Africa Union Free Trade Agreement

By January 22, 2022No Comments

“Covid-19 has shown that Africa is too dependent on the export of primary raw materials and too much on global supply chains,” said Wamkele Mene, Secretary General of the AfCFTA Secretariat at the opening of the free trade area. Launched on 1 January, the AfCFTA is a game changer. Currently, Africa accounts for only 2% of world trade. And only 17% of African exports are intracontinental, compared to 59% for Asia and 68% for Europe. The potential for transformation throughout Africa is therefore considerable. The pact will create the largest free trade area in the world in terms of the number of participating countries. The pact connects 1.3 billion people in 55 countries with a combined gross domestic product (GDP) worth $3.4 trillion and comes at a time when much of the world is turning away from cooperation and free trade. Trade under the agreement began on 1. January 2021, after a delay of six months due to the impact of Covid-19. Nigeria was one of the last countries to sign the agreement. With 200 million people, Nigeria is the most populous country in Africa and has about the population of the second and third most populous countries, Ethiopia and Egypt, each with about 98 million people. With a nominal GDP of $376 billion, or about 17% of Africa`s GDP, it is just ahead of South Africa, which accounts for 16% of the African economy. Given that Nigeria is such an important country in terms of population and economy, its absence when the agreement was first signed was particularly striking.

South African President Cyril Ramaphosa stressed this in a commentary on July 12, 2018, commenting: “The continent is waiting for Nigeria and South Africa. By negotiating with each other, we are able to conserve more resources on the continent. South Africa then signed the agreement. [52] The agreement aims to reduce all trade costs and enable Africa to further integrate into global supply chains – it will eliminate 90% of tariffs, focus on outstanding non-tariff barriers and create a single market with the free movement of goods and services. Reducing bureaucracy and simplifying customs procedures will lead to a significant loss of revenue. In addition to trade, the Pact also addresses the free movement of persons and labour, competition, investment and intellectual property. Roberto Echandi is a Senior Private Sector Specialist at ETIRI. It focuses on research and policy advice on issues related to cross-border trade in services, the negotiation, implementation and maximization of the potential benefits of deep integration trade agreements and the AfCFTA negotiation and implementation process. In 2012, AU Member States agreed to establish a Continental Free Trade Area and gave themselves 5 years to achieve this goal. But it wasn`t until February 2016, less than a year after the original deadline, that negotiations began in earnest. At that summit, Benin and Nigeria signed the agreement, making Eritrea the only African State not part of the agreement; Eritrea has since applied to accede to the agreement. Gabon and Equatorial Guinea also deposited their ratifications at the summit.

At the time of launch, 27 states had ratified the agreement. [45] [47] [48] [49] Policymakers claim that the free movement of workers will contribute significantly to the proper functioning of the free trade area, but not all African countries are committed to this concept. As of July 2019, 54 of the 55 African Union states had signed the agreement, with Eritrea being the only country not to sign it. Of these Member States, 27 have deposited their instruments of ratification. [43] [44] It is estimated that the agreement will increase African exports by $560 billion, mainly in the manufacturing sector. Intracontinental exports would also increase by 81%, while the increase to non-African countries would be 19%. According to the Mo Ibrahim Foundation, if successfully implemented, the AfCFTA could generate $6.7 trillion in combined consumer and business spending by 2030. In addition, the region`s markets and economies will be reshaped, leading to the creation of new industries and the expansion of key sectors. Significantly, this would make African countries more globally competitive.

Several committees have been established on trade in goods, trade in services, rules of origin, trade remedies, non-tariff barriers, technical barriers to trade and sanitary and phytosanitary measures. [39] Dispute resolution rules and procedures are still under negotiation, but they will likely include the designation of a dispute resolution body. [35] The Committee of Senior Trade Officials implements the Council`s decisions. The Committee is responsible for drawing up programmes and action plans for the implementation of the AfCFTA Agreement. [39] In addition to signing the creation of the AfCFTA and the Kigali Declaration of Support, 30 African states have signed the Protocol on the Free Movement of Persons, which aims to establish a visa-free zone in afCFTA countries. However, the main signatories to the AfCFTA, Nigeria and South Africa, have not signed the protocol and the political will to do so is lacking. To make matters worse in the negotiations, Africa was already divided into eight separate free trade areas and/or customs unions, each with different regulations. [Note 1] These regional bodies will continue to exist; The African Continental Free Trade Agreement aims first of all to remove trade barriers between the different pillars of the African Economic Community and finally to use these regional organizations as building blocks of the ultimate goal of an Africa-wide customs union. [21] [30] [31] [32] Israel Osorio Rodarte is an economist in the World Bank`s Department of Trade and Regional Integration. .