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Fair trade rules a must for states to gain from AfCFTA

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The African Continental Free Trade Area comes into effect on July 7 and it will be a historic day as the continent becomes a single market.

The African Union hopes the AfCTA will accelerate continental integration and trade, boost manufacturing and address possible overlaps within trade blocs.

This, however, requires members to review import tariffs, striking off import duty from 90 per cent of goods for free access to goods and services across the continent.

But, a recent United Nations Conference on Trade and Development (Unctad) report warns that the trade gains may not be evenly distributed among AU member states if proper rules that consider trade patterns, tariff profiles, liberalisation schedules and dependence on tariff revenue are not made.

The AfCFTA implementation team already anticipates bottlenecks based on the existing problems facing intra-African trade in the EAC, the Common Market for Eastern and Southern Africa, the Economic Community of West African States and Southern African Development Community.

While presenting The Economic Development in Africa Report, 2019 titled “Rules of Origin for Enhanced Intra-African Trade” in Nairobi last week, Chris Onyango, an expert on international issues, said the way the rules of origin will be created, enforced and verified will determine distribution of economic gains from the AfCFTA and shape future regional value chains.

According to the Unctad report, intra-Africa trade was only 15.2 per cent between 2015 to 2017.

Growth has been constrained by differences in trade regimes, restrictive Customs procedures, administrative and technical barriers, inadequacies in trade finance, information and infrastructure and inadequate focus on internal market issues.

A key challenge facing the AU in establishing the AfCFTA is the need for coherence within regional trade blocs and many countries having overlapping membership in several blocs.

Other challenges are weak productive capacities, tariff-related trade costs and non-tariff barriers.

Sub-Saharan Africa has the highest cost of exporting compared with all other regions. The AU committee is negotiating new continental free trade rules in line with the World Trade Organisation ahead of July 7.

Unctad said the rules need to be simple, transparent, predictable and business friendly for them to benefit small countries.

Experts say that as much as the AfCFTA seeks to remove all the restrictions in tariffs, the bloc rules will still be necessary to guide situations where goods are shipped in from other countries outside Africa. Poorer countries will need to be supported and protected to compete favourably.

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