Topics publications: African regional integration
Trade Briefs
Zimbabwe’s Lithium Export Beneficiation Gamble – Some Thoughts
This trade brief attempts to evaluate the potential of Zimbabwe’s recently announced export ban on lithium ore to succeed. In this case, ‘success’ is defined as the development of domestic lithium ore beneficiation industry, specifically the development of lithium-based battery manufacturing. The brief sketches the background to the ban, compares the actions and relative success of other developing country minerals exporters, examines some data on Zimbabwe’s trade in this material and its current capacity to add value and finally recommends some policy approaches to the problem.
Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.
Trade Reports
Is the AfCFTA changing the gameplan for African integration?
There may be objections to the question posed in the title of this paper. Some may argue that the Abuja Treaty (adopted in 1991, before the World Trade Organisation was established) is still the blueprint for Africa’s integration; there is no need for another plan. They may also point to the fact that the Preamble to the African Continental Free Trade Area (AfCFTA) Agreement says the AfCFTA “aims at integrating Africa’s markets in line with the objectives and principles enunciated in the Abuja Treaty”.
This paragraph in the Preamble expresses an intention. The AfCFTA Agreement does not contain a strategy to give effect to it, apart from mentioning certain long-term “General Objectives” in Article 3 of the AfCFTA Agreement. A clear strategy and deliberate steps will be required to deepen continental integration beyond the FTA foreseen as part of the AfCFTA scheme of things. There are no indications of such an initiative being contemplated.
The challenge facing the AfCFTA State Parties at the beginning of 2023 is to conclude the outstanding negotiations and to get the AfCFTA up and running. The full implementation of the AfCFTA package of agreements can bring about preferential trade in goods and services in Africa. That will be a major achievement but will not be easy.
Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.
Trade Reports
Mauritania and the African Continental Free Trade Area – challenges and opportunities
Mauritania is categorised as a lower-middle-income country, with a gross domestic product (GDP) per capita purchasing power parity (PPP) estimated at US$ 6 925 in 2022 by the IMF. In 2022, GDP growth reached 5.3% up from 2.4% in 2021, driven by the mining, agriculture, and fisheries sectors. The country’s economy heavily relies on extractive industries, making its GDP growth highly sensitive to global mineral commodity prices. The primary sector, which is heavily dependent on iron ore and fishery products, employs almost a third of the country’s workforce. The country also has large deposits of gold, copper, and oil-gas fields. The primary and secondary sectors represent 24% and 32% of the country’s GDP, respectively, while the tertiary sector represents about 44% of GDP, with the transport and telecommunications sub-sectors being the main contributors. The country has potential for tourism, but it has not attracted significant foreign investment due to a lack of infrastructure and regulatory frameworks.
This Trade Report focuses on Mauritania’s international trading relationships and more specifically, the African Continental Free Trade Area (AfCFTA) which was ratified by Mauritania in February 2019. Mauritania’s trade, industrial, and investment policies are reviewed, including the various bilateral and plurilateral agreements that Mauritania is party to. The paper also looks at Mauritania’s trade performance, outlining its global trade and regional trade profiles. A value chain analysis is presented focusing on Mauritania’s participation in regional value chains emanating from potential opportunities arising from the full implementation of the AfCFTA. Issues that Mauritania needs to address to capitalise on the AfCFTA are highlighted.
Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.
Trade Reports
Egypt and the African Continental Free Trade Area – challenges and opportunities
Egypt is among Africa’s economic powerhouses which include Nigeria and South Africa. It is the third largest economy by gross domestic product (GDP) and has been experiencing steady growth over the past few years. In 2022, GDP grew by 6.6% thanks to buoyant household consumption (85% of GDP), increased investment (particularly in infrastructure), and continued support from international funding. For 2023, the IMF forecasts growth at 4.4% of GDP amid an increase in natural gas production and favourable world prices, followed by a further acceleration in 2024 (5.2%). The country’s fast-growing economy, its strategic position linking Africa, Europe and the Middle East, and the fact that it is home to the Suez Canal makes it attractive to international investors. However, high global food and fuel prices have had a big impact on Egypt’s external accounts, pressuring the pound and fuelling inflation. Other reasons for Egypt’s recent woes emanate from failed industrial development and export policies which date back decades created a persistent trade deficit.
International trade, which is the focus of this paper, represents about 9% of the country’s GDP and the country has been gradually opening up with the ratification of various free trade agreements, with the latest being the African continental free trade area (AfCFTA) which was ratified by Egypt in 2019. This paper reviews Egypt’s trade, industrial, and investment policies, including the various bilateral and plurilateral agreements that Egypt is party to. This is followed by a look at Egypt’s trade performance outlining its global trade and regional trade profiles. Value chain analysis follows with a focus of Egypt’s its participation in regional value chains emanating from potential opportunities arising from the full implementation of the AfCFTA. Issues that Egypt needs to address to capitalise on the AfCFTA are highlighted and a conclusion follows thereafter.
Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.
Trade Briefs
Egypt and the AfCFTA – an opportunity for diversifying manufacturing exports and regional value chain participation
Egypt’s total global trade in goods was US$ was just over US$ 114 billion (9% of GDP) in 2021 of which 64% was imports (down from 69% in 2020). Both imports and exports have increased in 2021 following disruptions caused by the Covid 19 pandemic of 2020. Total trade grew by 31%, however, exports doubled during the 2020/2021 period from US$ 27 billion to US$ 41 billion (52% growth). Imports grew by 22% over the same period from US$ 60 billion to US$ 74 billion. Intra-Africa trade however remains low. Africa as a continent accounts for only 12% and 2% of Egypt’s global exports and imports respectively. The EU is Egypt’s largest trading partner accounting for 29% and 26% of Egypt’s exports and imports share respectively in 2021.
The country has been gradually opening up with the ratification of various free trade agreements, with the latest being the African continental free trade area (AfCFTA) which was ratified by Egypt in 2019. Egypt has a total of 8 free trade agreements (FTAs), enjoys non-reciprocal access under the General Systems of Preferences (GSP) from 9 countries and has 2 countries’ exports produced in its qualified industrial zones (QIZs). Boosting intra-Africa trade is one of the goals of the AfCFTA and Egypt has an opportunity to increase its manufacturing base through increase intra-Africa trade under the AfCFTA, given that it is the leader in manufactured goods in the continent.
As countries continue to deepen integration and liberalise trade, tariffs applied on imported goods have been on the decline and to date, it can be noted that the tariff although an important instrument for industrial policy is no longer the main barrier to trade. Non-tariff barrier (NTBs) which are cost raising are regarded as the major barrier impacting on not only intra-Africa trade but Africa’s global trade. The five-year average non-tariff trade costs (NTTC) to export intra-Africa products was about 292% ad valorem equivalent (AVE) between 2016 and 2020 (latest available data form the World Bank ESCAP database). NTTCs on agricultural goods are much higher than on manufacturing goods.
* The note presented here gives a snapshot overview of Egypt’s global economic and trading environment. The note is accompanied by an infographic highlighting key economic and trade indicators and forms part of a more detailed trade report published by tralac.
Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.
AfCFTA Frequently Asked Questions (FAQs)
What is the AfCFTA?
The African Continental Free Trade Area (AfCFTA) is, in addition to being a free trade area, a flagship project of the African Union (AU) in terms of Agenda 2063. It offers a member-driven blueprint for attaining inclusive and sustainable development across the continent. It is anchored in an overarching Agreement, Protocols and additional Annexes and appendices. They constitute a single undertaking. The AU Summit adopted the AfCFTA Agreement in March 2018, in Kigali, Rwanda.
The general objectives of the AfCFTA, are, according to its own Agreement, to:
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create a liberalised market for goods and services through successive rounds of negotiations
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contribute to the movement of capital and natural persons and facilitate investments by building on the initiatives and developments in the State Parties and the Regional Economic Communities (RECs)
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lay the foundation for a Continental Customs Union at a later stage; to promote and attain sustainable and inclusive socio-economic development, gender equality and structural transformation of the State Parties
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enhance the competitiveness of the economies of State Parties
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resolve the challenges of multiple and overlapping memberships and expedite the regional and continental integration processes.
The AfCFTA’s specific objectives are to:
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progressively eliminate tariffs and non-tariff barriers to trade in goods
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progressively liberalise trade in services; cooperate on investment, intellectual property rights and competition policy
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cooperate on all trade-related areas; cooperate on customs matters and the implementation of trade facilitation measures
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establish a mechanism for the settlement of disputes
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establish and maintain an institutional framework for the implementation and administration of the AfCFTA.
What do the AfCFTA legal instruments cover?
The AfCFTA Agreement is the founding agreement of the AfCFTA. It establishes the African Continental Free Trade Area and provides for Protocols on Trade in Goods, Trade in Services, Investment, Intellectual Property Rights, and Competition Policy.
The AfCFTA negotiations take place in phases. Phase I covers trade in goods and services as well as dispute settlement. Phase II covers intellectual property rights, investment, and competition policy. A Phase III has been added and will cover E-Commerce.
The AfCFTA Agreement, Protocol on Trade in Goods, Protocol on Trade in Services and Protocol on Rules and Procedures on the Settlement of Disputes (and their annexes and appendices) officially entered into force on 30 May 2019. However, the negotiations to finalise the rules of origin, schedules of tariff concessions, and schedules of specific commitments for the five priority services sectors (business services; communications; finance; tourism and transport) are ongoing. The deadline to finalise these negotiations was June 2021; however, this deadline was missed.
Trade under AfCFTA rules can only happen once all the legal arrangements are in place, but the AU Summit decided in December 2020 to allow trade under the reciprocal offers already extended as part of the Phase I negotiations. This has not happened, and at the 35th Ordinary Session of the Assembly of the AU (5-6 February 2022), Heads of State and Government decided that “commercially meaningful trade” should begin at a date to be determined.
How to exhaust domestic remedies? The Agiliss cases before the COMESA Court of Justice
In this paper, we provide a discussion of the principles which apply when a regional court such as the COMESA Court of Justice (CCJ) has to decide whether the requirement of exhaustion of domestic remedies has been complied with or not. We mention the relevant judgments of the CCJ and emphasise the fact that article 26 of the COMESA Treaty forms part of a regional integration arrangement based on Community Law. We start by recalling how the exhaustion of domestic remedies has developed as part of Public International Law and how this concept has been refined over time. In regional integration arrangements, the right of legal persons to approach regional courts has become an essential feature of the relevant legal regimes.
We argue that the requirement that legal persons must exhaust domestic remedies before they have access to regional courts, must be looked at holistically and in the context of the nature of the legal arrangement in which it appears. In the present instance, this requirement should be interpreted in view of the fact that it forms part of an inter-state regime established for the purpose of deepening economic integration among the Member States through adherence to specific legal obligations and procedures. These obligations appear in the legal instruments concluded by sovereign states. They must respect their obligations, including those adopted for the purpose of granting private parties’ effective access to the relevant regional court in order to protect rights, procedures and rules-based practices recognised in the applicable treaty. When the regional arrangement in question is based on Community Law, as COMESA is, the requirement to exhaust domestic remedies is about more than a mere procedural or jurisdictional prerequisite.
Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of