Africa’s Free Trade Area And the COVID-19 Virus

According to the AU, the Coronavirus outbreak is unlikely to delay a July 1 target for the first movement of commerce under the African Continental Free Trade Area agreement (AfCFTA), even if meetings are being cancelled. If it was not for the virus and the ensuing travel restrictions, discussions around trade concessions and rules of origin may have been further along and should be concluded by May. President Ramaphosa is scheduled to host an extraordinary African Union (AU) Summit to finalise the modalities of the agreement that month. Legally, the agreement is already in force, but to make the July 1 deadline for the start of trade in goods and services under the new tariff rules, these details need to be rubber-stamped before the May summit as part of Phase One of the process.

The real effect of AfCFTA in establishing the world’s largest free-trade area will probably be seen in only 3 years, according to the AU. That’s because a roadmap, laws and support mechanisms to facilitate the continent-wide trade vision, has to be finalised. Africa lags behind other regions in terms of internal trade, with intra-African commerce accounting for only 16-18% of the total, compared with 58% in Asia and more than 70% in Europe. The African Export-Import Bank estimates intra-African trade could increase by 52% within a year of the AfCFTA’s implementation and more than double that during the first decade. Agreements on tariffs and non-tariff barriers will take time because countries are expected to offer concessions on an individual basis and the Secretariat responsible for facilitating the agreement is not in place yet.

I have just completed a study for the South African Institute for International Affairs (SAIIA) on The Digital Economy and the AfCFTA which will be published soon. For more information contact me – [email protected]