1. The trade liberalization programmes need to be brought up to speed. Regional economic communities that have fallen behind should revitalize their efforts by implementing free trade within a reasonable period, preferably two years. This could involve ECOWAS, UMA, and ECCAS as well as countries not partici-pating in the COMESA fast track. Regional economic communities should also focus on nontariff barriers, increasing transparency in implementing protocols to remove them.
2. Efforts should be intensified to clean up trade agendas by harmonizing policies, removing unnecessary duplication, harmonizing investment codes and factor mobility, and promoting genuine unification of markets. This could provide sig-nificant additional cost-saving advantages for multinational corporations operat-ing within the economic community.
3. Huge investments are needed to link entire communities with effective transport, communication, and other physical infrastructure. Such links would substantially cut the cost of doing business in Africa—advancing the goals of trade expansion and market integration within communities. Partnerships with the private sector would help speed construction of these links.
4. Because trade and industry go hand in hand, trade and industrial policies need to be harmonized both within and across economic communities. More countries need to join countries such as Egypt, Mauritius, and South Africa, which have developed capacities to diversify production and export substantial amounts of manufactured products to the rest of Africa. Intersectoral linkages and cross-border private
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investment in industry, agriculture, and infrastructure should be encouraged to enhance intracommunity trade.
5. Foreign direct investment has to be encouraged to boost domestic capacity expan-sion and generate technological spillovers. These can take the form of education and training of local employees, externalities from innovative marketing and man-agement procedures, as well as importation and use of modern machines and equipment incorporating the latest technical innovations.
6. Becoming competitive should be a core concern of the regional economic com-munities. The business community could be assisted with ideas for developing new products, new markets, and new ways of doing business. A regular program of monitoring competitiveness, based on developing indicators, guidelines, policies, and capacity-building programs, could identify shortcomings in individual coun-tries and tailor measures to overcome them.
7. Vigorous campaigns should increase awareness of stakeholders and the public at large on the rights and benefits of the regional economic communities’ trade liberalization schemes—and intensify the development and dissemination of regular, complete, and accurate information on trading opportunities available within regional markets and beyond. Such mechanisms as EUROTRACE and the Trade Information Network (TINET) could be placed closer to the business community—for example, within enterprise networks rather than governmental structures. These campaigns should also target the elimination of border practices inconsistent with the spirit and letter of trade liberalization schemes. Such measures could go a long way toward reducing informal trade. Economic communities should also study other dynamics of informal trade within their communities and institute measures to help the sector boost formal intracommunity trade and cross-border capital movements.
8. Minimizing peace-shattering disputes within and between member states requires regional economic communities to promote peace, security, and conflict resolution.
Each community should put in place an early warning system for the signs of impending conflicts—and institute prompt measures to prevent or minimize their escalation into actual conflicts.
9. Regional economic communities also need to focus attention on multilateral trade, assisting their member states to participate in it effectively. The majority of African countries are members of WTO, and they need to be encouraged to use this avenue to boost their competitiveness and enhance growth. To this end, the communities need to be empowered to lead their member states to successful multilateral trade negotiations.
10. African countries, in future rounds of WTO negotiations, should push for mod-ifications to the principles of the WTO system and the body of agreements,
Foreign direct investment has to be encouraged to boost domestic capacity expansion and generate technological spillovers
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disciplines, and rules in ways that spotlight the vulnerable position of African and other developing countries. Enforceable statutory provisions are needed to:
• Support efforts for strengthening supply capacities.
• Provide flexibility in the use of instruments to enhance the recovery and trans-formation of African economies and in the implementation of the global trade liberalization agenda of the WTO.
• Improve market access for products of export interest to Africa.
Notes
1. The SITC categories include food and live animals (section 0), beverages and tobacco (section 1), crude materials except fuel (section 2), mineral fuels (section 3), and animal and vegetable oils and fats (section 4).
2. The SITC categories include chemical and related products (section 5), manufac-tured goods classified by material (section 6), machinery and transport equipment (sec-tion 7), and miscellaneous manufactured articles (sec(sec-tion 8).
3. This assumes that all other factors such as managerial efficiency remain unchanged.
4. Bhagwati and Ramaswami 1963; Bhagwati and Srinivasan 1975.
5. These are Botswana, Namibia, Lesotho, and Swaziland.
6. The rankings are based on the percentage shares of intracommunity export and import trade, averaged for all member states within a given regional economic com-munity. Averages are influenced by extreme values within the data series, so poorly performing countries within an economic community drag down overall performance while excellent performers lift overall performance. The regional economic commu-nity ranking is calculated from the average score for 1994–2000.
Newly created economic communities like the Community of Sahel-Saharan States (CEN-SAD) appear to be doing better than older economic communities, not because they have sounder programs on trade, but because of the trade flows among the member states and the performance of individual countries rather than the group.
Elaborate trade liberalization schemes, while a significant intervention in the right direction, may not earn a correspondingly high rating in intracommunity trade.
Members may not be implementing sufficient measures to induce a response to increased trade flows within the community. The IMF and UNCTAD trade data used to calculate these rankings should be viewed in this light.
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