What Is The African Free Trade Agreement

The framework itself states that by 2022, participating countries must abolish tariffs on 90% of the goods they produce and remove non-tariff barriers such as long tariff delays at borders, import quotas, subsidies, regulatory bottlenecks, etc. Maryla Maliszewska – Lead Author, Senior Economist at the Trade and Regional Integration Unit (ETIRI) at the World Bank. His area of expertise covers various aspects of trade policy and regional integration, with a particular focus on the impact of trade on poverty and income distribution. Eritrea did not sign due to tensions with Ethiopia, but following the Eritrea-Ethiopia summit in 2018, the AU Commissioner for Trade and Industry now expects Eritrea to sign the agreement. [93] The African Continental Free Trade Area only entered into force when 22 of the signatory states ratified the agreement, which happened in April 2019, when The Gambia became the 22nd member of the Treaty. The country has ratified it. [67] [68] As of August 2020, there were 54 signatories, of which at least 30 had ratified and 28 had deposited their instruments of ratification. [69] [70] [71] The three countries that have ratified their ratifications but have not yet deposited data would be Cameroon, Angola and Somalia[71][72], although Morocco is also documented as ratified. [73] [74] At this summit, Benin and Nigeria signed the agreement, making Eritrea the only African state that is not part of the agreement. Eritrea has since applied to accede to the agreement.

Gabon and Equatorial Guinea also deposited their ratifications at the summit. At the time of launch, 27 states had ratified the agreement. [45] [47] [48] [49] Although delayed by the COVID-19 pandemic, the implementation of the AfCFTA will resume in January 2021, with an initial focus on trade facilitation for small and medium-sized enterprises, which account for 90% of the jobs created on the continent. But the world the AfCFTA will deal with in January will be very different from the world it was designed in. There are more challenges than ever before, notably thanks to the economic destruction caused by the pandemic – “an unprecedented health and economic crisis,” the International Monetary Fund noted, “which threatens to disappoint the region, reverse the development progress of recent years and slow the region`s growth prospects in the years to come.” The political momentum for free trade across Africa has intensified. In March 2018, more than 40 countries signed the African Continental Free Trade Area (AfCFTA) Agreement. Once fully implemented, the AfCFTA is expected to cover all 55 African countries with a combined GDP of about $2.2 trillion. This SDN takes stock of recent trade developments in sub-Saharan Africa and assesses the potential benefits and costs of the AfCFTA, as well as the challenges for its successful implementation. In addition to increasing trade flows for existing and new products, the AfCFTA has the potential to generate significant economic benefits for African countries. These benefits include higher incomes from increased efficiency and productivity through better resource allocation, higher cross-border investment flows and technology transfers.

To ensure these benefits, in addition to reducing import tariffs, African countries must also remove other barriers to trade by making their customs procedures more efficient, reducing their large infrastructure deficits and improving their business climate. At the same time, policy measures should be taken to mitigate the various effects of trade liberalization on certain groups, as the resources of the economy are redistributed and activities migrate to places where costs are comparatively lower. .