Prohibitive costs of transportation in the COMESA region is the main handicap towards the successful implementation of the regional Free Trade Area. This has compelled trade experts and leaders in the regional bloc to begin thinking about the establishment of a shipping line.
As a result, the COMESA Council of Ministers have approved a proposal to establish a shipping line that would serve both inland and coastal countries. This would be done through regional institutions and Member States.
In their recent meeting in Lusaka, 3 – 4 November 2017, the Council approved this intervention noting that addressing the high transportation costs would resolve the challenges affecting the performance of the Free Trade Area.
An assessment conducted earlier by the COMESA Secretariat on the performance of the FTA indicated that the average bilateral intra-COMESA trade cost stands at 310 percent of the value of trade. This is much higher than the bilateral intra-regional costs of trade for East Asia and Pacific; Europe and Central Asia; Latin America and the Caribbean; Middle East and North Africa; South Asia and Sub-Saharan Africa.
The main challenges include: the high trade cost that could be attributed to both direct and indirect costs associated with; fulfilling regulatory import and export requirements; costs resulting from differences in currencies, geographical distance, domestic and international shipping and logistics costs associated with imports and exports. Other proposed interventions identified during the assessment was the need to establish Public-Private Partnerships especially in the development of transport and logistics infrastructure.
“For COMESA Member States to realize the highest levels of innovation-based growth in exports and produce high-value added products for long-term growth there is need to redesign policies geared toward facilitating adoption of existing technology, intellectual property rights and vocational education that would bolster innovation capacity,” said the assessment report.
The assessment indicated that the low levels of trade complementarity among Member States could be addressed through establishment of regional production networks. Thus Member States needed to eliminate and avoid imposition of Non-Tariff Barriers and relax Rules of Origin to enhance intra-COMESA trade.
In its decision, the Council directed the Secretariat to expeditiously undertake detailed analysis on the Rules of Origin, trade costs, transportation costs and other elements affecting intra-