Movement of business within the Free Trade Area

by JB Cronjé, tralac Researcher, comments on developments in the TFTA negotiations on movement of business persons

IN JUNE 2015, the Members of the Common Market for Eastern and Southern Africa (COMESA), East African Community (EAC) and the Southern African Development Community (SADC) held their third Tripartite Summit of Heads of State and Government. At the conclusion of the Summit Tripartite Member States signed a Declaration launching the COMESA-EAC-SADC Tripartite Free Trade Area (TFTA). They also signed and opened for signature the Agreement establishing the TFTA. Although the Declaration was signed by all Members except Libya and Eritrea the Agreement was signed by only sixteen Members at this stage.

The signatories to the Declaration Launching the COMESA-EAC-SADC Tripartite Free Trade Area (TFTA) in June 2015, directed:
• the conclusion of outstanding issues from Phase I including the elimination of import duties, trade remedies and rules of origin to operationalise the Agreement;
• the commencement of Phase II of the negotiations covering trade in services, cooperation in trade and development, competition policy, intellectual property rights and cross border investments;
• all negotiations, including outstanding work be carried out in accordance with principles, processes and institutional structures as approved by Summit;
• the development of a Roadmap on Phase II negotiations;
• the acceleration of work on the industrial development and infrastructure pillars;
• work on negotiations on movement of business persons to continue on a separate track.

It is important to note the separation of negotiating issues. The negotiations on movement of business persons are neither grouped with the “outstanding issues” from Phase I nor do they feature in the list of issues constituting the second and final phase of the negotiations. This anomaly could be ascribed to the way in which the negotiations have been conducted until this point in time. The Declaration Launching the Negotiations for the Establishment of the TFTA adopted at the Second Tripartite Summit in June 2011 provided the negotiations will be concluded in two phases. Phase I covered trade in goods and the movement of business persons and Phase II covered “the build-in agenda in services and trade-related areas”. However, it stated “Movement of business persons will also be negotiated during the first phase through a separate track in a committee to be established by the Tripartite Sectoral Ministerial Committee”. It was only much later in July 2013 that the Tripartite Sectoral Ministerial Committee established this committee; the Tripartite Technical Committee on Movement of Business Persons (TTC-MBP). Initially the TTC-MBP started its work on developing an Annex on Movement of Business Persons to regulate the movement of certain categories of persons.

This Annex was intended to form an integral part of a single comprehensive TFTA Agreement. This position changed in 2014 when the Tripartite Sectoral Ministerial Committee decided instead to conclude a separate legal instrument to regulate the movement of business persons in the Tripartite region. Since the launch of the negotiations in 2011, the negotiations have unfolded in a different way as reflected in the latest Declaration. It would seem the movement of business persons is no longer part of Phase I or II of the negotiations. In fact, apart from the Preamble, the Agreement establishing the TFTA does not mention movement of business persons. Article 3 of the Agreement provides its scope and coverage will comprise of trade in goods, trade in services and other trade-related matters. Trade-related matters are defined in Article 45 of the Agreement in the context of matters subject to Phase II of the negotiations. Apart from a protocol on trade in services, Members also agreed to negotiate and endeavour to conclude protocols on trade-related matters, including competition policy, cross-border investment, trade and development, and intellectual property rights. These protocols will form an integral part of the TFTA Agreement. Article 6 of the Tripartite FTA Agreement provides that the Agreement is governed by, amongst others, the principle of “single undertaking with regard to the various phases of the Agreement”. It means that all matters forming part of both Phases I and II of the negotiations must be concluded to form a single package of legal instruments. It would seem the conclusion of an arrangement to regulate the movement of business persons in the TFTA falls outside to ambit of the “single undertaking” principle.
Whereto from here for negotiations on movement of business persons? Article 45 allows Members to conclude protocols “in any other trade-related matters”, which could then also include movement of business persons. However, seeing that such an arrangement is no longer required for the conclusion of Phases I and II of the negotiations, Members may now decide to address issues relating to the liberalisation of movement of business persons as part of the negotiations on trade in services. It also means that the focus of the separate legal instrument on measures facilitating movement business persons will be limited to measures such as relaxation of visa and permit procedures and requirements.