The Role of Competition Reforms in Unlocking International Trade: Evidence from Africa’s Proposed Tripartite Free Trade Area

Date01 June 2021
DOI10.1177/0003603X21997046
AuthorCornelius Dube
Published date01 June 2021
Subject MatterArticles
Article
The Role of Competition Reforms
in Unlocking International Trade:
Evidence from Africa’s Proposed
Tripartite Free Trade Area
Cornelius Dube*
Abstract
This study applies an econometric approach to estimate the impact of competition reform adoption
and tightening on international trade, using Africa’s envisaged Tripartite Free Trade Area (TFTA) as a
case study. An index measuring the extent to which competition regimes have been tightened and
enforced between 2001 and 2016 in the TFTA countries is constructed. A gravity model of interna-
tional trade, based on generalized method of moments, is then estimated to establish how exports are
influenced by this competition index measure after controlling for other traditional gravity model
variables. The results show that increasing competition reforms by 1% is associated with an increase in
bilateral exports into the TFTA by 0.16%. However, if competition reforms in the importing country
increase by 1%, then an approximate decline in bilateral exports of 0.46% would result. This underlines
the role of competition enforcement in enhancing national competitiveness.
Keywords
competition policy, competition reform index, international trade
I. Introduction
A. Background
The wave and lobbying by development partners and competition practitioners, which was aimed at
the developing world to embrace competition reforms, was very noticeable beginning in the 1990s
to the early 2000s.
1
However, the momentum is waning now, as it appears to have borne fruit, based on
* School of Economics and Finance, College of Law and Management Studies, University of KwaZulu Natal, Durban, South Africa
Corresponding Author:
Cornelius Dube, School of Economics and Finance, College of Law and Management Studies, University of KwaZulu Natal,
University Rd., Westville, Durban 4000, South Africa.
Email: cornydee@gmail.com
1. See PRADEEP S. MEHTA &SIMON J. EVENETT,Promoting Competition Around the World: A Diversity of Rationales and
Approaches, in COMPETITION REGIMES IN THE WORLD—A CIVIL SOCIETY REPORT xvii, xxiii (PRADEEP S. MEHTA ed., 2006);
The Antitrust Bulletin
2021, Vol. 66(2) 252–275
ªThe Author(s) 2021
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DOI: 10.1177/0003603X21997046
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the increase in the number of countries that have adopted competition reforms in developing countries.
There is a noticeable increase in the number of countries that have competition laws in the world, from
only about twenty in 1990
2
to about 130 by 2016.
3
This means that only a third of the world had not
embraced some measure of competition enforcement
4
by 2016. The same increasing trend is also
noticeable in Africa; in 2000, only thirteen countries had competition laws,
5
but the number had
increased to thirty by 2017.
6
This means just above half of the continent had competition laws in
2017,
7
though this also means that the competition law adoption ratio is lower in Africa compared to
the world. The high number of countries without competition laws could reflect that technocrats in
different countries are still characterized by some ideological differences or lack of consensus con-
cerning the benefits from competition enforcement. There is, therefore, reason to expect that the
expected benefits from competition policy and its enforcement are not being fully realized in Africa.
There has been a lot of momentum in Africa with respect to regional and continental integration.
This means that the integration has been taking place at a time when countries are at different stages
with respect to competition policy enforcement. The discussions on trade cooperation in Africa have
since moved beyond regional economic cooperation (REC) arrangements and now include a trade
cooperation involving a merger of three RECs and a continental integration initiative. The Tripartite
Free Trade Area (TFTA) involves a merger of the Common Market for Eastern and Southern Africa
(COMESA), the East African Community (EAC), and the Southern Africa Development Community
(SADC). The origin of the TFTA dates back to October 2008 in Kampala, Uganda, when the first
summit of the TFTA summit was held.
8
This was strengthened in June 2015 when twenty-six mem-
bers
9
met in Egypt and initiated the process of ensuring that the TFTA comes into force. The TFTA
Agreement would come into force if it is signed and ratified by at least fourteen member states.
Membership in the TFTA has since increased from the original twenty-six to twenty-nine, with South
Sudan joining the EAC while Tunisia and Somalia have also joined COMESA.
10
However, although
there were twenty-two countries that had signed the TFTA Agreement in April 2020, there were only
eight
11
that had ratified it, meaning that there were still six more needed to have the Agreement
Dina I. Waked, Adoption of Antitrust Laws in Developing Countries: Reasons and Challenges,12J.L.ECON.&POL Y. 193,
207–210 (2016); MICHAL S. GAL &ELEANOR M. FOX,Drafting Competition Law for Developing Jurisdictions: Learning
from Experience, in ECONOMIC CHARACTERISTICS OF DEVELOPING JURISDICTIONS:THEIR IMPLICATIONS FOR COMPETITION LAW
296-356 (MICHAL S. GAL ET AL., eds., 2015).
2. OECD, INTERNATIONAL CO-OPERATION IN COMPETITION LAW ENFORCEMENT, OECD. Doc.C/MIN(2014)17 (2014), https://www.
oecd.org/mcm/C-MIN(2014)17-ENG.pdf (last visited Nov. 2, 2020).
3. Aydin Umut & Tim Bu
¨the, Competition Law & Policy in Developing Countries: Explaining Variations in Outcomes;
Exploring Possibilities and Limits,79L
AW &CONTEMP.PROBS. J. 1, 1 (2016).
4. Assuming that there are about 195 countries in the world.
5. WORLD BANK,BREAKING DOWN BARRIERS:UNLOCKING AFRICASPOTENTIAL THROUGH VIGOROUS COMPETITION POLICY (2016).
6. LIPIMILE GEORGE,COMPETITION LAW FOR THE TRIPARTITE FREE TRADE AREA AND THE AFRICA CONTINENTAL FREE TRADE AREA
(Fourteenth Meeting of The Tripartite Committee Of Senior Officials and Fifteenth Meeting Of The Tripartite Tra de
Negotiation Forum (TTNF), June 14–16, 2018).
7. Assuming there are fifty-five African countries.
8. Andrew Mold & Rodgers Mukwaya, The Effects of the Tripartite Free Trade Area: Towards a New Economic Geography in
Southern, Eastern and Northern Africa? (Credit Research Paper No. 15/04, 2015).
9. Angola, Botswana, Democratic Republic of the Congo, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia,
Seychelles, South Africa, Swaziland, Tanzania, Zambia, Zimbabwe, Burundi, Kenya, Rwanda, Uganda, Comoros, Djibouti,
Egypt, Eritrea, Ethiopia, Libya, and Sudan.
10. Common Market for Eastern and Southern Africa (COMESA), More C ountries Ratify Tripartite Free Trade Area
Agreement (Jan. 2020), https://ww w.comesa.int/more-countr ies-ratify-tripartite-fre e-trade-area-agreement/ (la st visited
Nov. 2, 2020).
11. Egypt, Kenya, South Africa, Rwanda, Uganda, Burundi, Botswana, and Namibia.
Dube 253

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