Drafted and Edited by: Thando Mathenjwa (MA Development Studies, University of Witwatersrand)
As of March 2018, the African Continental Free Trade Area (AfCFTA) Agreement was signed and ratified by 44 out of 55 African Union (AU) member States. By signing the Agreement, AU member States agreed to nullify tariffs on the majority of goods, regenerate the trade of services and address barriers to trade between African countries (African Union, 2018). The development of the AfCFTA was deemed a necessary turning point for African trade and a potential breakthrough policy for African economies. The main objectives of the AfCFTA are to create a single continental market for goods and services, with free movement of business persons and investments, and inevitably pave the way for accelerating the resurgence of the Customs Union (Abrego et al, 2019). The AfCFTA is expected to enhance competitiveness at the industry and enterprise level through utilisation of opportunities for scale production, continental market access and improved resource allocation (Osoro, 2019). Furthermore, it will expand intra-African trade through better synchronisation and coordination of trade liberalisation, facilitation and instruments across regional trade blocs (African Union, 2018). With the majority of AU member States lawfully committed to intra-African trade, the AfCFTA can be seen as a game changer by means of creating accessibility, skills development and mobility of goods and services across the continent.
The conclusion of the AfCFTA Agreement was necessary to create certainty. The AfCFTA is a large scale regional trade agreement which aims to create a single market for goods and services, smooth the path for investment and enhance the movement of persons in order to deepen economic integration in Africa (Parshotam, 2018.). The AfCFTA seeks to accelerate intra-African trade and solidify Africa’s international economic relations as a multilateral trading regime (Olatunji, T. 2019.). In this regard, the AfCFTA represents a Pan African vision that aims at uniting African states as a regional trading bloc.
The trade bloc is meant to strategically reestablish its strength in international trade negotiations by creating a competitive African market (Kuhlmann & Agutu 2020.). Kuhlmann & Agutu (2020) further highlight that deep-rooted structural and socio-economic inequality and power asymmetry among African states has most recently been revealed by the COVID-19 pandemic. Overcoming the various challenges facing intra-Africa trade is at the core of its objectives. The aim is to promote agricultural transformation and growth in Africa, prioritising food security, and boosting competitiveness through regional value chain development and encouraging large-scale investments in production and market infrastructure (Osoro, 2019). Despite the ambitious nature of the agreement, one needs to question the ability of the policy to be rolled out in a fair and equitable manner.
The ratification of the African Continental Free Trade Area (AfCFTA) Agreement is a pinnacle illustration of the African Union’s effort to advance intra-African Trade. The AfCFTA is expected to drive socio-economic development and industrial competitiveness in Africa. There is a need to examine the dynamics linked with the success or failure of the AfCFTA as well as zoom in on the ability to foster amicable trade.
References:
Abrego, L., Amado, M.A., Gursoy, T., Nicholls, G.P. & Perez-Saiz, H. 2019. The African Continental Free Trade Agreement: Welfare Gains Estimate from a General Equilibrium Model. International Monetary Fund. Vol. 19, No. 124.
African Union, (2018). Agreement Establishing the African Continental Free Trade Area, and Compiled Annexes). URL: https://www.tralac.org/resources [12 November 2021]
Kuhlmann K & Agutu A. 2020. The African Continental Free Trade Area: Toward a New Legal Model for Trade and Development’ Georgetown Journal of International Law. Vol 51, No. 4, [69-86].
Olatunji, T. 2019. Protecting the Interest of Private Investors under the AfCFTA Dispute Settlement Mechanism. LACIAC Dispute Resolution Update (October 2019 URL: http://www.laciac.org/files/Dispute%20Resolution%20Update_October%202019.pdf [11 November 2021].
Osoro, K. 2019. The AfCFTA is a Lightning Rod for Regional Integration and Free Trade. In: Journal of Economics and Business. Vol.2, No.4, [1298-1311].
Parshotam, A. 2018. Can the African Continental Free Trade Area Offer A New Beginning for Trade in Africa? South African Institute Of International Affairs. Paper No. 280.