Africa`s Big New Free Trade Agreement Explained

Despite the remaining obstacles, the potential effect of AfCFTA should not be reduced. Faced with the diversion of free trade in much of the developed world, Africa is opening a new path to promote sustainable prosperity and sustainable development for the continent. “Africa could be seen as a huge market in the trade negotiations phase. This could lead to a new engine of growth across the continent,” said Ngaire Woods of the Dean Blavatnik School of Government at Oxford University. Roberto Echandi is the senior private sector specialist at ETIRI. It focuses on research and policy advice on issues related to cross-border trade in services, negotiations, implementation and maximizing the potential benefits of deep integration trade agreements and the AfCFTA negotiation and implementation process. It goes without saying that East Africa will continue to face a number of challenges, including one shared by all countries on the continent: the need to quickly finalize tariff offers and ongoing negotiations on rules of origin, as well as timetables for the provision of services. This common challenge will be particularly difficult, as negotiations in areas such as services and Phase II, such as competition and protection ownership measures, will inevitably be quite complex and highly technical. The African Union began AfCFTA negotiations in 2015 in the hope of boosting intra-African trade, which lags behind [PDF] trade in other regional blocs. Only 15 per cent of African exports go to other African countries, compared to 58 per cent in Asia and 67 per cent in Europe. High tariffs and colonial infrastructure facilitate the export of African countries to Europe or the United States.

In addition, membership in Africa`s eight regional economic communities (IAC) hinders the normalization and implementation of trade. AfCFTA, which creates a single continental market for goods and services, is trying to increase intra-African trade by reducing tariffs by 90% and harmonizing trade rules at regional and continental levels. In 2022, AfCFTA is expected to boost intra-African trade by 52.3%. The African Union has launched the operational phase of the African Continental Free Trade Area (AfCFTA), which, depending on the number of countries, will be the largest free trade area in the world once fully operational. In 1963, the Organization of African Unity (OAU) was founded by the independent states of Africa. The aim of the OAU was to promote cooperation between African states. The 1980 Lagos Action Plan was adopted by the organization. The plan proposed that Africa minimize its dependence on the West by encouraging intra-African trade.

It began with the creation of a number of regional cooperation organizations in different parts of Africa, such as the Conference on the Coordination of Southern African Development. Finally, in 1991, this led to the Abuja Treaty, which founded the African Economic Community, an organization that encouraged the development of free trade zones, customs union, an African Central Bank and a common African monetary union. [21] [22] Intra-African trade was historically low. Intra-African exports accounted for 16.6% of total exports in 2017, compared with 68% in Europe and 59% in Asia, indicating untapped potential. After the Kigali summit, more signatures were added for the AfCFTA. At the African Union summit in Nouakchott on 1 July 2018, five other nations, including South Africa, joined the agreement. Kenya and Ghana were the first nations to ratify the agreement and file their ratifications on 10 May 2018. [2] Of the signatories, 22 had to ratify the agreement in order for it to enter into force, and it happened on 29 April 2019, when Sierra Leone and the Arab Democratic Republic of the Sahara ratified the agreement.

[7] As a result, the agreement came into force 30 days later on 30 May 2019; At that time, only Benin, Nigeria and Eritrea had not signed.

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