By Francis Mangeni:
The African Continental Free Trade Area (AFTA) will be launched on July 7 2019 in Niamey, Niger, by the Heads of State and Government at an extraordinary summit of the African Union (AU).
The Agreement entered into force on May 30 2019, within 14 months after its signature on March 21 2018 in Kigali. It was negotiated in just over two years.
This impetus towards closer economic integration, is poised to change Africa forever. The entry into force of the AFTA is a truly momentous event.
The irony is stark, that amidst current global trade wars, Africa is now the torch bearer of multilateralism and open economies.
However, African economic integration is developmental integration, designed to promote structural transformation, rather than being a traditional FTA obsessed primarily with market liberalisation.
AFTA covers goods and services and has complementary programs for infrastructure, industrialisation, agriculture modernisation, small scale trade, as well as innovation, intellectual property, competition and investment.
There has never been a better time to invest and trade in Africa.
With a combined GDP of $6.7 trillion in purchasing power parity, business and consumer spending at $4 trillion, over 400 companies with revenues of over $1 billion, 60 percent of the world’s arable land and vast strategic minerals, Africa has truly taken off.
For African political, private sector and intellectual leadership, the call of duty now is to ensure that this trajectory is irreversible, and that decent jobs and incomes are equitably generated from increasing trade and investment.
Economic panafricanism has come of age. We now have a crop of economic panafricanists who have negotiated this Agreement, in a record period of just two years, and then ensured it entered force in just over one year. We should harness this crop and build a sustainable intergenerational institutional memory for Africa that will keep the impetus into the future. We must enhance capabilities to continuously make what seems impossible very easily possible.
Now is the time for the young to know what panafricanism means: I am not free until everyone is free. We must have the Africans We Want, in order to build the Africa We Want; that is, a free, prosperous and peaceful Africa.
This euphoria though, must have the realism to galvanise the required immediate actions before the launch of AFTA, if it is to work.
Before trade can actually happen under AFTA, the following should be in place: trade documents, tariff schedules, rules of origin and a system for addressing non-tariff barriers.
Countries need to be able to issue and process especially the new AFTA customs declarations and certificates of origin. And the private sector including the logistics industry need to be familiar with and have confidence in these documents. This is in addition to the universal trade documents, and product specific regulatory documents especially for agricultural and chemical products.
Tariff Schedules should be in place. Without them, one would not know the payable customs duties under AFTA on the 5,000 or so tradeable products.
Bilateral negotiation of tariff offers would be too complex and take an overly long time. Every Member State/ customs territory should therefore just produce a Tariff Schedule without further delay, covering 90 percent of the products on which the tariff phase down is to commence immediately.
In addition, the principle of acquis should be used. It means that Members States in existing FTAs in the regional blocs do not have to renegotiate anything anew among themselves. This should be harvested into AFTA, on the basis of the agreed principle of preserving and building on the acquis. The EAC-SACU tariff negotiations have been finalized within the Comesa-EAC-Sadc Tripartite Arrangement. What has been agreed there can also be harvested into AFTA, so that there are no new negotiations between EAC and Sacu for the AFTA Tariffs.
These two approaches – of producing Tariff Schedules indicating a phase down to zero percent customs duty over the relevant transition periods, and of harvesting the acquis – can produce Tariff Schedules in time for the launch of AFTA on 7 July in Niamey.
On rules of origin, a critical number has been agreed, which is sufficient for launching AFTA. More progress can be made right away, however, if the rule of thumb could be agreed, setting the value of non-originating material at 60 percent. This will promote local content, back and forward linkages and value chains in African economies.
Other complementary requirements include a regional payment system that could build on current mobile payment solutions as well as the Comesa and Sadc payment systems.
These are already in use and owned by stakeholders; and a Continental trade portal, called the African Trade Observatory, which could build on highly successful national portals around the continent.
Twenty four countries have ratified AFTA within a record period of 14 months. While impressive, this is still less than a half of the 55 Member States of Africa.
*The author is the Director of Trade and Customs at the Comesa Secretariat