The globalisation of trade and foreign investment over the past decade, as expressed in the WTO, have significantly exposed African economies to competitive pressures of the global economy. New global trading rules under the WTO present both steep challenges and fresh new opportunities to national economies on the African continent. In other parts of the industrialised world, individual country realignment to the new trading conditions have been complemented by regional trade blocs – such as NAFTA, the EU and ASEAN – to lower the cost of regional trade of member countries.

The creation of the African Union (AU) in 2003 represents a historic opportunity for the African continent to work towards greater trade integration. Although the political, economic and social institutions underpinning the workings of the AU are still unfolding, it is clear that trade integration will become a key policy objective if the AU is to succeed in increasing the volume, and reducing the cost, of trade and economic development.

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In pursuing this objective, there are a variety of trade instruments that have been developed – the most common of which are economic development zones (EDZ), free trade zones (FTZ), export processing zones (EPZ) and special economics zones (SEZ). Although all these instruments are differently structured and operated, they share a similar objective in the promotion of trade integration.

With the support of the New Partnership for Africa’s Development (NEPAD), it is proposed to form an association of economic development or free trade zones, to be known as the Pan African Free Trade Zone Association. The proposed association will:

  • bring about greater trade synergies and strategic coordination of the continent’s free trade and economic development zones, and through this, maximise and cheapen the flow of goods and services;
  • develop and adopt a continent-wide Charter of Free Trade Zones making provision for a set of common protocols, rules and ethical practices among member countries;
  • act as a marketing tool for the collective benefits of free trade areas within the AU with trading partners in other parts of the world;
  • provide a trade information and data service for its membership;
  • facilitate exchange of technologies, practices and experiences with the view to maintaining the competitive advantages of trade in Africa;
  • promote policy innovations within member countries to effect greater integration of free trade zones within their respective economic heartlands.

The association will provide database support, policy advisory, networking, promotion and marketing services.

The recommendations of the concept document seek formal support by member countries for the project to establish a Free Trade Zone Association. It is hoped that a small, full-time secretariat will operate under the auspices of NEPAD. The secretariat will be responsible for drawing up terms of reference for PAFTZA, its marketing to AU members, and submission for official adoption by decision-makers.