52 of the 55 member countries in the African Union signed the treaty for creating the African Continental Free Trade Agreement (AfCFTA). It went into effect last Thursday (30), the AfCFTA is an initiative of the African Union, and its purpose is to do away with tariffs and other customs constraints among the member countries in the bloc. The treaty covers intellectual property rights and competition policies, as well as goods, services, and investments.
It needed to be ratified by 22 of the 52 member-signing countries to the agreement to go into effect. Twenty-four countries have already ratified it up to now. The free trade area includes a market of 1.2 billion people and a total Gross Domestic Product (GDP) of US$ 2.5 trillion dollars.
According to APS Algerian news agency, the trade among African countries currently makes up 16% of the total transactions of the continent traded with the world and only 2% of the overall global trade. For comparison purposes, the transactions among European countries corresponds to 67% of all European transactions traded with the world.
By launching the African Continental Free Trade Agreement and putting it into effect, Africa is overcoming its fragmented history and the isolation of its economies. Thereby opening enormous opportunities for trading, as well as improving its transportation and communication connections among our countries,” states Albert M. Muchanga Commissioner for Trade and Industry of the African Union.
+ The ten Arab nations in Africa are signing members of the African Continental Free Trade Agreement
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Expected growth
Tariff and non-tariff barriers will be phased out. The elimination of tariffs of 90% of the products traded between the nations of the continent is foreseen, which characterizes the agreement as being of free trade.
Among the expected benefits are the improvement of frontier station infrastructure, the facilitation of movement of goods, people and financial resources, and the stimulation of trade growth by bringing together fragmented economies in the region into a large integrated market.
It is also expected to accelerate the process of urbanization as more investments are attracted to the continent.
+The free trade area is part of the AU Agenda 2063, a common strategy for inclusive growth and sustainable development in Africa.
Implementation Phases
The operational phase for implementing the treaty is going to begin by a chiefs-of-states summit meeting and the African Union government. The meeting will take place on July 7th in Niamey, Niger.
“The African Continental Free Trade Agreement is already achieving results even before being put into effect,” celebrates Muchanga. According to him, the I Intra-African Tradeshow took place in Cairo in December 2018, and it attracted 1,086 exhibitors, 86 over the target. Over US$ 32 billion dollars in negotiations were transacted, well over the expected target of US25 billion dollars. “That excellent performance displays the powerful strength of the Intra-African Tradeshow as a platform and viable brand name for commercial information, as well as the real increase of intra-African trade,” he concludes.
WTO Support
“Clearly there is a lot of work ahead of us. I am ready to assist in whatever way I can,” says the Director-general of the World Trade Organization (WTO), Roberto Azevêdo, this Monday (3).
“We are in contact with the African Union and Commissioner Muchanga and are exploring ways in which we may be able to work more closely together, and specific areas where we can provide greater technical support”.