COMESA Agreement PDF

Faculty of Commerce And Business Administration COMESA Agreement Mennatullah Ashraf Mahmoud Othman/Aya Hosam Ali Mohamed Demiana Maged Shehata/Rofaida Ragab sayed ibrahim...

Faculty of Commerce And Business Administration COMESA Agreement Mennatullah Ashraf Mahmoud Othman/Aya Hosam Ali Mohamed Demiana Maged Shehata/Rofaida Ragab sayed ibrahim Shahd Sherif/Kareem Ali Mahran Faculty of Commerce Helwan University (Foreign Trade) Foreign Trade in Egypt Dr. Hadeer Al-Batatouni Introduction to COMESA: The Common Market for Eastern and Southern Africa (COMESA) was established in December 1994 to replace the Preferential Trade Area (PTA) and further regional economic integration. It consists of 21 member countries spread across Eastern, Southern, and Northern Africa, including key economies like Egypt, Kenya, and Ethiopia. COMESA’s core objectives are to promote free trade, reduce trade barriers, enhance cooperation, and improve competitiveness within the region. The organization aims to create an integrated regional market that boosts intra-regional trade and investment, contributing to sustainable economic development. Its headquarters is located in Lusaka, Zambia. Why did Egypt replace PTA with COMESA? (1) Market access: PTA allowed Egypt to trade with a limited number of countries under preferential tariffs, mainly focused on basic commodities. While COMESA provides Egypt access to a market of over 500 million people across 21 member states, allowing for a broader range of goods and services, enhancing trade opportunities significantly. (2) Economic integration: PTA focused on reducing tariffs for a specific list of goods without deeper integration. While COMESA Aims for a customs union and a common market, facilitating free movement of capital and labor, exemplified by initiatives like the COMESA Simplified Trade Regime, which eases trade for small-scale traders. (3) Trade facilitation: The PTA Had basic provisions for trade but limited mechanisms for efficient customs processes. Meanwhile, COMESA Implemented programs such as the COMESA Virtual Trade Facilitation System, which streamlines customs procedures and reduces delays at borders, benefiting regional trade. (4) Long-Term vision: PTA Primarily focused on immediate trade benefits without a comprehensive development strategy. While COMESA Pursues a long-term vision through initiatives like the COMESA Infrastructure Master Plan, which aims to enhance transport, energy, and telecommunications infrastructure across member states, promoting regional development. What are the reasons behind the selection of member countries in COMESA? The choice of member countries in COMESA is influenced by several factors for example: Geographic Proximity: Countries that are geographically close to each other can benefit from reduced transportation costs and easier trade connections. Economic Compatibility: Member states often have complementary economies, allowing them to trade goods and services more effectively. For example, countries rich in natural resources can supply those to industrialized nations within the bloc. Desire for Development: Many countries join COMESA to enhance economic development through access to larger markets, trade facilitation, and investment opportunities. What is the current status of the agreement? COMESA is still active and functioning. It continues to promote regional economic integration, trade facilitation, and cooperation among its member states, COMESA also regularly updates its agreements and frameworks to adapt to changing economic conditions. Key Features of COMESA: COMESA’s integration model revolves around creating a free trade area (FTA), which allows member states to trade goods with minimal tariffs and trade barriers. This was successfully implemented in 2000, making it one of Africa's largest free trade areas. The organization is working towards forming a customs union, with a common external tariff for goods entering from non-member countries, and aims to establish a common market in the future. COMESA also supports the free movement of goods, services, and labor within member states, enhancing regional economic cooperation. Other key features include developing regional infrastructure, harmonizing regulations, and promoting trade facilitation. Achievements of COMESA: COMESA has made significant strides in promoting trade and economic cooperation among its member states. It has expanded intra-regional trade by reducing tariffs and facilitating easier cross-border movement of goods and services. Key sectors like agriculture and manufacturing have seen growth due to increased access to regional markets. COMESA has also launched successful infrastructure projects, such as improvements in transport and energy, which help to connect member countries and reduce trade costs. Through trade facilitation programs, member states have also modernized their customs procedures, reducing bottlenecks at borders and boosting competitiveness. Challenges Facing COMESA: Despite its achievements, COMESA faces several challenges. Political instability in some member countries disrupts regional cooperation and trade. Additionally, the wide disparities in economic development among member states make it difficult to achieve harmonization of policies. Infrastructure deficits, especially in transport and energy, continue to hinder the smooth flow of goods across borders. Non-tariff barriers, such as complex customs procedures and regulatory differences, further complicate trade within the region. These challenges slow down the full realization of COMESA’s goals, especially the formation of a customs union and a common market. Economic Impact of COMESA: COMESA has had a positive impact on the economies of its member states by fostering trade and investment. The establishment of the free trade area has increased intra-regional trade, allowing countries to access larger markets, diversify exports, and boost industrial production. Foreign direct investment (FDI) has also risen in member states, particularly in infrastructure, agriculture, and manufacturing sectors. By creating a stable trade environment and reducing trade barriers, COMESA has contributed to economic growth and development in the region. Countries like Kenya, Egypt, and Zambia have benefited significantly from increased market access and expanded regional trade. COMESA and Global Trade: COMESA plays a crucial role in linking its member states to the global economy. It has established trade agreements with regions outside Africa, such as the European Union (EU) and other global economic blocs, which provide preferential access to international markets for COMESA members. COMESA is also part of larger continental initiatives like the African Continental Free Trade Area (AfCFTA), which seeks to integrate all African economies into a single market. Additionally, COMESA aligns with global trade regulations set by the World Trade Organization (WTO), ensuring that its policies are compatible with international trade norms. Future Outlook of COMESA: Looking ahead, COMESA’s future priorities include deepening regional integration by advancing toward a customs union and, ultimately, a common market. It plans to continue investing in infrastructure projects, particularly in transport and energy, to improve connectivity among member states. COMESA is also expected to play a key role in Africa’s broader integration efforts, such as the AfCFTA, which aims to create a continent-wide free trade area. With the expansion of digital trade and the rise of e-commerce, COMESA is exploring ways to modernize its trade systems, enhance regulatory frameworks, and harness new technologies to foster economic growth. The COMESA Agreement with Egypt, established in 1998, brought Egypt into the Common Market for Eastern and Southern Africa (COMESA). Egypt became a founding member of the COMESA Free Trade Area (FTA) in 2000. This agreement allows member countries to exchange goods with reduced or zero tariffs, depending on the country's status in the FTA. Key Features of Egypt's Involvement in the Agreement: 1) Tariff Reductions: Egypt, alongside other COMESA countries like Kenya, Zambia, and Sudan, offers complete exemption from customs duties on goods traded within the COMESA FTA, provided the goods have a certificate of origin. Some countries, such as Uganda and Ethiopia, apply partial tariff reductions. 2) Major Exports and Imports: Egypt exports a variety of products to COMESA countries, including building materials, chemicals, foodstuffs, and pharmaceuticals. On the other hand, Egypt imports products like coffee, tea, tobacco, and livestock from these countries. 3) Economic Impact: Egypt benefits from the large market COMESA offers, with a population of over 380 million. Despite challenges, such as the decrease in trade during the COVID-19 pandemic, Egypt remains a key player, exporting mainly to countries like Libya, Sudan, and Kenya. 4) Customs and Trade Barriers: While most goods enjoy tariff exemptions, certain items face restrictions. For instance, Sudan and Kenya have maintained protective measures on specific imports from Egypt, such as sugar and wheat flour. Overall, the COMESA Agreement enhances trade by reducing barriers and fostering economic cooperation in Africa, with Egypt playing a significant role within this trade bloc. Conclusion: In conclusion, COMESA stands as one of Africa’s most significant regional economic communities, promoting trade liberalization, economic cooperation, and development across its 21 member states. Through initiatives such as the Free Trade Area, infrastructure development, and fostering regional peace, COMESA has achieved remarkable progress in enhancing economic integration. However, it faces ongoing challenges, including political instability and infrastructure deficits, which require continued efforts and collaboration. Egypt’s active participation and leadership within COMESA further highlight the importance of strong member states in driving the organization’s goals forward. As COMESA looks toward a future of deeper integration and greater economic success, its role within the larger African trade landscape, especially through initiatives like the AfCFTA, will be critical in shaping the continent’s growth and global trade presence. Through cooperation and strategic development, COMESA holds the potential to unlock sustainable economic growth for its member states and the broader African continent.