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Key African Nations Establish Digital Free Trade Zone

Key African Nations Establish Digital Free Trade Zone
From WWD - February 11, 2018

In January, the Common Market for Eastern and Southern Africa held a two-day workshop in Mah, Seychelles, to familiarize member states with the impending rollout of the Digital Free Trade Authority, conceived and designed to transform cross-border trade, minimizing and eventually eliminating physical barriers between the various nations.Dr. Francis Mangeni, COMESAs director of trade and customs, stressed the importance of the establishing the DFTA. Trade facilitation is a key priority for Africa, and a digital FTA is a practical way of increasing intra-regional trade and creating wealth," he said.That viewpoint was echoed by the vice president of Seychelles, Vincent Meriton, when he opened the workshop. He described the DFTA as a unique opportunity to further realize the potential of free trade through information and communications technology, as well as to contribute to greater regional integration. In todays rapidly changing world and economies, this region cannot afford to be left behind," he said.While the idea of a digital FTA was first floated in 2014, COMESA had already established an FTA in October 2000, with only nine countries joining. Over the years, all of the 19 member states have joined the FTA, except for Ethiopia and Eritrea.Ethiopia, Mangeni said, has indicated that it is in the process of finalizing consultations to join the FTA. Ethiopia has reduced customs duties payable on goods originating from other COMESA countries by 10 percent on the Most Favored Nation rates. Eritrea as well is finalizing consultations to join the FTA. It has reduced its duties by 80 percent on the MFN rates," Mangeni said. Swaziland, on the other hand, obtained an exemption in 2000 because it was already a member of the Southern African Customs Union.Going digital is a logical evolution, since the world is experiencing the fourth industrial revolution, the decision was taken in October 2017 to transform the FTA into a digital FTA," he said.At the Seychelles workshop, Meriton lauded COMESA for seizing the benefits of ICT, for linking it with trade and for making the countries of our region part of todays digital economy.The COMESA Digital FTA will have three main elements: e-trade, or an online market; e-legislation to underpin it, and e-logistics, including a payment gateway or channel.As presented during the workshop, e-trade intends to promote e-commerce by providing an online platform for COMESA region traders to trade online. The DFTA platform will enable duty-free and quota-free treatment, making it an online market for the COMESA region. Digital logistics uses ICT as a tool to improve the commercial activity of transporting goods to customers.E-legislation looks at the readiness of legislation in countries for them to carry out e-transactions and e-payments. DFTA will require both technological and legal innovations, especially in the fields of intellectual property, competition, data privacy and protection, cyber security and a whole range of other innovative laws.The workshop was informed that with digital delivery of e-commerce, digital transactions and digital payments legal redress is a must, Mangeni said.Also unveiled during the workshop was the approved DTFA Action Plan, which includes the establishment of the COMESA Online Market. While the design, rules and guidelines for implementing the online market would be developed and shared with the member states, the COMESA secretariat said it would be the responsibility of the member states to decide on the best approach for implementing the COMESA Online Market in their respective countries, and suggested, for example, establishing a public-private partnership, or coming up with a government initiative.The secretariat would be available to provide technical assistance upon request to build country pages for the COMESA Online Market platform.An earlier ministerial meeting held in Lusaka, Zambia, last November had recommended a phased approach to the rollout of the instruments for the DTFA, beginning in 2018 with the instruments that were ready, as well as the member states that were ready. Other segments would be finalized as specific issues facing other countries were being addressed, such as national legislation that would need to be enacted or amended.According to COMESA spokesperson Mwangi Gakunga, "We are rolling out the Digital FTA in 2018, beginning with willing member states on the basis of the principle of variable geometry.One of the key instruments of the DFTA, the electronic certificate of origin, or eCO, was in fact developed and presented during this meeting, alongside its draft regulations. The eCO was declared ready for piloting in the 15 member states that were willing and ready to participate: Burundi, Democratic Republic of Congo, Egypt, Ethiopia, Kenya, Madagascar, Malawi, Mauritius, Rwanda, Sudan, Seychelles, Uganda, Swaziland, Zambia and Zimbabwe. Replacing the manual certificates of origin with electronic certificates would speed the process of certification as well as facilitate trade in real time."The e-certificate of origin is a good practice around the world but COMESA will be the first regional economic bloc in Africa to have it as a regional FTA instrument," Gakunga said.Among the more immediate and tangible effects of digital economic integration would be the elimination of long queues at border posts for goods and people moving across borders.Mangeni believed that the creation of the DFTA would definitely improve trade for all the member states. It will facilitate especially SMEs to get access to the regional and global markets, hence increasing their trade and incomes," he said.Asked whether he foresaw any resistance from the various countries customs bureaus, shippers and the like with the transition from manual to fully digital, he stressed that the relevant authorities in government have expressed support for the DFTA, including trade, customs and IT officials.While the DFTA, which was modelled after the Malaysian Free Trade Zone, is expected to vastly facilitate and simplify trade among member states, Mangeni believed that it would also bolster international trade, increasing exports to the U.S., Europe, and even Asia. COMESA, he said, has comprehensive industrialization and infrastructure programs to increase productivity and competitiveness, as well as partnerships to increase exports to global markets.

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