African Economic Blocs and Trade: Case Study of COMESA and Sudan

16 Pages Posted: 29 Jul 2011 Last revised: 14 Aug 2011

See all articles by Issam A.W. Mohamed

Issam A.W. Mohamed

Al-Neelain University - Department of Economics

Date Written: July 29, 2011

Abstract

Comprehensively, Economic Trade Partnerships and Blocs are important to a member country. However, with the continuing global financial distresses it is useful to evaluate them to maximize possible benefit. The question of joining, continue membership with the Comesa is vital to the Sudanese economy that presently stands in a very decisive time. The Common Market for Eastern and Southern Africa is a free trade area with nineteen member states stretching from Libya to Zimbabwe. COMESA formed in December 1994, replacing a Preferential Trade Area which had existed since 1981. Nine of the member states formed a free trade area in 2000 which are Djibouti, Egypt, Kenya, Madagascar, Malawi, Mauritius, Sudan, Zambia and Zimbabwe. Rwanda and Burundi joined the FTA in 2004 and the Comoros and Libya in 2006. COMESA is considered as one of the pillars of the African Economic Community. In 2008, COMESA agreed to an expanded free-trade zone including members of two other African trade blocs, the East African Community (EAC) and the Southern Africa Development Community (SADC). The history of COMESA began in December 1994 when it was formed to replace the former Preferential Trade Area (PTA) which had existed from the earlier days of 1981. COMESA was established as an organization of free independent sovereign states which have agreed to cooperate in developing their natural and human resources for the good of all their people. It has a wide-ranging series of objectives which necessarily include in its priorities the promotion of peace and security in the region. However, due to COMESA's economic history and background its main focus is on the formation of a large economic and trading unit that is capable of overcoming some of the barriers that are faced by individual states. The current strategy is summed up in the phrase 'economic prosperity through regional integration'. With its 21 member states, population of over 385 million and annual import bill of around US$32 billion COMESA forms a major market place for both internal and external trading. Its area is impressive on the map of the African Continent and its achievements to date have been significant. As a Free Trade Area, the COMESA states, in implementing a free trade area are well on their way to achieving their target of removing all internal trade tariffs and barriers, an exercise which is to be completed by the year 2000. Within 4 years after that COMESA will have introduced a common external tariff structure to deal with all third party trade and will have considerably simplified all procedures. Trade Promotion as the primary objective was supposed which will be met to assist in the achievement of trade promotion that include trade liberalization and Customs cooperation, including the introduction of a unified computerized customs network across the region; improving the administration of transport and communications to ease the movement of goods services and people between the countries; creating an enabling environment and legal framework which will encourage the growth of the private sector; the establishment of a secure investment environment, and the adoption of common sets of standards and the harmonization of macroeconomic and monetary policies throughout the region. However, from the results introduced here it is obvious that Sudan did not benefit much from joining the Comesa due to many logistic problems and obstacles. Most Comesa members suffer from lack of sufficient infrastructure. Also there are inelastic trade policies that discourage the inflows commodities. Impacts on Sudan economy are most manifested in trade imbalances with the Comesa members. Moreover, Sudan is not properly represented in the organization's administration because it was a late member. However, the major manifested obstacle is that the Comesa members' products are mostly primary and agricultural commodities. That makes them compete within the organization's structure and not of integrated prospective. Perhaps that is why the Chinese invading commodities are without competing partners whereas most African countries lack both technology and the industrial sector necessary for an economic bloc. Moreover, the Chinese invaders do not allow technological transfer neither high value commodities to African countries. The only feasible and logical advice for Comesa is that it should combine its structure and members with other international trade blocs which may allow the technological transfers and high valued commodities instead of totally depending on Chinese trade. For Sudan, it is obvious from data introduced here that it has not benefited from joining the Comesa. Sudan's trade balance with Comesa remained on the negative side for the past two decades. Besides, the Comesa members do not have commodities of high value neither integrative with the Sudanese products. The most important part of this argument is that with the secession of Southern Sudan, Northern Sudan lost its possible connection with most Comesa members except for Ethiopia and Eritrea. That provokes a new theory that Sudan's membership with Comesa is not beneficial or accepted in the economic reason.

Note: Downloadable document is in Arabic.

Keywords: Africa, economic blocs, administrative structure, Sudan, economic viability, high and low valued commodities, infrastrcture, trade balance

JEL Classification: A00, A10, E6, E60, E61, E62, E63, E64, E65, E66, E69, N1, N17, Q1, Q17

Suggested Citation

Mohamed, Issam A.W., African Economic Blocs and Trade: Case Study of COMESA and Sudan (July 29, 2011). Available at SSRN: https://ssrn.com/abstract=1898619 or http://dx.doi.org/10.2139/ssrn.1898619

Issam A.W. Mohamed (Contact Author)

Al-Neelain University - Department of Economics ( email )

P.O. Box 12910-11111
Khartoum, Khartoum 11111
Sudan
249122548254 (Phone)

HOME PAGE: http://works.bepress.com/issamawmohamed/

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