Why it may be better not to rush the Implementation of the AfCFTA now
There have been urgent calls for completing the outstanding African Continental Free Trade Area (AfCFTA) negotiations and to implement this new continental free trade regime as soon as possible. It is claimed that an important opportunity will be lost if there is a slowdown in momentum and in political support. In December 2019, a second of Senior Trade Officials (STOs), and a second meeting of the Council of Ministers (COM) of the AfCFTA were held. The STOs recommended, and the COM decided that the African Union Commission should arrange meetings so that tariff offers and rules of origin negotiations could be concluded so that the trade could begin on 1 July 2020, as had been decided by the AU Summit. For trade in services, it was decided by the COM that initial offers for sector commitments for the 5 priority services sectors (financial, transport, communication, business services and tourism) were to complete by 31 January (as had been agreed by the African Union Ministers of Trade – AMOT) and finalized by end of May 2020.
Implementing the AfCFTA Agreement was never going to be easy. The complications are in its design, the nature of the obstacles to be removed to boost intra-African trade in goods and in services, and the economic landscape to be traversed. Since the AfCFTA is a member-driven arrangement, fifty-five countries at different levels of economic development must agree on the rules for opening their markets to competition. Only after they have done so, will the AfCFTA be ready for implementation, provided the required domestic procedures are also in place.
The COVID-19 pandemic has derailed the workplan for completing the outstanding AfCFTA negotiations. Africa’s first COVID-19 case was recorded on 14 February in Egypt. Since then African Governments had to shift their priorities to focus on urgent national emergency measures. The implications for the AfCFTA are far-reaching. The outstanding negotiations are about basic aspects (tariff reductions, rules of origin and conditions for trade in services in the five priority areas) without which AfCFTA-based preferential trade is not possible. The target date of 1 July 2020 cannot be met.
Under present conditions it may not be wise to set new deadlines for when trade under AfCFTA rules will commence. The reasons are twofold: Individual Governments face more urgent challenges now and the outstanding negotiations are about complex matters. Concluding the negotiations will need time and effort, and rightly so. The AfCFTA should not be a rushed job. Once the effects and implications of the pandemic are better understood, noting that getting it under control will take much longer, these Governments will be able to muster the resources and instruct officials to represent them in the negotiations for concluding outstanding AfCFTA matters. E-negotiations are an untested terrain. They may not be able to bring about the outcomes made possible by direct personal exchanges.
The AfCFTA formally entered into force on 30 May 2019 – why can an Agreement which is in force not be implemented? The explanation for this state of affairs lies in the fact that the ratification process preceded a final outcome. What was ratified was not yet complete. The African Union (AU) Member States were entreated to demonstrate their support for the AfCFTA project by ratifying an interim result, the Agreement which was “launched” in March 2018 in Kigali, Rwanda. Early ratification presumably meant political support for the unfolding process and the larger continental initiative.
The outstanding matters go to the heart of a Free Trade Area (FTA). The minimum requirements for an FTA are preferential tariff concessions and rules of origin. Ultimately an FTA is a trade regime in which substantially all the trade in goods among the Parties must be liberalized within a reasonable period of time and in which all other restrictive regulations of commerce must be eliminated – as per Article XXIV of the General Agreement on Tariffs and Trade. The AfCFTA wants to liberalize trade in a selected number of services sectors too and sector commitments still have to be negotiated. When the AfCFTA is implemented, trade in five priority services sectors (financial, transport, communication, tourism and business services) must be possible.
The outstanding negotiating issues – both for trade in goods and trade in services – are sensitive matters. Concluding these negotiations will take time, at least if a well-designed regime for trade in goods and services is to be reached.
The AfCFTA design is about a standard recipe for trade in goods and some services. It some ways it is quite cautious. The havoc caused by COVID-19 has demonstrated that there is a need to include additional issues in the final round of negotiations. Effective cross-border cooperation under conditions of a continent-wide emergency such as the present one deserves urgent attention. The AfCFTA agreement repeats the general exception approach borrowed from Article XX of the GATT, which allows Member States to take unilateral action to safeguard national interests. Africa needs a debate about more innovative and better responses. COVID-19 may well be providing an opportunity to reflect, debate and seek innovative responses to very complex challenges.
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