African free trade bloc comes into force after Covid delays
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African countries began officially trading under a new continent-wide free trade area on Friday, after months of delays caused by the global coronavirus pandemic.
But experts view the New Year’s Day launch as largely symbolic, with full implementation of a deal expected to take years.
The African Continental Free Trade Area (AfCFTA) aims to bring together 1.3 billion people in a $3.4 trillion economic bloc that will be the largest free trade area since the establishment of the World Trade Organization.
Backers say it will boost trade among African neighbours while allowing the continent to develop its own value chains. The World Bank estimates it could lift tens of millions out of poverty by 2035.
“There is a new Africa emerging with a sense of urgency and purpose and an aspiration to become self-reliant,” Ghana’s President Nana Akufo-Addo said during an online launch ceremony.
But obstacles – ranging from ubiquitous red tape and poor infrastructure to the entrenched protectionism of some of its members – must be overcome if the bloc is to reach its full potential.
We celebrate 2021 which also heralds the historic official #StartofTrading of the #AfCFTA #OneAfricanMarket. The journey towards economic integration for the #AfricaWeWant, has now begun in earnest. Wishing you all peace to face this new year with courage & determination. pic.twitter.com/vDXmcmbKAT— Moussa Faki Mahamat (@AUC_MoussaFaki) January 1, 2021
Trade under the AfCFTA was meant to be launched on 1 July, but was pushed back after Covid-19 made in-person negotiations impossible.
However, the pandemic also gave the process added impetus, said Wamkele Mene, secretary-general of the AfCFTA Secretariat.
“Covid-19 has demonstrated that Africa is overly reliant on the export of primary commodities, overly reliant on global supply chains,” he said. “When the global supply chains are disrupted, we know that Africa suffers.”
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Every African country except Eritrea has signed on to the AfCFTA framework agreement, and 34 have ratified it.
But observers such as W Gyude Moore – a former Liberian minister who is now a senior fellow at the Center for Global Development – say the real work begins now.
“I would be surprised if they can have everything set up within 24 months,” he told Reuters. “For long-term success, I think we’ll need to look at how long it took Europe. This is a multi-decade process.”
Historic challenges including Africa’s poor road and rail links, political unrest, excessive border bureaucracy and petty corruption will not disappear overnight.
And an annex to the deal outlining the rules of origin – an essential step for determining which products can be subject to tariffs and duties – has not been completed yet.
The 1st day of 2021 marks the start of the African Continental Free Trade Area.— International Trade Centre (@ITCnews) December 31, 2020
ℹ️ It allows African businesses to trade in a single market.
As a partner of @_AfricanUnion, ITC via its #OneTradeAfrica initiative fully supports #AfCFTA implementation. 🔗https://t.co/4r0fYHkYKt pic.twitter.com/N8bbaYXQP6
Meanwhile, 41 of the zone’s 54 member states have submitted tariff reduction schedules.
Members must phase out 90 percent of tariff lines over five years for more advanced economies, or 10 years for less developed nations.
Another 7 percent of economies considered sensitive will get more time, while 3 percent are allowed to be placed on an exclusion list.
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