The institutional structure of COMESA is similar to
that of the European Union (EU). It has a legislative (Council of Ministers)
which takes policy decisions and activities on the COMESA program, an executive
(Authority of Heads of State and Government) which is responsible for general
policy and a judicature (Court of Justice) which should ensure the proper
interpretation of the provisions of the treaty. Besides COMESA has a Central
Bank (PTA Bank) which should ensure implementation of the monetary and
financial programs. Another important part of COMESA’s institutional structure
is the Consultative Committee of the Business Community and other interest
groups. This committee should help to facilitate the dialogue between
enterprises and organs of the Common Market.
Due to COMESA’s opinion will economic development
largely depend upon Foreign Direct Investment (FDI). Therefore it will be
necessary to liberalize the trade and investment environment, e.g. elimination
of non-tariff barriers and harmonization of trade documents. Because of
multiplicity in membership (10 of 14 SADC members are also COMESA members),
Eastern and Southern African countries affected have already began harmonizing
their programs and target dates.
A. Customs Union
A Free Trade Area (FTA) should be established by the year 2000 to be achieved by annual reduction of tariffs. Therefore all COMESA countries try to reduce their tariffs of 100% by October 2000. In 1996 the majority of member states had already reduced tariffs for intra-COMESA trade by 80%, eliminated all tariff barriers and liberalized their rules of origin. As it is very difficult for most of member states to renounce the tariffs, that are often the main source of government revenue, this reduction has been seen as a great access. Namibia was given derogation from publishing COMESA tariffs from January 1993 to January 1998. Nevertheless Namibia has already liberalised its import permit system and uses it – as the export permit – primarily for monitoring and not for controlling. A list of prohibited and restricted imports and exports, which are mostly on behalf for qualitative, security and health reasons, exists. Namibia applies quotas in some instances mostly on agricultural products. Furthermore, the importation of second-hand clothing, gearboxes, engines and used tyres is restricted.
The FTA is a prelude to the establishment of a
Customs Union, which should start in 2004. Actually steady progress in
elimination of non-tariff barriers can be noticed, e.g. liberalisation of
import licensing and removal of foreign exchange restrictions and taxes. With
the reduction of non-tariff barriers trade has been enhanced and competition
increased. In order to ensure fair competition among member states, COMESA is
in the process of formulating a regional competition policy, which is to be
consistent with internationally accepted principles. However, it is unsure if
the “market clearing effect” through competition really works and fair trade
will be realized or if intervention of government is necessary in order to
protect national enterprises and prevent monopsony structures.
Besides this, there are still a number of trade
progresses required like improving the transport and communications structures
which require significant investment and will only be achieved over a medium to
long term.
B. Establishment of a Common External Tariff (CET)
The member states had agreed on the establishment of
a CET in respect of goods imported from third countries. Therefore it is
necessary to analyse the tariff structure of the member states, evaluate data
relating costs and revenues and make comparative study of the CET’s of other
similar economies. If lower tariffs on imports are realized, it will have of
course impacts on revenues and competitiveness; and also some unfortunate
consequences on uncompetitive enterprises. For this, exceptions for some
products are planned. Until now the member states have not agreed on tariffs on
imports into COMESA.
Social and technical regulations and norms shall be
standardized and harmonized in order to maintain, expand and upgrade communications
and transport systems. The fiscal taxes, including the fiscal burdens on
transport and communications enterprises should also be harmonized. COMESA
Customs Documents and carrier license should be adapted from member states in
order to standardize trade. Actually the transport and communications
infrastructures are mostly in public ownership. To COMESA’s opinion the
harmonisation of technical standard has not been rapid due to public ownership.
However, it must be regarded that a total privatisation of infrastructure is
not desirable, as private goods are only usable for people who are able to pay
so that a sufficient provision of infrastructural measurements will not be
reached by privatisation. Besides this, it is not forcible necessary to harmonize
all communication and infrastructural measurement. Most of all it is essential
to establish common transit charges. This is, like the establishment of
standards like overload controls and vehicle dimensions, in work. Furthermore,
a transit insurance scheme, called the Yellow card, is already existing. The
holder of a Yellow Card is able to purchase in local currency from his
insurance company for countries to be visited; i.e. he must not carry hard
currency in order to buy insurance within COMESA. Besides this, the Yellow Card
pays for medical expenses for drivers and passengers and for compensation in
case of a car accident.
It is also planned to establish a Fast Payment Facility (FAP) in order to reduce costs of trade finance. All national transit documents should be replaced through Road Customs Transit Declaration (RCTD). With the RCTD documentation costs and delays at border crossings should be reduced. As Namibia is not a transit country it has not extensive experience with COMESA instruments as e.g. the RCTD.
It is further intended to establish Common
Statistical Rules in order to comparise trade data and statistics and Tariff
Nomenclatures to harmonize and standardize of the commodity coding system. Some
members, including Namibia, have already adopted the vehicle insurance scheme,
common product description and commodity coding system.
Moreover, an Automated System for Customs Data and Management (ASYCUDA) and the Eurotrace program, a data collection system that works in harmony together with ASYCUDA have been designed in order to make customs process more efficient. They have already been installed in nine, respectively 13, countries, also in Namibia.
D. Maritime transport in the
COMESA region
Unfortunately the COMESA maritime region is the least developed in the developing countries and lays even further behind North and West Africa. The short and medium term objective of COMESA is to provide the framework for cooperation in the field of maritime transport, improving the operations of seaports, protecting the interests of shippers and promoting cooperation between the national and foreign shipping lines.
The quality of shipping services provided to shippers, e.g. development of infrastructure and commercial and technical management shall be improved in order to rise efficiency.
Actually the COMESA region is totally dependent on foreign ships for its trade as locally owned vessels are too old and small to stand competition and COMESA members do not have money for necessary investments.
On the short term it is planned to coordinate the existing shipping services and to communicate their services to international traders throughout the region in order to increase the shipping activities. On the medium and long term COMESA envisages cooperation on a functional basis in order to participate in the international shipping industry. For this, COMESA will control cargo and establish a non-vessel owning container Line (NVOCL) which shall be a partnership venture between the existing shipping, trading and weight forwarding companies and the shipping agents. The second phase is the establishment of a COMESA Multinational Shipping Company. Namibia’s Walfish Bay shall become the main transit port on the West Coast.
In 1982 the PTA Clearing House was established to
enhance cooperation in settlement of payments for intra-regional trade in goods
and services. Actually it counts 18 member states. The objectives of the PTA
Clearing House are facilitation of financial transaction through use of
national currencies and promotion of trade liberalisation. The PTA Clearing
House guarantees prompt payment for exports and reduces the risk of non-payment
for exporters. The transaction costs will be also reduced. Besides this, PTA
Traveller Cheques were introduced to enable countries to save foreign exchange
on external travel. Up to now Namibia is a not member of the Clearing House but
the authorized Namibian Bank cooperates with this settlement.
The Monetary Harmonization program will be implemented
in four phase, from 1991 to 2025. The goal is to establish a Monetary Union
which implies an irrevocable fixed exchange rate, a single currency or parallel
currencies as well as full harmonization of economic, fiscal and monetary
policies. The Trade and Development Bank for Eastern and Southern Africa (PTA
Bank) should link the activities of the Monetary Harmonization Program. Namibia
is a member of the Common Monetary Area. Therefore its foreign exchange control
regulations must conform to those applicable in the rest of the member states.
As the Namibian Dollar is linked to the South African Rand the exchange market
is managed by the South African Reserve bank whose principal of intervention is
the US Dollar. A foreign exchange licensing is not necessary as authorised
dealers provide it for outside imports.
Financial and economic stability in the medium to
long term must be achieved for a Monetary Union. Therefore, it is necessary
that member states show a similar economic development but it is uncertain if
this can be reached within the time frame. As the example of the EU shows it
takes a long time to form a Common Market and much more to create a Monetary
Union. A fixed exchange rate bears the risk of a “domino-effect” in case of
currency turbulence. If the devaluation of a currency is not allowed although
it should be devaluated it is only a question of time how long the country is
able to buy foreign currencies in order to stable its own. The break down of
fixed exchange rate of the EU in 1993 shows that a higher stability can be
reached with more flexible exchange rates (now: +/-15%). The formation of a
Common Market and a Common Monetary Union should not direct towards a fixed
time frame but to the efforts of its members.
With the establishment of the FTA in the year 2000
there will also be greater need for business persons to move freely within
COMESA. A Visa Protocol was designed which should allow the granting of free
visitor visas up to 90 days. Bilateral or multilateral arrangements, which
provide for more favorable visa treatment, are allowed. The different types of
visa should also be harmonized. Namibia has already fulfilled the
implementation of visa requirements as it has at present relaxed its visa
conditions with at least 24 countries.
It is further planned to implement the right of free
movement of labour, services and the right of establishment and residence.
These implementations will be made in five stages, ending in the year 2014 with
the right of residence.
COMESA provides assistance to the private sector,
like to improve access to information on trade opportunities and trade
development, to give enterprise-specific assistance development of national and
regional competition policies and to help harmonizing quality control
procedures and other related activities which could constitute barriers to
trade. COMESA promotes also the establishment of a Business Community
Consultative Committee which should develop strategic and policy advises in
order to support COMESA.
Besides this, the COMESA Trade development and
promotion program was designed which supplied in 1995 and 1996 the following
product groups: textiles and clothing, furniture and wood products, toiletries,
perfumes, cleansing products and essential oils and manufacturers of iron and
steel. These surveys were subcontracted to trade promotion organisations and
the Chambers of Commerce and Industries of the member states. Actions were e.g.
organisation of buyer/sellers meetings in order to promote actual business
negotiations and transactions through direct personal contacts and specific
enterprise assistance, e.g. market research in COMESA.
Moreover, COMESA established a complementary
database in order to identify trade flows between COMESA countries and to
facilitate and expand intra-COMESA trade. The database contains basic economic
indicators as well as company profiles. Besides data collection for the purpose of identifying production and investment
opportunities are in progress.
COMESA has made great advances as the increase of
intra PTA trade shows. Most of its member states have already liberalised their
import and export licensing and other non-tariff barriers. Nevertheless COMESA
has to deal with several problems as e.g. transport logistical problems, lack
of adequate business contacts, not issuing visas as agreed in the protocol and
insecurity on some transit roads.
The goal of COMESA is to establish an effective market
integration of its members where movement of trade, services, capital and
investment are free. COMESA believes that the globalisation of production,
distribution and exchange requires this process. But it must be taken into
consideration that COMESA members are developing countries. As long as some of
its members have to deal with problems like surges in food consumption and
shortages in production the principal aim must be to overcome this dilemma.
Therefore, intra PTA trade must be increased but the trade liberalisation can
only speed as high as the member states are able to follow. The agreed time
frame bears the risk of polarisation so that the rich countries will gain and
the poor countries are not able to stand the competition and lose. For this, it
is necessary to find the right speed of integration for all members and not to
imitate the European way.
For any further information you are asked to contact
NCCI, Mr. Sam Geiseb, Head of Corporate Services Department, Tel. 61- 22 88 09
or the COMESA website on the Internet: http://www.comesa.int.