The African Free Trade Area Holds 1st Business Forum

The AfCFTA Secretariat held its first Business Forum from the 16^th to the 18^th in Cape Town. The SA Dept. of Trade and Industry minister, Ebrahim Patel opened the Forum and the SA Deputy President, Paul Mashatile, closed the event. The AfCFTA has much to be proud of, as its Secretary-General, Wamkele Mene, pointed out. The negotiations on tariffs are going well. About 10% remain to be discussed – however, these include some pretty important tariff lines including textiles. The Rules of Origin are nearly complete. These will define what products are “made in Africa”. Some foreign elements of assembly will be accepted but the majority of any product manufactured in Africa must be produced on the continent in order to be considered to be ‘made in Africa’ (see below). The Secretary-General also referred to the Protocols which are intended to reduce non-tariff barriers and grow business within the AfCFTA. Three Protocols – on investment, competition and intellectual property – have already been adopted this year. Member Parties must now ratify these in order to ensure their application. The Protocol on digital trade (see previous Newsletters) is being negotiated. The deadline set by the Secretariat is the end of June, however the second reading only took place last week.

EFA attended the conference and was interviewed by SABC on ecommerce’s interest in the AfCFTA (https://youtu.be/6CYdN3RyzbQ – 4 minutes into the clip). EFA met, among others, the AfCFTA Secretary-General; Mr Fikile Majola, the SA Deputy Minister for Trade; the CEO of the Pan-African Payments and Settlement Services (PAPSS); Director for Trade Policy at the UN Economic Commission for Africa, the President of the African Business Council, as well as many government, business and civil society representatives. While it is excellent to be able to meet with key players, the conference itself was simply a succession of speakers or panels, with no questions allowed. EFA is concerned that this form of meeting will replace proper, informed and democratic discussion between stakeholders and the AfCFTA Secretariat/ or national negotiators. We are already warned that stakeholder engagement will not be welcomed in the future negotiations on the Digital Trade Protocol, and yet EFA’s comments on the Zero Draft of that Protocol have been greatly welcomed by many national negotiators, who are not specialists in the issues and who are keen to ensure that our sector can develop across the continent with the removal of the current restrictions.

As for the draft Digital Trade Protocol, a new draft is rumoured to be circulating. It is said that this has stripped out reference to payments which have been placed in a new Framework on Financial Services, which is already in Zero Draft form. It is also said that logistics may be covered in a new Framework on Trade in Services, although there is no confirmation of this. The AfCFTA works with protocols and frameworks. The latter are far wider in scope, whereas a protocol addresses just one issue – such as digital trade or Intellectual Property. So far, this author is not aware that any framework agreements have been adopted by the AfCFTA, but I stand to be corrected.

Meanwhile, the Nairobi-based African Organisation for Standardisation (ARSO) and the UN body, the International Trade Centre (ITC) have signed a MOU to assist with efforts to establish a ‘Made in Africa’ label and boost trade under the AfCFTA. The agreement renews a working commitment between the 2 organizations until 2028, with an updated cooperation framework reflecting developments in Africa’s regional integration efforts, underpinned by the AfCFTA, and a growing global shift towards the use of sustainability standards to demonstrate commitment to good environmental, social, ethical and food safety practices.

Finally, according to the International Monetary Fund in a recent report, the AfCFTA if successfully implemented could significantly boost economic growth and improve living standards at a time of rising geopolitical tensions and climate change. The IMF Report,  Trade Integration in Africa — Unleashing the Continent’s Potential in a Changing World , says: “Greater trade openness would help countries adapt to climate change and to strengthen food security, including by improving the availability and affordability of food supplies. More diversified and broad-based trade would reduce the impact of disruptions in specific markets and products that could result from shifts in global trade patterns.” The IMF also estimates that comprehensive reforms along with the AfCFTA implementation could increase the median merchandise trade flow between African countries by 53% and the rest of the world by 15%. That could raise the median per-capita GDP in Africa by more than 10% and lift as many as 50m people from extreme poverty by 2035.