African Union Assembly Decision of February 2022 on Trade in Goods under the AfCFTA
The Decisions, Declarations, Resolution and Motions adopted at the Thirty-Fifth Ordinary Session of the African Union (AU) Assembly, which took place in Addis Ababa on 5-6 February 2022, have just been published. In this Blog we take a look at the Assembly decision on trade in goods under the Protocol on Trade in Goods of the African Continental Free Trade Area (AfCFTA). This Decision is the response of the Assembly to the Report of the 8th Meeting of the AfCFTA Council of Ministers Responsible for Trade which was held in Accra, Ghana on 28-29 January 2022. The AU Assembly must adopt these decisions in order for them to become binding.
It was also decided to convene another Extraordinary AU Assembly meeting, dedicated to the AfCFTA. It confirms the “critical importance of the role of the Assembly in advancing progress in the implementation of the AfCFTA and in the remainder of the AfCFTA negotiations”. A complete AfCFTA deal will only be in place once all outstanding matters have been agreed and the results have been adopted by the AU Assembly.
Forty-three tariff offers have now been submitted. They originate from the Member States of respectively the Economic and Monetary Community of Central Africa (CEMAC), East African Community (EAC), Economic Community of West African States (ECOWAS), and the Southern African Customs Union (SACU), as well as ten individual countries. Among these there are 29 technically verified tariff offers that are compliant with the Modalities for Tariff Liberalisation under the AfCFTA. Verification is undertaken by the AfCFTA Secretariat. The State Parties amongst these 29 States are encouraged to fast-track their domestication processes in order to start commercially meaningful trading under the AfCFTA regime. It must be noted that Non-State Parties also participate in the ongoing tariff reduction negotiations. They will have to ratify/accede to the AfCFTA Agreement in terms of Articles 22 and 23 of the AfCFTA agreement before they will be State Parties and be able to trade under AfCFTA preferences.
The objective now is to begin with commercially meaningful trade. Exactly when this will commence is not clear.
The Assembly has endorsed the Ministerial Directive to start trading by “directing the Application of the Provisional Schedules of Tariff Concession in order to ensure the provisional application of the tariff offers on a basis across the states parties amongst the 29 Member States, pending the conclusion of all outstanding issues on the Schedules of Tariff Concession”. Negotiations on “subsequent tariff Schedules submitted by the State Parties must specify a schedule of tariff cuts that meets the annual tariff reduction schedule in order to achieve zero-rated duties on 90% of tariffs lines with the time frames set out in the Modalities and subject to reciprocity”. (Emphasis added.)
The State Parties should also fast track the publication of their trade procedures, documents and “put in place necessary trade infrastructure that is needed for effective trading”. The AfCFTA Secretariat must facilitate negotiations of the remaining 10% of the tariff lines; Sensitive Products (7%) and Excluded Products (3% not exceeding 10% of the total value of trade). The Council of Ministers (COM) has to submit the final Schedules of Tariff Concessions “as required by the AfCFTA Agreement by xxx”.
It is important to differentiate between trade in goods under a finally concluded AFCFTA Trade in Goods Protocol (when its tariff schedules and annex on rules of origin will be agreed and in force) and trade under a provisional trade regime. The latter is articulated in the notion of provisional commercially meaningful trade. Tariff offers, even if they are compliant with the negotiating modalities, are an important stage in tariff reduction negotiations in a Free Trade Area (FTA) but are not yet final. Ultimately there must be agreement among the AfCFTA State Parties on liberalising (removing all tariffs and non-tariff barriers) on 90% of goods traded amongst them in accordance with the negotiating modalities which they have agreed at the outset. Compliance with these modalities will be country specific; each will make its own selection of tariffs considered to be sensitive and those that will not be liberalised. (In customs unions there must of course be prior agreement about a collective tariff offer.) Negotiations are to a six-digit level under the HS system.
These negotiations are “subject to reciprocity”. Reciprocity in the AfCFTA will be reached when the negotiating parties are in agreement about access to each other’s markets in light of the full package offered; the tariffs that will be fully liberalised in terms of the agreed timeframes, those that may be excluded, and the accompanying rules of origin. The negotiations to reach this critical point when 54 countries at different levels of economic development are participating is by its very nature a difficult and complicated exercise. Each country (and customs union) will pursue its own offensive and defensive interests.
Other trade in goods matters have also been addressed. The AfCFTA dismantling of tariffs should be through annual tariff cuts based on the date of start of trading on 1 January 2021. The Council of Ministers, the AfCFTA Secretariat, State Parties and Customs Authorities must develop the AfCFTA Electronic Tariff Book and identify the annual tariff reductions of State Parties. The AfCFTA Secretariat must also assist the State Parties in migrating to the HS 2022 system and transpose their Schedules of Tariff Concessions to HS 2022. An impact assessment must be conducted within three months.
Progress in respect of trade facilitation on the Abidjan – Lagos Corridor has been noted, while endorsing the “corridor approach to trade facilitation interventions towards the implementation of the AfCFTA.” The Assembly wants the AfCFTA Secretariat to continue with capacity building for customs officers to implement the AfCFTA Agreement, and “ensure its sustainability”. The AfCFTA Secretariat must provide Guidelines to finalise the Regulations on Special Economic Zones (SEZs) and the Guidelines on Infant Industries. The relevant provisions in the AfCFTA instruments lack the necessary detail.
Rules of Origin are the other major issue to be finalised in these negotiations. The Assembly has taken note of the progress made in this regard; with 87.7% of tariff lines being agreed. They must be published; “pending the conclusion of all outstanding issues under negotiations”. It also directed the Council of Ministers and the AfCFTA Secretariat to adapt the agreed Rules of Origin to HS 2022 nomenclature.
It seems safe to conclude that it will still be a while before trade under AfCFTA preferences will become a reality. The next milestone event will be the Extraordinary AU Assembly meeting which has been promised and which will be dedicated to the AfCFTA. In the meantime, the tariff and rules of origin negotiations will continue.
 Democratic Republic of Congo, Egypt, Madagascar, Malawi, Mauritius, Morocco, Sao Tome, Seychelles, Zambia, and Zimbabwe.
 CEMAC: Cameroon, Chad, the Central African Republic, Equatorial Guinea, Gabon, and the Republic of Congo. ECOWAS plus Mauritania: Benin, Burkina Faso, Cabo Verde, Côte d’Ivoire, The Gambia, Ghana, Guinea, Guinea Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone, Togo, Mauritania; Democratic Republic of Congo, Egypt, Madagascar, Malawi, Mauritius, Seychelles, and Zambia.
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