Malawi to reap from grand FTA

Malawi is poised to reap from the proposed Tripartite Free Trade Area (FTA) through improved collective bargaining power, improved access to the sea and improved trade facilitation and custom procedures, a senior government official said on Monday.

The three Regional Economic Communities (RECs) in Eastern and Southern Africa, namely the Common Market for Eastern and Southern African (Comesa), East African Community (EAC) and Southern Africa Development Community (Sadc), comprising 26 countries intend to establish the FTA by harmonising programmes in the area of trade, customs, civil aviation, free movement of people and infrastructure development.

Principal Secretary in the Ministry of Industry and Trade Nebert Nyirenda said in Lilongwe that the tripartite integration will enlarge the regional markets and create a seamless space for increased investment and expansion of trade in Malawi and other countries that are committed to creating the FTA.

“The Tripartite FTA will, therefore, increase the size of the region as an investment area which will attract more foreign direct investment (FDI),” he said.

He was speaking during the official opening of a five-day training for Tripartite FTA negotiators by Trademark Southern Africa.

According to Nyirenda, most of the countries in the eastern and southern African region have economies that are too small and fragmented to allow for the exploitation of economies of scale, hence the need for the grand FTA.

The three economic blocs have a combined population of over 530 million people and a combined gross domestic product (GDP) of over $ 1 Trillion.

Nyirenda said foreign investors are preferring large markets for their goods and services, adding that a large consolidated and seamless market is important for investment decisions.

He also observed that currently, there is a problem of overlapping membership by countries in regional trade agreements which he said have resulted into almost all member States belonging to more than one regional economic community.

Currently, Malawi is a member of both Comesa and Sadc.

“The establishment of a Tripartite FTA is an important initiative to overcome this problem [of overlapping membership] and is in line with the continent’s pronounced policy to achieve more rationalisation of regional integration initiatives,” he said.

The First Tripartite Summit of Heads of State and Government of October 2008 in Kampala, Uganda, decided that three communities should immediately start working towards a merger into a single community with the objective of fast-tracking the attainment of the African Economic Community.

The Tripartite FTA negotiations were thus launched in Johannesburg, South Africa on 12th June 2011.

The Second Tripartite Summit that was held in June 2011 in Johannesburg, South Africa adopted Negotiating Principles and Structures, and a road map for the establishment of the Tripartite FTA.