Africa: Continental Trade Arrangement to Be Operationalized in July

Nairobi, Kenya — Africa is on course to operationalize the largest trade arrangement that will change the global economic landscape and boost intra-regional trade across the continent.

Director for Trade and Industry at the African Union (AU) Commission, Treasure Maphanga said the integrated trade market commonly known as the "African Continental Free Trade Area" (AfCFTA) will be operationalized in July, setting the stage for Africa to start implementing measures aimed at promoting the smooth movement of goods and services across the continent.

Maphanga said since the historic decision to sign an agreement to establish the AfCFTA in March 2018, a total of 52 African countries have signed the agreement, while 20 have ratified the agreement in their national assemblies. Of these, 15 have already deposited instruments of ratification with the AU Commission.

"We are therefore on course for the AfCFTA to become operational by July this year and we are actively planning for this eventuality, expecting the largest free trade area of the world to be launched during the Extra-Ordinary AU summit in Niamey, Niger in July," Maphanga told a Trade Law Centre (Tralac) conference underway in Nairobi, Kenya.

The process of approval of a continental legal instrument requires, first, signing, and then ratification, a process that differs from country to country.

A protocol "enters into force" following ratification by at least 22 AU Member States. This advances the continental law from being a stated intention to actual application. Those member states that join after a protocol has entered into force are said to "accede" to the protocol.

To support and ensure the successful realisation of the AfCFTA, plans are now at an advanced stage to establish a Secretariat that will monitor and track implementation.

"The process has started for the establishment of the AfCFTA Secretariat, and an official report on progress will be submitted to the next meetings of the AU Policy Organs," she said.

"We expect that the Niamey Extra-ordinary Summit will make a decision on the structure and location of the Secretariat."

Once the AfCFTA becomes operational, the next stage for Africa is to launch a continental Common Market.

A Common Market is a higher level of integration where countries remove all trade barriers between themselves, establishing common tariff and non-tariff barriers for importers, and also allowing for the free movement of labour, capital and services between themselves.

"All of these steps demonstrate our resolve and intention to lay the groundwork for successful implementation of the AfCFTA," Maphanga said, adding that "once this is established, we intend to focus on the establishment of an African Common Market, in line with the Abuja Treaty."

"So the work does not stop. Even as we implement the AfCFTA, successive rounds of negotiation will continue, deepening the integration in Africa."

She said it is important for Africa to continue working together to ensure that the AfCFTA is a success because the integrated market has the capacity to transform Africa's political independence into sustainable economic development.

In this regard, the continent should remain united and guard against external forces that do not want the AfCFTA to be a success.

"As we enthusiastically build our single market, we also have to be aware of the challenges and dangers to implementation and to the realization of "The Africa We Want". The current interest from our traditional and new trading partners needs to be carefully assessed and strategically acted upon in such a way that the ideals of the single market are not undermined," she said.

"If we act strategically, we will be careful in only concluding trade and investment agreements with third countries that support the objectives of the AfCFTA Agreement."

In light of these challenges, the AU Assembly that met in July 2018 actually made a decision that binds all African countries wishing to enter into partnerships with third parties to inform the Assembly with assurance that those efforts will not undermine the AU Vision of creating one African market.

The creation of an integrated market in Africa is one of the initiatives to rid the continent of the remaining vestiges of colonization and apartheid that has seen Africa trade more with the outside world than within the continent.

According to the AU, the AfCFTA when fully operational is expected to increase African intra-regional trade from the present 10 percent to about 40 percent.

The establishment of the AfCFTA builds on the existence of other Free Trade Areas (FTAs) in the continent such as the SADC FTA and the pending "Grand" FTA involving the Common Market for Eastern and Southern Africa (COMESA), the East African Community and SADC.

For example, when SADC attained the status of the FTA in 2008, intra-regional trade in southern Africa increased from US$89.3 million in 2001 to US$394 million in 2012, representing a 341 percent increase over an 11-year period.

Furthermore, consumers in the region are now getting better products at lower prices due to increased production, while producers are benefiting from a tariff-free trade for all goods originating within the region.

In this regard, the AfCFTA will go a long way in promoting the smooth movement of goods and services across borders, as well as allow member countries to harmonize regional trade policies to promote equal competition and increased trade.

The AfCFTA will also resolve some of the challenges of multiple and overlapping memberships and expedite the regional and continental integration processes.

Currently, most countries in Africa belong to more than one regional economic community, a situation that promotes conflicts of loyalty and confusion of commitment, thus hindering progress of integration in Africa.

Therefore, addressing the issues of overlapping membership has the capacity to accelerate the pace of integration in Africa.

The AfCFTA brings together all the 55 AU Member States, creating a combined market of more than one billion people and a combined Gross Domestic Product of more than US$3.4 trillion.

The Tralac conference, which is being held 21-22 March is running under the theme 'Africa's Integration Agenda: from Aspirations to Pragmatic Implementation.'

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