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Wednesday, 28 June 2017

Britain’s exit from EU, a warning for Africa’s regional integration project

Britain’s exit from the EU has brought into question the benefits of intra-regional trade, with some commentators suggesting that it could sound a warning for Africa’s regional integration project. Advocates of Brexit pointed to a decline in Britain’s trade with its EU partners as an indication that a focus on intra-EU trade is no longer a priority for Britain. It is worth noting that since 2012, Britain’s trade with the rest of the world has overtaken its trade with the EU. This is in part because emerging economies have shown higher growth than Europe and have thus offered more opportunity. Brexiteers also argued that Britain’s EU membership has hindered the growth of the UK’s trade with non-EU nations (including with its former colonies), with insufficient benefit gained from trading with EU member states to compensate. It is notable that the EU itself recognises the importance of trade with the world’s emerging, faster growing economies. The EU advocates an active free trade policy towards emerging market economies and a policy of active engagement with non-EU partners through free trade agreements. Nevertheless, Brexit campaigners maintain that EU tariffs can hinder trade with non-EU countries and tend to divert trade back within the EU. Intra-African trade is an important part of the African Union (AU) agenda. The Abuja Treaty cites amongst the implementation processes for achieving the AU’s objectives: the establishment and strengthening of Regional Economic Communities (RECs), liberalisation of trade between Member States and establishing free trade areas within the RECs. The AU’s Agenda 2063, the framework for the continent’s socio-economic transformation over the next 50 years, includes amongst its goals the fast-track of a Continental Free Trade Area by 2017, doubling of intra-African trade by 2022 and strengthening of Africa’s “common voice and policy space in global trade negotiations”. That the AU is focusing on increasing intra-regional trade is not surprising given its many potential benefits. Greater intra-regional trade encourages the development of larger markets. This enables firms to take advantage of economies of scale and fosters greater competition, which in turn should lead to greater specialisation and efficiencies.

Source: News Ghana