The African Continental Free Trade Area is an ambitious trade pact aimed at forming the world`s largest free trade area by connecting nearly 1.3 billion people in 54 African countries. The AfCFTA was designed as a multi-stage process, which means that the agreement will evolve over time and further negotiations are planned. The first phase, covering trade in goods and services, entered into force this year, although discussions on finalising tariffs and rules of origin provisions for Phase 1 have not yet been concluded. 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] In March 2018, three separate agreements were signed at the 10th Extraordinary Session of the African Union on the AfCFTA: the African Continental Free Trade Agreement, the Kigali Declaration; and the Protocol on the Free Movement of Persons. The Protocol on the Free Movement of Persons aims to create a visa-free zone in the AfCFTA countries and to support the creation of the African Union passport. [27] At the Kigali Summit on March 21, 2018, 44 countries signed the AfCFTA, 47 the Kigali Declaration and 30 the Protocol on the Free Movement of Persons. Although it was a success, there were two notable resistances: Nigeria and South Africa, Africa`s two largest economies. [28] [29] [30] Maryla Maliszewska – lead author, is a Senior Economist in the World Bank`s Trade and Regional Integration Unit (ETIRI). His area of expertise covers various aspects of trade policy and regional integration, with a particular focus on the impact of trade on poverty and income distribution. The AfCFTA is the most ambitious integration initiative on the African continent, enshrined in the African Union`s Agenda 2063, whose main objective is to create a continental single market for goods and services with the free movement of people and investment, thereby expanding intra-African trade across the continent, improving competitiveness and supporting economic change in Africa.
The AfCFTA agreement aims to progressively reduce and eventually eliminate tariff and non-tariff barriers to trade in goods and allow the free movement of services in priority sectors. As far as trade in goods is concerned, the target is set for 90% of products across the continent to be duty-free. Second, the AfCFTA will be an opportunity to regulate policy areas important for economic integration that are often regulated in trade agreements, but have so far not been covered by most African APTs, which, according to the bank, “tend to be superficial.” The new year began with trade under the AFCFTA Continental Free Trade Area. But what does the new trade zone mean for existing bureaucracy, poor infrastructure, tariffs and freedom of movement throughout the region? These agreements, especially those that are free trade areas or customs unions, have their own deeper integration programs that they will continue to pursue. Intra-African trade continues along several tracks. As the AfCFTA progresses and consolidates, there should be more policy convergence and simplification of rules. To date, all African countries have signed the AfCFTA agreement and 54 national governments have formally committed to establishing the AfCFTA, with the notable exception of Eritrea. The AfCFTA Agreement has so far been ratified by 31 AU Member States, in particular Algeria, Angola, Burkina Faso, Cameroon, Chad, the Republic of Congo, Côte d`Ivoire, Djibouti, Egypt, eSwatini, Equatorial Guinea, Ethiopia, Gabon, Ghana, Guinea, Kenya, Mali, Mauritania, Mauritius, Namibia, Niger, Rwanda, Sahara, São Tomé and Principe, Senegal, Sierra Leone, South Africa, Gambia, Togo, Uganda and Zimbabwe. While the AfCFTA entered into force on 30 May 2019, the AU Extraordinary Summit on the AfCFTA, held in Niamey on 7 July 2019, kicked off the operational phase of the AfCFTA with the agreement that trade under the AfCFTA will begin on 1 July 2020 and with the decision to entrust Accra with the opening of the AfCFTA Secretariat, Ghana. The same goes for the RECs, which are more advanced in reducing tariffs and other barriers to trade, according to the AfCFTA text. “If you don`t have the roads, if you don`t have the right equipment for customs authorities at the border to facilitate the fast and efficient transit of goods… If you don`t have the infrastructure, both hard and soft, it diminishes the meaning of this deal,” Mene told the Financial Times ahead of the launch.
Eritrea was not part of the original agreement due to the ongoing state of war, but the 2018 Peace Agreement between Ethiopia and Eritrea ended the conflict and the obstacle to Eritrea`s participation in the free trade agreement. [10] [30] [45] [46] [47] The unrecognized state of Somaliland did not participate in the discussions on the creation of the agreement. Policymakers claim that the free movement of workers will be a key factor in the proper functioning of the free trade area, but not all African countries are committed to this concept. In the longer term, regional trade cooperation could potentially become a fruitful bridge to connect the richest and poorest countries in the region, promote the growth of value chains and lay the foundations for an increase in international exports, especially given the strong existing trade relations, for example with the European Union (EU) and Asia. The African Continental Free Trade Area (AfCFTA) has completed its first month of trade and began early in the new year. The emerging and large-scale trade area will be closely monitored given its size, size and potential impact on development, as well as its importance to existing regional communities and trade relations with other partners. The agreement was negotiated by the African Union (AU) and signed by 44 of its 55 member states in Kigali, Rwanda, on March 21, 2018. The only country that has not yet signed the agreement is Eritrea, whose economy is largely closed. Intra-African exports accounted for 16.6% of total exports in 2017, compared to 68.1% in Europe, 59.4% in Asia, 55% in America and 7% in Oceania, according to UNCTAD. Intra-African trade, defined as the average of intra-African exports and imports, was about 2% over the period 2015-2017. Africa`s share of exports to the rest of the world in 2000-17 was between 80% and 90% – only Oceania had greater export dependence on the rest of the world during this period. Officials say that since negotiations on rules of origin cover about four-fifths of tariff positions, the terms of the AfCFTA will already apply to trade in these products.
In trade jargon, rules of origin refer to the amount of content that must be produced locally to be considered to come from that country. According to the United Nations Conference on Trade and Development (UNCTAD), simplified and flexible rules of origin are crucial for the region, which is below the level of intraregional trade in most other regions of the world. .