seafood Hub”, “Financial
Services”, “Knowledge”, “Healthcare” and the “Information, Communication &
Technology” are also becoming very important features of the Mauritian economy.
Over the last years, the Economic Partnership Agreement (EPA) has formed the basis for
discussion. The EPA is essentially a means to make the Cotonou Agreement more WTO-
compatible. However, it relates to all African Caribbean and Pacific (ACP) countries, which
makes the process more time consuming. For Mauritius, it will be more relevant to negotiate
from the bilateral front, either independently or through a regional organisation. In fact, the
Indian Ocean Commission (IOC) is the only regional organisation which includes a European
partner (France) alongside Mauritius. France is represented in the Organisation through
Reunion islands. So, this could be a basis for further bilateral talks to consolidate bilateral ties
with Europe. Cooperation between Mauritius and EU has mainly taken the form of
developmental cooperation and financing programmes. The 10 th European Development
Fund (EDF) provides some EUR 65.5 million for developmental funding with a totaldevelopment cooperation portfolio of EUR 308 allocated to Mauritius for the period 2008-
2013. In addition, EU has supported regional programmes to be implemented in Mauritius,
such as, the Africa Regional Technical Assistance Centre South (AFRITAC South) and the
Regional Multi-disciplinary Centre of Excellence (RMCE) falling under the Common Market
for Eastern and Southern Africa (COMESA). Other areas of cooperation include fisheries,
fight against piracy and promotion of maritime security and the movement of natural persons
in terms of the Schengen Visa waiver. A recent example of how Mauritius benefited from its
membership in the IOC was when the Malagasy Patrol Atsantsa caught two Sri Lankan
vessels fishing illegally 750 kilometers north of Mauritius. This demonstrated the
commitment of the IOC in the fight against illegal fishing. (l‟express online, 25.02.13)
Trade policy reform from the World Trade Organization (WTO) negotiations, regional
negotiations and/or bilateral agreements resulting in lowering of tariff for instance in
agricultural products would lead to an increase in import and declining of price of imported
goods thereby enhancing food security. The removal of support, however, is beneficial in the
long run as it would enhance competitiveness of agricultural products from African countries.
Mauritius should consider strategies to make use of its regional affiliations to the Southern
African Development Community (SADC), Common Market for Eastern and Southern
Africa (COMESA) and Indian Ocean Commission (IOC) to achieve a degree of food securityso that we need not divert resource from exporting enterprises to local production in order to
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meet the demand of a growing population level. Two broad options have generally been
followed by countries attempting to achieve adequate levels of food security: food self-
sufficiency and food self-reliance:
(1) Food self-sufficiency, or the provision of a level of food supplies from national
resources above that implied by free trade, represents a strategy followed by a widerange of countries. While this approach implies the provision of sufficient domestic
production to meet a substantial part of consumption requirements, it does not
necessarily imply that all households in the country have access to all the food they
require. In a number of countries which are net food exporters, substantial numbers of
households are suffering from malnutrition.
(2) A strategy of food self-reliance reflects a set of policies where the sources of food are
determined by international trade patterns and the benefits and risks associated with it.
This strategy has become more common as global trade has become more liberal. It is
even argued that improved food security, as well as efficiency gains, may be achieved
more satisfactorily, even in countries where agriculture remains a major contributor to
GDP, by shifting resources into the production of non-food export crops and importing
staple food requirements.
Food Security Initiatives have been explored in the past by Mauritius from a bilateral
perspective. For e.g. Mauritius negotiated with Mozambique to use its land for agricultural
purposes for plantation of wheat and rice.
It is also interesting to note that COMESA internal trade is very minimal as a share of
COMESA trade to the world. Exports to non-COMESA countries (NONCOMESA) isobserved to have been very influential to the economic development of the countries. This is
principally due to the large export volume from COMESA to EU and USA under the Lomé
Convention/ Cotonou Agreement and the AGOA preferential regime. Moreover, the
preferential access to the European and the US markets attracted small Asian investors to
locate textile and garment manufacturing operations in the country. Interestingly the growth
of COMESA countries is principally determined by their level of investment. Mauritius has
been successful in channeling significant export oriented Foreign Direct Investment due to its
low-cost labour, efficient infrastructure, preferential access to large markets, sound legal
system, political stability, government policies favourable to foreign investors and a strong
business environment with a vibrant entrepreneurial culture.
FDI has contributed significantly to the diversification of the Mauritian economy. This type
of investment now plays a pivotal role in the development of the country‟s economy. Indeed,
Mauritius is among the most competitive and successful economies in Africa and actively
seeks FDI. At the same time, Mauritius remains one of the best performers of Africa with an
average annual growth rate of around 4 per cent. The significant contribution of FDI to the
Mauritian economy has been already highlighted in Seetanah (2006). Kamau notes that the
greater the pace towards deeper regional integration between members of a trade bloc leads to
higher economic performance. In addition, less restrictive trade policies within each countryand as a trade bloc with the rest of the world also promotes economic growth for countries of
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Eastern and Southern Africa. This point to the important role played by deep economic
integration involving regional integration and WTO compatible tariffs reduction on growth.
Unilateral, multilateral and preferential trade reforms when pursued simultaneously have a
significant impact on growth.
Furthermore, according to (Gnany, MCB Focus, 2012) greater integration is expected to
result in the achievement of the following
(i) Economies of scale, with enlarged market sizes leading to lower average production costs
(potentially passed on to customers in the form of lower prices)
(ii) Dynamic gains emanating from greater competition across regional markets, which are
anticipated to bring about augmented production efficiencies and targeted strategic
orientations, in turn facilitating the expansion of firms serving niche markets
(iii) high levels of knowledge and technology transfer stemming from imports of capital
goods as well as increased linkages and interactions with foreign counterparts; and
(iv) Attraction of FDI from both within and outside the regional integration arrangements, as
a result of market enlargement and production rationalisation
2.5 Discriminatory effects of trading blocs
Initially, the WTO encouraged the growth of RTAs, as it is generally acknowledged that
regional and multilateral integration initiatives are complements rather than alternatives in
the pursuit of free trade. However, the proliferation of RTAs in global trade and the
increased diversion of trade through this route is becoming a cause for concern for the
multilateral trading system under WTO (Gupta& Pal, 2003). Pal (2004) further added that
by its very nature RTAs are discriminatory. With reference to WTO rules, the WTO
explains that countries within an RTA can trade among themselves using preferential
tariffs and easier market access conditions than those applicable to other WTO members.
Consequently, WTO member-countries that are not a part of the RTA lose out in these
markets.
Some empirical evidence shows a relationship between an increase in international trade,
wage dispersion and the level of employment, which has led a number of economists to
conclude that recent internationalisation of economies has contributed to the increase in
the dispersion of wages and unemployment (Sachs and Shatz, 1994; Leamer,
1996;Baldwin and Cain, 2000; Haskel and Slaughter, 2001).
Trade among non-equals (i.e. producers in developed vs. developing countries) can lead
to different adverse outcomes such as the decimation of entire industries in some
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developing countries. Similarly, simply expanding the realm of free trade has, in many
cases, resulted in an actual increase in poverty and environmental degradation, and in an
adverse impact on women and food security across the developing world, undermining
efforts to achieve sustainable human development (McCulloch ,2001)
Since the establishment of the World Trade Organization (WTO), trade disputes between
its country members have escalated sharply. An increasing number of developing
countries have become involved in trade disputes, while more conflicts have arisen
between the developed countries. In addition, more of these disputes have been related to
non-tariff barriers and as such, have been more difficult to settle under the WTO than
under its predecessor, the GATT. These developments have caused public concern about
the consequences of the WTO and this has led to calls for more serious research attention
(Yin and Lee, 2004).
2.6 Opportunities to Member countries
Formation of economic alliances such as COMESA and ECOWAS will stimulate intra-
regional trade and commerce, particularly if these alliances also become Free Trade Areas
(FTA), as they intend to be.
Money which used to be spent on maintenance of disproportionate armies and police
forces which are used for repression can be spent on beneficial projects for development
and improvement of the quality of life of the people in the region.
The World Bank, IMF and other lenders are generous when it comes to aiding highly
indepted poor countries (HIPCs). They have put in place certain initiatives for helping
poor countries.
2.7 Problem that may arise from within economic alliances (Beraho, 2007)
It is usually the case that countries needing help are the ones that are heavily indebted and
burdened by debt. In such cases, the countries would not have funds to stimulate their economies as they would be spending most of their little money on debt service to remain
qualified for possible aid in the future.
Formation of political and economic alliances like COMESA or ECOWAS may not work as
well as originally envisioned because the members are not bound to stay in the alliance. That
means that there is always a danger of possible future disintegration, upon a member or
members disagreeing. Indeed, currently there have appeared two smaller alliances within
COMESA already and they are: the EAC, and the SADC. If EAC and SADC are independent,
then COMESA cannot declare a FTA for all its members. In fact, COMESA would not
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function with those smaller alliances inside it. It is difficult to see the future of a COMESA
with fragmented interior. (PanAfrica News Agency, 2000)
Business Africa (2000) mentioned that though COMESA members have signed agreements
to have free trade with non-members, South Africa additionally has an agreement with theEuropean Economic Community and Kenya has a similar agreement with Egypt. It is fear
that if this practice is not abandoned it will tend to dilute COMESA‟s regional synergy and
make unity difficult to achieve.
3.0 Conclusion and recommendations:
Although the trade blocs have made considerable progress in integrating their economies,
there is room for improvement that would help member countries reap even high benefits
from economic integration. First, there is need to address the issue of lack of political will
among integrating economies. Lack of political will as demonstrated by poor implementationof agreed trade reforms could be improved by adopting proper monitoring mechanisms,
perhaps similar to the European Union‟s “Single Market Scoreboard”. In addition to
providing vital information, the scorecard is useful as a disciplinary measure- to shame
governments with a record of poor implementation into action and to empower governments
with good records of implementation and hence challenge those members who are not
meeting commitments. Second, more effort is required towards macroeconomic policy co-
ordination. These countries have been pursuing very similar policies under the auspices of the
IMF and the World Bank in terms of economic restructuring. However, from the results
obtained, it can be inferred that a more proactive economic policy co-ordination will be
beneficial to the region and should be encouraged. A resolute effort must be made to achieve
greater institutional and economic policy convergence. This assumes that countries establish
ambitious, but feasible timetables for instituting reforms and establishing regional
institutions, while realistically evaluating the resources required. These efforts will reduce
income divergence and as a result translate into deeper economic integration efforts by
members. The evidence of income divergence across and within the three trade blocs‟
countries is an interesting finding as it creates new challenges including political tension in
the process of pursuing deeper integration in the region.
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Mauritius: Deepening and entrenching its reach in Africa August 2012 gilbert Gnany