What Is The African Continental Free Trade Agreement

The African Continental Free Trade Agreement was signed by 52 African Member States and will be implemented after only three years of free trade negotiations with the 22 necessary ratifications. This represents a huge diplomatic and political success, given the short timetable, ambitious liberalisation targets and heterogeneity and the large number of 55 Member States negotiating the free trade area. It is now a matter of actively modifying, reforming and adopting new frameworks, regulations and agreements that should promote and promote intra-African trade, investment and employment in the medium term. Accompanying and implementing policy documents such as the African Union`s Trade Facilitation Strategy or the AU Services Sector Development Programme have been developed to set continental standards for further implementation of the strategies they are transposing at regional and national levels for effective implementation. Although Africa`s average growth is 3.6% in 2019/20 and the world`s fastest growing economies are on the continent, much remains to be done. Africa remains highly dependent on exports of raw materials and agricultural products, while it imports mainly capital goods or food products from abroad. With less than 3% of world trade, it is not yet necessary to achieve export diversification, as many African countries still depend on the rents of extractive exports, while they lag behind in industrialization efforts. In this context, intra-African trade remains below its potential and accounts for about 17% of total African trade volume in 2017. In contrast, intracontinental trade in North America accounts for 51 per cent of exports, 49 per cent in Asia and 22 per cent in Latin America, while this figure is 69 per cent in European countries. Although some regional economic communities (REC) have improved trade integration through tariff reductions, the African market remains fragmented. Non-tariff barriers, such as uncoordinated bureaucratic procedures, long border wait times or long and heavy export requirements, increase trade costs on the continent. As a result, Africa has integrated more quickly into the rest of the world than with itself.

The World Bank report, The African Continental Free Trade Area: Economic and Distributional Effects, aims to help policymakers implement policies that can maximize the potential benefits of the agreement while minimizing risks. Creating a continental market requires resolute efforts to reduce all business costs. Governments also need to develop strategies to increase the willingness of their workforce to take advantage of new opportunities. Forty-four countries initially signed the agreement on March 21, 2018. Nigeria was one of 11 African Union countries to avoid signing the treaty. At the time, Nigerian President Muhammadu Buhari said Nigeria could do nothing to undermine local producers and entrepreneurs. [53] The Nigerian Manufacturers` Association, which represents 3,000 Nigerian manufacturers, welcomed the decision to withdraw from the agreement. [53] Nigeria`s foreign minister tweeted that more internal consultations are needed before Nigeria can sign the agreement. [54] Former President Olusegun Obasanjo said Nigeria`s delay was regrettable.

[55] The Nigerian Labour Congress called the agreement a «renewed, extremely dangerous and radioactive neoliberal political initiative», suggesting that increased economic pressure would push workers to rush into difficult and precarious conditions. [56] Eritrea was not part of the original agreement because of the continuing state of war, but the 2018 peace agreement between Ethiopia and Eritrea ended the conflict and ended the barrier to Eritrea`s participation in the free trade agreement. [10] [30] [45] [46] [47] The unrecognized state of Somaliland was not involved in discussions on the creation of the agreement.