Question

QUESTION FIVE Evaluate whether the formation of the Common Market for Eastern and Southern Africa (COMESA) has in anyway compromised the welfare benefits typically associated with a customs union.

Answer 1

The formation of COMESA has not compromised the welfare benefits typically associated with a customs union, although there are challenges that hinder the full realization of these benefits.

Step-by-step explanation:

The formation of the Common Market for Eastern and Southern Africa (COMESA) has not compromised the welfare benefits typically associated with a customs union.

A customs union is an agreement between countries to eliminate trade barriers, such as tariffs, and establish a common external tariff on imports from countries outside the union. The primary goal of a customs union is to promote economic integration and increase trade among member countries.

COMESA has achieved some level of integration and cooperation among its member states, but it has not fully realized the welfare benefits that are typically associated with a customs union. Some challenges, such as uneven development among member states, differing economic policies, and limited infrastructure, have hindered the full realization of the benefits. However, COMESA has made progress in promoting regional trade and economic cooperation.

Answer 2

While COMESA was formed to enhance economic integration, it might have compromised welfare benefits due to disparities in development levels and external trade arrangements among member states. Protectionist desires can also undermine the distribution of gains within such a customs union.

Step-by-step explanation:

The formation of the Common Market for Eastern and Southern Africa (COMESA) was intended to boost economic integration among member states, similar to other regional trade blocs. A customs union typically brings about welfare benefits through the removal of trade barriers between member nations and the establishment of a common external tariff. However, the experience with COMESA might have compromised these welfare benefits in several ways.

When evaluating such a trade organization, it is important to consider that the enabling of free trade can sometimes lead to hardships, particularly in developing countries where industries may not be competitive. Also, regional trading blocs can create economic disparities within the unions. While larger or more developed countries may benefit from increased market access and economies of scale, smaller or less developed countries might face challenges due to increased competition and the loss of trade protections.

Moreover, the external global trade arrangements of individual COMESA countries could clash with the collective agreements, resulting in complexities and uneven benefits within the union. Domestic sectors that are less competitive may seek protectionist measures, just as farmers in the European Economic Community did in the past. This desire for protectionism can undermine the full potential of a customs union, like COMESA, by compromising the even distribution of welfare gains.

Therefore, while COMESA aims to promote regional economic integration, it has been susceptible to the same challenges that affect other customs unions, which may compromise the welfare benefits associated with a unified tariff and trade regime.