General Objectives of the African Continental Free Trade Area (Part 2 of 8)

Theme 1 – (Bringing African Markets closer together by deepening economic integration)

On the 05^th of December 2020, it was decided in an African Union summit that the start of trading under the African Continental Free Trade Area (AfCFTA) Agreement shall commence on the 01st of January 2021, so on paper this objective was technically achieved on New year’s day 2021. 

However, what is a market without goods and services, or buyers and sellers? Also given that these buyers and sellers belong to State Parties (i.e. African countries that are bound by the Agreement) some of which are yet to ratify the Agreement, while even many more are yet to finalise negotiations relating to Tariff concessions on goods, the African Continental Free Trade Area is nowhere near the buzz of activity that it has the potential to be just yet. However do not write it off just yet, a combination of good old politics, international relations dynamics, as well as delays in internal consultations within state parties all further complicated by the Covid 19 pandemic has contributed to the delay.

Overview

Under the above theme, the African Continental Free Trade Area aims to amongst other things create a single liberalised market for goods and services (Ref-2). To achieve a liberalised market, all state parties will have to go through several rounds of Tariff liberalisation negotiations on various Goods (ongoing) and services (planned for the future).

A single liberalised market means that many barriers to trading goods between African countries will either be done away with or will be reduced significantly. For instance, it means that African businesses, traders and consumers will no longer pay tariffs on a large number of goods that are traded between African countries (cost savings that can hopefully be passed onto the end customer). It also means that there will now be a collaborative effort to identify and put mechanisms in place to manage or do away with non-tariff barriers that usually impede the cross border trade activities. 

The African Continental Free Trade Area Agreement in and of itself adheres to a principle of progression. In other words, the process of eliminating tariffs and non-tariff barriers will be progressive. This is because State Party representatives need to always find themselves having to balance the obligations to the domestic industries of their local country against the obligations to their continent. 

For this reason Article 4 of the Agreement cites that “State Parties shall

• Progressively eliminate tariffs and non-tariff barriers to trade in goods
• Progressively liberalise trade in services;” (Ref-1)

To conclude, the AfCFTA is very much in session, but taking advantage of all its advantages may not only be time dependent but also be dependent on your country, or your industry or goods and services you want to trade in. In other words, it really does depend where each state party is in the process of fulfilling and enabling free trade conditions.

Useful Links (UL)

https://au.int/en/agenda2063/overview 

The Continental Free Trade Area (CFTA) in Africa (A Human Rights Perspective) – United Nations Economic Commission for Africa