Factors Behind Tanzania To Withdraw From COMESA

The study has focused on analyzing the major factors influencing Tanzania to withdraw its membership form the Common Market for Eastern and Southern Africa(COMESA)in 2000.COMESA is the region economic integration where Tanzania joined in 1994 with the expectation of gaining more benefits through trade relations that existed between the member states.The study explains how the Common Market for Eastern and Southern Africa failed to meet the required targets to some of its member states particularly Tanzania and leading to withdraw its membership.The expectations of Tanzania to promote trade relations and improving exportations alongside with developing domestic industries and small and medium enterprises seemed to fail.The economic gap between Tanzania and other member states was increasing day to day to the extent in 1990's Tanzania was among of the poorest countries in the world.The efforts were taken to revive the economy,and one of the approaches taken was to withdraw from one of the regional economic integration that was COMESA.In order to realize the reasons behind that influenced Tanzania to take that unexpected decision,the study will seeks to answer two research questions: Why did Tanzania withdraw from COMESA? What factors influenced Tanzania to withdraw form COMESA?In attempting to answer these questions,the findings of the study show that zero tariff reduction agreement was the major influence of Tanzania to withdraw its membership from COMESA.Reducing tariffs to 100% was a threat for Tanzania because according to trade policy review of 2000 shows that Tanzania was heavily relying on revenues from trade tariffs and VAT.Therefore,if Tanzania would remain in COMESA and implementing zero tariff reduction could more affect its revenue collection.According to East African trade review,implementation of the new tariff regime would cost the government a total of US$80 million annually and also would affect the domestic industries due to unable to sustain the competitiveness of the market for imported goods from other member countries.Henceforth,the implementation of zero tariffs agreement would be an obstacle for Tanzania thus why declared its intention to withdraw from the integration during the Summit of the authority of COMESA heads of state and government in Nairobi,Kenya.According to Hon.Benjamin Mkapa,the former President of the United Republic of Tanzanian President,the large part of Tanzania revenue was depending on tariffs charges from foreign goods particularly from neighboring land locked countries such as DRC,Zambia,Malawi,Burundi and Rwanda that have been using Tanzania as transit to import and export theirs goods through Dar es Salaam,Mtwara and Tanga ports and transporting to or out of their countries through Tanzania borders.The products were usually imposed trade tariffs through customs border agents and forming necessary source of revenue to Tanzania.According to him,if Tanzania would agree to remove all trade barriers to zero tariffs would harm its revenue collection and leading economic instability.Generally,the study has comprised five chapters: Chapter one cover the introductory part that explaining the over role idea on how Tanzania become the member of COMESA;the significance of conducting this study;the methods used to compile the information of the study which includes desk review,observation and telephone interview;but also this chapter explains how this topic was discussed by several literatures from different authors who used to explain about the mechanisms used by the government for infants industrial protectionism,the impact of tariffs reduction under special free trade agreement and effects of multiple memberships.Chapter two explains the phases and procedures used by Tanzania to withdraw from COMESA.In this chapter the study shows that,Tanzania has gone through three major phases and conditions resulted to be non COMESA member state.The first phase entails the meeting of COMESA council of ministers held on 20-22 May 1999 in Nairobi,Kenya that explored the agenda and discussion of zero tariffs reduction with the theme of Countdown to the COMESA Free Trade Area,31 October 2000.The second phase entails the Summit of the authority of COMESA heads of state and government held one day later after the council of ministers.During this meeting,Tanzania has declared its intention to be out of COMESA by 2000.The move of Tanzania to be non COMESA member ended in the third phase of Parliamentary session where the decision and ratification was made by the members of Parliament.Chapter three explains the key economic factors influencing Tanzania to withdraw from COMESA.The issue of tariffs revenue loss was the primary factor where the revenue collection seemed to decline since Tanzania signed to implement the free trade agreement with COMESA member states.Moreover,the case of declining of external trade has also influenced Tanzania to pull out its membership.Tanzania experienced the trade deficit since joining in COMESA that also could affect the domestic producers.In other words it was founded that the importation exceeded the exportation.In 1970's the trend of importation and exportation was stable where it was seemed that Tanzania was exporting more compared to import.But the situation began to change in 1980's after establishing PTA and then COMESA.The trend of exportation declined to the minimum level and leading trade deficit.Economically when a country imports more goods than export,indicates the worse situation that leads the shortage of foreign currency and threatening economic stability.The trade and economic situation in Tanzania was very worse thus why it decided to take tough and unexpected decision to exit from that regional trade bloc for the aim of strengthening its trade patterns.Chapter four shows how Tanzania was not much benefited from COMESA,the level of trade exportation within the COMESA member states was not good and beneficial compared to other economic integrations such as EAC and SADC where Tanzania was belong to.Declining of exportation has also affected the value of agricultural products of the member states including Tanzania where the value of export was below US$ 5 million from 1995-2000.The other factor is multiplicity of memberships where the study found that Tanzania was a member of more than three integrations.The study depicts that not only Tanzania was a member of COMESA but also was a member of other economic integrations such as EAC and SADC.The multiplicity of membership has affected technically and financially the performance and commitment of Tanzania.Multiple memberships was the major obstacle to Tanzania and caused to be inactive member within integrations.Economically Tanzania could not serve and provide financial contributions properly to all integrations under which belong to.The survival and development of those integrations relied on the financial contributions from their member states.Members have been providing financial budget for all development projects such as road construction,railways,water pipelines,power etc.and also contributed operational costs for administration.That was a burden for Tanzania and it could not manage to provide those contributions as required.The only way to avoid with that inconvenience situation was to remain with dual memberships that can actively participate in several development activities.Multiple memberships was also an obstacle because of implementation of dual customs union.The World Trade Organization(WTO)rules and regulations do not allow member states to have dual customs union agreements,where the study shows that COMESA and EAC members were under the custom union agreements in which Tanzania was belong to.If Tanzania would remain within COMESA would breach the WTO regulations by having dual customs union.Chapter five which the final one concludes and gives the personal opinions based on the findings explored in this study.Also explains some recommendations and actions to be taken by Tanzania for the aim of strengthening the trade relations with other countries.