Africa`s Big New Free Trade Agreement

After years of discussions, the aim is to create a single market for goods and services in 54 countries, allow the free movement of business travellers and investments, and create a continental customs union to streamline trade – and attract long-term investment. Several committees have been established for trade in goods, trade in services, rules of origin, trade policy measures, non-tariff barriers, technical barriers to trade, and health and plant health measures. [39] Dispute resolution rules and procedures are still being negotiated, but should also include the appointment of a dispute resolution authority. [35] The Committee of Senior Trade Officials implements the Council`s decisions. The Committee is responsible for the development of programmes and action plans for the implementation of the AfCFTA agreement. [39] Indeed, Africa will benefit even more from trade diversification and value chain growth than through a single free trade agreement. Most African exports are raw materials: agriculture and mineral products, with about 70% of the value added outside the continent. The limited value-added is partly the result of trade agreements that penalize processed products from Africa in favour of raw materials. And these agreements need to be amended so that the continent benefits the most from afCFTA.

African leaders agreed that afCFTA would enter into force within 18 months. To do so, at least 22 countries must formally ratify the agreement. Some countries, such as South Africa (which has not yet registered but are thinking about it) say that the deadline may be too short, especially given the need for debate and negotiation within each signatory country. The heterogeneous size of African economies, the existence of numerous bilateral trade agreements with the rest of the world, the overlapping membership of the REC, different levels of industrial development and differences in openness also pose challenges for AfCFTA. What complicates matters further is that Africa was already divided into eight separate free trade zones and/or union unions, with different regulations. [Note 1] These regional bodies will continue to exist; The African Continental Free Trade Agreement aims firstly to remove barriers to trade between the various pillars of the African Economic Community and, finally, to use these regional organizations as building blocks of the ultimate goal of an African-wide customs union. [21] [30] [31] [32] A second challenge is the East African Community. Of the six members, only three have ratified the AfCFTA.

Given that the regional bloc of the EAC is a customs union and therefore has a common external customs duty (CET), without further ratification of afCFTA by the other three Member States, the integrity of the CET will be problematic. In principle, rules of origin may limit this problem, but their liberal application will increase bureaucratic overheads and increase the risk of trade diversion (trade being diverted from a more efficient exporter to a less efficient exporter because of the different tariffs applied). This could reduce the benefits of AfCFTA. The more harmonised trade policy in East Africa, the better, as it will facilitate further regional economic integration and pave the way for the final creation of an African customs union, as envisaged in the AfCFTA agreement.