Malawi ratifies 3 Bloc trade pact
Malawi has ratified the Tripartite Free Trade Area agreement comprising East African Community, Comesa and Sadc, nine years after the country signed the trade deal.
However, trade experts fear Malawi’s weak industrial base, coupled with high cost of doing business and poor infrastructure could deny the economy the benefits of being party to the trade pact.
In a brief interview yesterday, Minister of Trade and Industry Sosten Gwengwe confirmed the development, but could not give further details.
However, speaking separately yesterday, former minister of Trade and Industry Joseph Mwanamvekha observed that while the ratification will assimilate the country’s economy into the African trade bloc and the wider world economy, the trade agreement will bring a lot of competition to local goods and services.
He said: “The signing of the agreement is welcome though with caution. More African markets will be available to Malawi.
“On the other hand, it means Malawian products and services have to compete with products within the tripartite region on equal terms and conditions.”
Mwanamvekha, who also served as Minister of Finance and advocated for the review of some of the many trade agreements that Malawi is party to, said failure to properly manage the trade deal would unravel a lot of challenges for the country.
“Malawi may end up being a net importer which may lead to loss of foreign exchange, loss of jobs and massive closures of the small and few manufacturing companies that Malawi has,” he said.
Small-scale Business Operators Association of Malawi general secretary Tennyson Mulimbula said while Malawi has made progress in reducing power supply challenges, a number of challenges still remain.
He said: “We are still left to deal with high cost of doing business which has come about due to high inflation and interest rates and depreciation of the kwacha.
“This, coupled with poor infrastructure, will make small business not to benefit as Malawi is still lagging in many areas.”
National Working Group on Trade Policy chairperson Frederick Changaya urged Malawi to scrutinise the protocol and review its position, adding that opening borders could have disastrous results of de-industrialisation which leads to falling employment and wages.
The agreement, an inter-regional co-operation and integration arrangement among countries of Common Market for Eastern and Southern Africa (Comesa), East African Community and the Southern African Development Community (Sadc), is anchored on three pillars, namely market integration, industrial and infrastructure development among member States .
Thus far, 22 member States have signed the agreement while 12 have ratified it.
The agreement is one of the many bilateral and multilateral trade deals Malawi is a signatory to.
Malawi Confederation of Chambers of Commerce earlier feared that local firms could lose out as has been the case with trade performance with other regional blocs.
Trade Law Centre study indicated that Malawi can achieve optimal benefits from the agreement if it increases its exports to the region.
The Tripartite Free Trade Area was launched in June 2015 by the Third Tripartite Summit after more than three years of intense negotiations and has 600 million people and gross domestic product worth $1.2 trillion.
