AfCFTA: Advances and Keys to Success

The African Continental Free Trade Area (AfCFTA) is the flagship project of the African Union's Agenda 2063, which aims to achieve inclusive and sustainable development of the African continent over the next 50 years. It aims to promote intra-African trade by providing member states with comprehensive and mutually beneficial trade agreements covering trade in goods and services, investment, intellectual property, competition policy and electronic commerce.

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The agreement entered into force on May 30, 2019. Today, the AfCFTA has 54 of the 55 countries that are signatories and 36 countries are States Parties due to the deposit of their instruments of ratification.

January 1, 2021 also marked an important milestone in Africa with the start of trade under the AfCFTA. This start of trade was celebrated across Africa as a historic day for the continent, as it marked the day that Africa took one more step towards the vision of a continent that will be more integrated.

Having officially become operational, the AfCFTA will be tested on the world trade scene against the backdrop of the Covid-19 pandemic. Despite the current conditions of the pandemic, the implementation of the AfCFTA represents real opportunities to transform the African economy and boost prosperity. The AfCFTA will allow foreign and African investors to access a unified market but also to benefit and enhance industrial value and supply chains between Africa and external markets.

Indeed, the AfCFTA will bring together a gross domestic product exceeding 3.4 trillion $ and estimates by the United Nations Economic Commission for Africa (ECA) indicate that the African free trade area will have the possibility of increase intra-African trade by 52.3% [1]

by removing customs duties, or even doubling them if it succeeds in reducing non-tariff barriers.

Thus, the AfCFTA will mark the largest free trade area in the world since the creation of the World Trade Organization (WTO) in 1995. Therefore, it is important that adaptation measures revolve around the definition. strategies that will contribute to the recovery of African economies and the implementation of the AfCFTA.

On the occasion of the Extraordinary Summit held by videoconference on the Continental Zone on January 1, 2021, the African Union Commission handed over to the Secretary General of the AfCFTA several instruments to facilitate the start of trade under the preferential trade regime of the AfCFTA .

Several tools developed with the various cooperation partners contribute to the success of the project:

• One of the elements that will be of paramount importance to the implementation of this project is the platform "tradebarriers.africa". It is an online platform developed by UNCTAD and the African Union to help remove non-tariff barriers to trade in Africa. The tool, tradebarriers.africa, will help African governments monitor and remove barriers faced by traders and businesses that slow the flow of goods and cost the region's importers and exporters billions each year.
• An online tariff negotiations portal will also be set up, along with a web and mobile application for businesses. The application will be used as a unique means for access to information by the public but also by entrepreneurs.
• Creation of the African Trade Observatory (ACO) to emphasize the transparency and integrity of the AfCFTA market in the context of trade in goods and services, the. This observatory will provide reliable and timely information on emerging opportunities with regard to applied regulations, market conditions as well as authorized economic operators.
• Launch of the Pan-African Payment and Settlement System (PAPSS) in July 2019 as a key tool for the implementation of the project. The PAPSS initiative aims to ensure interconnection between the different actors evolving in the African trade landscape including payment service providers, banks as well as businesses. In a rapidly changing world of digitalization, fast or even instantaneous settlement of business transactions has become increasingly crucial to meet market demands.

• In order to enable countries to adapt more effectively to the large and sudden losses resulting from the implementation of this agreement, a $ 1 billion "Adjustment Facility" will also be made available.
• Finally, the African Business Council (AfBC), which was also established, represents the supreme body for promoting and lobbying the interests of pan-African businesses. Membership of the AfBC is open to national, regional and continental private sector organizations. It is an independent private sector institution of the African Union whose mission is to be the first advocacy platform for the cooperation and engagement of the private sector at the continental level while strengthening economic ties. and investment between the business communities of the continent.

On the other hand, the recent decision of the Assembly to transfer the functions and structures of the Commission of the African Union to the secretariat of the AfCFTA has as main objective a better efficiency of the implementation of the project such as the launch of the integrated agenda and ongoing negotiations.

Today, maintaining the momentum of implementation plays a large role in achieving the development objectives of the African Continental Free Trade Area project. In order to ensure this maintenance, several steps are necessary to materialize:

• Mobilization for the signature and universal ratification of the AfCFTA agreement: to date the African Continental Free Trade Area has 54 of the 55 countries that are already signatories, 36 states that have already ratified the agreement and others are also expected.
• The finalization of the current negotiations on the rules of origin: The rules of origin (which make it possible to determine the origin of goods entering a customs territory) have already been approved in a large majority by most countries and " The remaining 20% ​​must therefore be completed by July of this year, ”said Mr. Faki Mahamat, chairman of the African Union commission. [2]

[2] United Nations website, "AfCFTA: Business Begins", Kuwonu Frank, January 7, 2021

• The finalization of the current negotiations on the lists of tariff concessions: As part of this agreement, the states parties have agreed to liberalize at least 90% of their trade. This will be finalized within 10 years for the LDCs and 5 years for the developing countries of the continent. In addition, 7% of the products are considered to be sensitive, which implies that the deadline for tariff dismantling will be up to 13 years for LDCs and 10 for others. In addition, 3% of products will be excluded from tariff commitments and will therefore not be subject to liberalization. However, the volume of these products should not represent more than 10% of the value of African imports (on average over a reference period of three years (2014-2016 or 2015-2017)).
• The finalization of the current negotiations on trade in services: These negotiations mainly focus on the predictability of market access regulations and the domestic regulatory framework and aim to consolidate the competitiveness of services through the economies of scale, to improve access to the African continental market but also to promote technological progress in the services market in order to accelerate economic development.
• Conclusion of Phase II Negotiations: Phase II of the negotiations particularly concerns the areas of intellectual property rights, investment and competition policy.In addition, while it was decided that the Phase III negotiations would focus on an electronic commerce protocol, the latter will ultimately be negotiated in parallel with the themes of Phase II.
• Institutional strengthening of the AfCFTA: Several measures will be implemented to ensure the institutional strengthening of the AfCFTA such as the full establishment of a sustainable and efficient Secretariat responsible for the implementation of the Agreement. We can also note that several investments have been made for this purpose such as the support of the African Development Bank which granted a donation of 4.8 million US dollars to the African Union Commission to finance the project of institutional support for the implementation of the AfCFTA.

The AfCFTA offers Africa an unprecedented opportunity to harmonize the business environment and therefore represents a real hope for long-term development for the African continent. For his part, the Chairman of the AU Commission, Moussa Faki Mahamat supported: We are fulfilling an old dream of the Founding Fathers of the OAU which was to create an African common market.