Building capacity to help Africa trade better

African Union warms up for CFTA negotiations


African Union warms up for CFTA negotiations

African Union warms up for CFTA negotiations
Photo credit: ICTSD

As we approach the start of negotiations for the establishment of the Continental Free Trade Area (CFTA), the African Union (AU) held a series of three meetings on enhancing intra-African trade from the 23 to 27 November.

These meetings, organised with the Trade Law Center (Tralac) in Cape Town, South Africa, have examined the progress and prospects for regional integration in the context of the CFTA; the issue of modalities for services negotiations of the CFTA; as well as the monitoring of the implementation of the AU Action Plan for Boosting Intra African Trade (BIAT).

Adopted in 2012 by members of the AU at the 18th Ordinary Session of the Assembly of Heads of State and Government, the BIAT Action Plan aims to deepen African market integration and significantly increase the volume of trade that African countries undertake among themselves. The road map also envisages that the CFTA will be established by 2017, building upon and consolidating the regional free trade agreements of Regional Economic Communities (RECs).

One of the meetings held on 25 November specifically focused on the progress evaluation in regards to the implementation of the BIAT plan.

The meetings were attended by several departments of the AU Commission and representatives of regional economic communities (RECs) and some African member states.

“Beneficiaries of intra-African trade, i.e. the African people, need to see results sooner rather than later, so we are discussing how we can move forward step by step to realize the opportunities that will arise from greater intra-African trade,” said Treasure Maphanga, AUC Director for Trade and Industry.

These three meetings at the end of November are part of the broader framework of the Agenda 2063, adopted in January 2015 by the AU, which defines a strategy to build a prosperous and united Africa over the next 50 years. The paper entitled “The Africa We Want” reiterates some key objectives of the AU Plan of Action for the deepening of intra-African trade (BIAT). In particular, it advocates for the doubling of intra-African trade by 2022 and a swift establishment of the CFTA.

The CFTA on starting blocks

In June 2015, AU member states announced the launch of the negotiations to establish the CFTA, arousing great expectations throughout the African continent and beyond, but also some scepticism. In particular, the deadline for implementation of the CFTA, set for 2017 by the AU, has often been seen by some as too ambitious.

Nevertheless, the AU Commissioner for Trade and Industry, Fatima Acyl Haram, said in June that the organisation is fully aware of the challenges which may arise from the negotiation of such an agreement.

If it is successful, then the CFTA would be the largest free trade area in the world, comprising 54 States. According to the UN Economic Commission for Africa, its implementation could increase intra-African trade by 52 percent by 2022, or about US$35 billion.

On 5 November, the Continental Task Force (CTF) on the CFTA held a meeting in Abuja, Nigeria to consider documents in preparations of the negotiations. The meeting was organized by the Africa Union Commission in preparation for the commencement of the CFTA negotiations in December 2015. The CTF is established to coordinate actions between the AUC and the RECs and to ensure that the CFTA negotiations are conducted within the agreed timelines. During the meeting, participants focused on the rules of procedures of the negotiating forum, the modalities for tariff negotiations in services, as well as the establishment of technical groups in some areas.

“We need to think outside the box to envisage the way to achieve this mandate,” said Treasure Maphanga after the meeting. Urging participants to share best practices identified at the regional level, she also said, as has been often pointed out by the AU, that the experience gained in the framework of the Tripartite Free Trade Area has proved to be a great asset to the negotiations of the CFTA.

One of the three meetings held in Cape Town, South Africa at the end of November also considered, specifically, the issue of negotiating modalities in the field of services. The purpose of this meeting, which was held on 25 November, was to review the various options and potential modalities for the liberalisation of services, in order to make recommendations for the approach to negotiations. As part of the CFTA, it is expected that negotiations on goods and services will be conducted in a simultaneous manner, to enable mutual concessions between the two domains.

The conclusions from the meetings will be submitted in the course of 2016 to the Specialized Technical Committee on Trade, Industry and Mineral Resources of the AU for consideration in the formulation of the CFTA.

Private Sector

As part of a three-day conference co-organised with the Pan African Chamber of Commerce (PACCI) and the Seychelles Chamber of Commerce, the AU also initiated a dialogue with the private sector on the CFTA. The meeting, which was held on 12 November in Victoria, the Seychelles, enabled participants to share views, knowledge and experience with various private sector representatives.

According to the AU, the governance structure of the CFTA provides for the establishment of an African Business Council as a necessary platform for aggregating and articulating the views of the Private Sector in the continental policy formulation processes. This council is expected to collect, coordinate and present the views of the private sector.

Treasure Maphanga called on the private sector to partner with the AU Commission to carry out its mandate and to take ownership of the process for establishing the African Business Council.

Echoing Maphanga’s words, Peter Chisawillo, the President of the Chamber of Commerce, Industry and Agriculture of Tanzania, also stressed the fundamental role of the private sector in enhancing intra-African trade.

Some participants nonetheless had more nuanced views regarding the establishment of such an African Business Council. Seth Adjei Baah, President of the Pan African Chamber of Commerce, advised for example, that the establishment of the African Business Council should not weaken existing Private Sector organizations that are operating at national, regional and continental levels.

AU-ECOWAS consultation

Last month, the AU Commission also held discussions with the Economic Community of West African States (ECOWAS) with a view to developing regional strategies for engagement in the CFTA negotiations and to identify areas for capacity building at the national and regional levels.

At the meeting which was held on 3-4 November in Abuja, Nigeria, participants discussed the commercial potential of the CFTA, general principles, institutional arrangements, and technical issues related to the negotiation process, as well as the engagement of the private sector in these negotiations.

Ahmed Hamid, ECOWAS Commissioner for Trade, Customs and Free Movement, stressed the importance that the west African regional community attaches to the establishment of the CFTA, and highlighted some of the lessons that can be learned from the experience of ECOWAS in regional integration. He also suggested to attending member states that the mandate given to ECOWAS for the negotiation of the EPA negotiations be extended to the CFTA.

Some participants stressed the need to complement efforts to establish the CFTA with a set of actions geared towards enhancing intra-African trade within the context of the BIAT.

“There is no CFTA without BIAT and vice-versa. There is need to focus on ensuring that national productive capacities are enhanced taking advantage of regional and continental market access opportunities,” also said David Luke, Director of the African Trade Policy Centre (ATPC) of the UNECA.

The AU underlined for its part that a sole elimination of tariffs and other trade barriers would not be sufficient to increase intra-African trade.

“We must do more in terms of developing the productive capacities of our economies, implement trade facilitation measures, develop our infrastructure, and ensure reliable energy supply and skills availability,” said Treasure Maphanga.

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