Progress on Tripartite Free Trade Area (TFTA)

The Tripartite Free Trade Area (TFTA) is a regional economic integration initiative that brings together 29 African countries from three Regional Economic Communities: the Common Market for Eastern and Southern Africa (COMESA), the East African Community (EAC), and the Southern African Development Community (SADC).

The TFTA presents an expansive market, comprising 53% of African Union membership, and encompasses a combined population of 800 million people. To date, 15 Member/Partner States have ratified the agreement, including Egypt, Uganda, Kenya, Rwanda, Burundi, Eswatini, Botswana, Namibia, South Africa, Zambia, Zimbabwe, Malawi, Lesotho, Angola, and Djibouti.

TFTA Key Milestones

• 2008: The 1st Tripartite Summit, held in Kampala, Uganda, approved the establishment of the TFTA.
• 2011: The 2nd Tripartite Summit, held in Santon, South Africa, launched TFTA negotiations and approved guidelines for the process.
• 2015: The 3rd Tripartite Summit, held in Sharm El Sheikh, Egypt, approved the signing of the TFTA Agreement.
• 2015: Kenya signed the TFTA Agreement.
• 2018: Kenya ratified the agreement alongside the African Continental Free Trade Area (AfCFTA).
• July 2024: Angola became the 14th Member/Partner State to ratify the agreement, meeting the threshold for the TFTA's entry into force.

TFTA Opportunities

• Expanded market access: The TFTA provides access to a larger market of approximately 800 million people with a GDP of USD 1.88 trillion.
• Economic growth and diversification: TFTA Member/Partner States are some of Africa's fastest-growing economies, benefiting from increased trade within the larger, more diverse TFTA market.
• Sectoral opportunities: Key sectors poised for growth include agriculture, automotive, pharmaceuticals, and logistics, with significant potential in processed foods, fishery products, and leather goods.
• Technological advancement and financial development: The use of digital technologies can enhance trade capacities, including digital trade platforms, e-commerce, and financial services that create new avenues for market expansion.

TFTA Negotiation Phases

• Phase I: Focuses on negotiations for trade in goods, including tariff liberalization, rules of origin, non-tariff barriers (NTBs), customs procedures, transit processes, technical barriers to trade, sanitary and phytosanitary (SPS) measures, and trade remedies. It also addresses the movement of businesspersons.
• Phase II: Covers trade in services and related issues such as intellectual property rights, competition policy, and cross-border investments.

TFTA's Three Pillars

1. Market Integration: This pillar aims to establish a free trade area, including the free movement of businesspersons. The TFTA sets an ambitious goal of 100% tariff liberalization, with 60-85% of tariff lines liberalized upon entry into force and the remaining 15-40% negotiated over 5-8 years.
2. Infrastructure Development: Focuses on improving regional transport (roads, rail, air, and water) and trade-related infrastructure such as energy and ICT to enhance connectivity and support market integration.
3. Industrial Development: Seeks to promote value addition, diversification, higher productivity, and competitiveness in the region's industries.

Movement of Businesspersons: Negotiated separately, this component aims to facilitate market integration by easing business travel across Member/Partner States.

Institutional Framework for TFTA Negotiations

• Tripartite Summit of the Heads of State and Government
• Tripartite Council of Ministers
• Tripartite Sectoral Ministerial Committees
• Tripartite Committee of Senior Officials
• Tripartite Trade Negotiation Forum (TTNF)

The TTNF has established four Technical Working Groups (TWGs) on Rules of Origin (RoO), Customs Cooperation, SPS/TBT/NTBs, and Trade Remedies and Dispute Settlement to support the negotiation process. Notably, 90% of the TFTA's Rules of Origin have been agreed upon.

Outstanding Areas

• Aligning tariff offers with the HS 2022 version.
• SACU upgrading its tariff offer to match EAC's 90.25%.
• Finalizing negotiations on sensitive products and Rules of Origin for textiles and automobiles.

Challenges

1. Lack of a dedicated secretariat and institutional structure to coordinate TFTA programs.
2. Low awareness of the TFTA among the private sector in Member/Partner States.
3. Cultural and language barriers that could impede market penetration.

1. Limited access to affordable credit for businesses, especially small enterprises.
2. Political and security concerns that may affect business mobility.
3. Overlapping memberships in multiple RECs, leading to policy conflicts.
4. Infrastructure deficits hinder cost-effective trade.
5. Low capacity for value addition in Member/Partner States, limiting export diversification.

Despite these challenges, the TFTA offers immense opportunities for Kenyan businesses to collaborate with partners in SADC and other regions, facilitating increased trade and regional integration.