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Trade pacts slow investment – World Bank
2006-11-11 08:51:51
By Guardian Reporter
Africa needs to reduce the number of its regional trade agreements to spur trade with non-members and remove barriers to investment, a senior World Bank adviser has said in Dar es Salaam.
In addition to several bilateral trade agreements, African countries belong to at least 12 regional trade agreements, each with a different set of rules that members and non-members have to follow while trading.
Their memberships often overlap and diagrams illustrating them look like doodles, prompting economists to refer to them as a ”spaghetti bowl.”
”There has been a preoccupation on the continent with regional trade agreements,” Harry Broadman, economic adviser to the World Bank’s Africa Department, said late on Thursday at a briefing for reporters, diplomats and government officials.
”It is highly confusing if you are an investor concentrating on making an investment or engaging in import or export,” he added while making a presentation on his book, ”Africa’s Silk Road - China and India’s new economic frontier”.
Regional trade areas on the continent include Southern African Development Community, Common Market for Eastern and Southern Africa and Economic Community of Western African States among others.
”The current ’spaghetti bowl’ of intra-African regional trade agreements provides little, if any, incentive for new trade and investment; in some cases they appear to be more ’trade diverting’ than’ trade creating’,” Broadman said in an overview of his book.
To solve this, African countries will have to reduce the regional blocs, he said.
”What is required is to create a unified free trade area, or at least several of them, not what we have today,” Broadman said.
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