Despite growing calls for increased intracontinental trade, businesses in Africa are taking advantage of preferential trade deals with other regions and ignoring local free trade agreements. This is the information provided by the results of a study by the United Nations Conference on Trade and Development (Unctad) on the Common Market for Eastern and Southern Africa (COMESA), according to which African traders are taking advantage of the favorable import tariffs provided by the United States, Canada, the European Union and Japan (the “quad nations”) under various preferential trade agreements (PTAs).
Because of this, trade between regional blocs lagged substantially behind transactions with the Quad nations. For example, exports to the EU, the US, Japan and Canada were worth $25.6 billion in 2018, compared with $9.3 billion in trade between the same COMESA member states.
Specifically, Burundi transported $44.8 million worth of goods to Quad nations in 2018, gaining tax exemptions on imports of $2 million worth of items out of a total of $2.2 million. dollars covered by PTAs. However, during the same time period, Burundian traders used only 17.3% of the duty exemptions provided by Comesa for export to member countries and 77.5% of the duty exemptions provided by the EAC (Community of East Africa).
Similarly, businesses in Uganda received 96.9% of the exemptions granted by the Quad Nations, compared to just 17.1% under Comesa and 74.7% under the EAC.
Unctad argues that the “complex and severe” laws of origin, which prevent local businesses from benefiting from the commercial benefits provided for by regional treaties, are the main cause of this situation. “Rules of origin can be complex to comply with, particularly for products made using materials sourced from different countries across global value chains, and can make it difficult for products to benefit from trade preferences,” the organization said in a statement. Note. “This complexity may prevent African companies from benefiting from the preferential trade agreements that the continent’s governments have increasingly signed up to boost intra-African trade,” UNCTAD added. [Da Redazione InfoAfrica]
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Read our zoom in the December issue dedicated to the opportunities related to the development of a continental free trade area: https://www.africaeaffari.it/rivista/golfo-chiama-africa