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Huge Egypt to South Africa Trade Bloc Being Formed in Wake of BRICS Summit
22 November 2014
EIRNS—Developments leading to a huge 27-nation trade bloc extending from Egypt to South Africa, including all of eastern Africa, took a big step forward this week. Egyptian Industry and Foreign Trade Minister Mounir Fakhry Abdel Nour, in an interview with Reuters yesterday, said that an agreement which would bring 27 African countries into a unified trade bloc is slated to be signed in Cairo in next month. His statement was reportedly confirmed by the South African government. The agreement takes on a greatly increased significance following the development mechanisms established by the BRICS nations at their summit this July. Members of the bloc are pushing for rapid implementation. In the Reuters interview, Abdel Nour said from his office on Tahrir Square: "It is going to happen immediately. We expect to sign, absolutely." He noted that "The execution, like any free trade agreement is done in stages, for some countries quicker than others depending on their economic structure, their ability to compete. But it’s going to be done." The planned trade bloc is referred to as the Tripartite Free Trade Agreement (T-FTA). Discussions to establish this trade bloc have taken place since 2011 between the Common Market of Eastern and Southern Africa (COMESA), the East African Community (EAC), and the Southern African Development Community (SADC). The consequences for Africa, as infrastructure is built, include connecting land-locked countries to the BRICS dominated development economy, as well as encouraging trade between African nations. The South African cabinet has officially approved South Africa’s position on T-FTA, according to the Reuters report. South Africa is confronting high unemployment, poverty, and income inequality. A South African cabinet statement said: "The Tripartite initiative is a key African-led project aimed at promoting economies of scale, enabling competitiveness, diversification, fostering regional value-chains, intra-regional trade and investment, and cross-border infrastructure." The T-FTA is, according to the Reuters report, also being considered as possibly setting the groundwork for an FTA for the whole continent. The combined gross domestic product of the FTA member nations amounts to about $1.2-trillion. Their combined population is 626-million people, which which is over half of Africa’s population. South Africa is considered by monetarists to have Africa’s second-largest economy (after Nigeria), but it has not recovered from the 2007-8 Atlantic system collapse. The South African government is viewing the T-FTA as key to raising intra-African trade and investment levels, while improving prospects of aligning the South African economy with some of the world’s fastest-growing economies. In addition, Abdel Nour said Cairo is working on trade agreements with the Russia-oriented Eurasian Economic Community and the South American trade bloc Mercosur in order to encourage the return of foreign investors who left Egypt during the 2011 destabilization. In addition to the prospects for infrastructure construction, the trade bloc will be "one huge free-trade union" which will provide the opening for foreign investors in Egypt to more easily reach 260-million consumers from South Africa to Ethiopia. According to South Africa’s Department of Trade and Industry, the agreement had been worked out over a long period of time. The Trade and Industry Department characterized the agreement as initially a "tripartite alliance" which is made up of COMESA, the SADC, and the EAC. It is now expanded to Egypt and countries in between. Egypt had a trade balance deficit of about $35-billion in the fiscal year that ended June 30. This trade bloc will be an advantage to Egypt, since President Abdel Fattah el-Sisi has put infrastructure mega-projects on a priority status. Abdel Nour said that in a few days, he will announce the result of a tender for drafting a master plan to develop the mining resources in southeast Egypt, known as the "Golden Triangle," which is seen as rich in resources including gold, phosphate and quartz. Douglas Degroot |