African Free Trade Agreement 2020

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Negotiations for Phase II began in February 2019. These negotiations will cover competition, intellectual property and investment protocols. Negotiations on Phase II issues are expected to be completed in 2020. [25] [32] The World Bank`s report, The African Continental Free Trade Area: Economic and Distributional Effects, aims to help policymakers implement measures that can maximize the potential benefits of the agreement while minimizing risks. Creating a continent-wide market requires firm efforts to reduce all trade costs. Governments also need to develop strategies to increase the willingness of their workforce to seize new opportunities. ”We are now the largest free trade area in the world since the creation of the World Trade Organization and we must ensure that this matters,” the president said. And it couldn`t happen at a better time. As a collective, the continent is embarking on a new economic path. In 2018, African heads of state signed an agreement that would bring to life the African Continental Free Trade Area (AfCFTA) – a game-shift in African regional and international trade. If it gradually comes into effect in the coming months and years, the AfCFTA will cover a market of more than 1.2 billion people and up to $3 trillion in combined GDP, with the potential to increase intra-African trade by more than 50 percent, according to the United Nations Economic Commission for Africa.

According to the World Bank, the deal could bring in $76 billion in revenue for the rest of the world. Once completed, the AfCFTA will become the largest free trade area in the world since the creation of the World Trade Organization. ”States have understood that they need the AfCFTA more than ever,” Sebahizi said. He mentioned countries that do not have direct access to the sea and were virtually cut off from global trade during the coronavirus lockdown of the first half of the year due to border closures. Sebahizi believes the situation will create ”the spirit of more cooperation.” A second challenge is specific to the East African Community. Of the six members, only three have ratified the AfCFTA to date. Given that the EAC regional bloc is a customs union and therefore has a Common External Customs Tariff (TEC) without the other three member states having yet ratified the AfCFTA, the integrity of the TEC will be problematic. Rules of origin can in principle limit this problem, but their liberal application will lead to higher overhead costs and increase the risk of trade diversion (thus diverting trade from a more efficient exporter to a less efficient exporter due to differences in tariffs). This could reduce the benefits of the AfCFTA. The greater the degree of harmonization of trade policy regimes within East Africa, the better, as it will facilitate deeper regional economic integration and pave the way for the creation of an Africa-wide customs union, as provided for in the AfCFTA agreement.

On July 21, 2018, five other nations, including South Africa, signed the agreement. At the time, the Nigerian government stressed that its non-participation was a delay and not a withdrawal, and promised to sign the agreement soon. [57] As previously pointed out by the Minister of Foreign Affairs, the Nigerian government intended to continue to consult with local companies in order to obtain private sector agreement. [58] 44 countries initially signed the agreement on March 21, 2018. Nigeria was one of 11 African Union nations that did not initially sign. At the time, Nigerian President Muhammadu Buhari said Nigeria could not do anything that would harm local producers and entrepreneurs. [53] The Manufacturers Association of Nigeria, which represents 3,000 Nigerian producers, welcomed the decision to withdraw from the agreement. [53] Nigeria`s foreign minister tweeted that further internal consultations were needed before Nigeria could sign the deal. [54] Former President Olusegun Obasanjo said Nigeria`s delay was regrettable. [55] The Nigerian Labor Congress called the agreement a ”renewed neoliberal political initiative, extremely dangerous and radioactive,” indicating that increased economic pressure would push workers to migrate under difficult and uncertain conditions.

[56] The 12th extraordinary meeting of the African Union on the AfCFTA was convened to bring the new agreement into its operational phase, which was held in Niamey on July 7, 2019. [40] [41] Nigeria was one of the last nations to sign the agreement. . . .

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