Building capacity to help Africa trade better

AfCFTA Update, August 2023

AfCFTA Update, August 2023

AfCFTA Update, August 2023

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The implementation of the African Continental Free Trade Area (AfCFTA) Agreement may start soon. In this Update, we remind readers of what the legal instruments of the AfCFTA provide for in respect of its key features. Expectations about what will happen when implementation starts should be informed by what the State Parties accepted as new commitments, and what they want to retain from existing structures and regional agreements.

The questions in this Update are often asked in workshops and seminars. A few caveats should be listed before answering them:

  1. The quotes from the texts of the AfCFTA instruments provided below refer to provisions in the AfCFTA Agreement, which includes all the associated Protocols, Annexes and Appendices. This Agreement is in force but not yet implemented. Some matters must still be finalised.

  2. Economic integration makes sense in and for Africa. Many African countries are land-locked and/or have small domestic markets. Many are Least Developed Countries. The AfCFTA could, if properly implemented and accompanied by better trade-related governance, make an important contribution to boost intra-African trade, economic development, and trade governance. If this happens, trade with global partners will also be improved.

  3. Regional integration has been pursued under former African initiatives such as the Lagos Plan of Action and the Abuja Treaty. The AfCFTA is based on a new design. It explicitly preserves existing integration arrangements (through the principle of the acquis) and does not contain a linear integration scheme of things for the whole continent to become politically unified, as the Abuja Treaty does.

  4. New trade deals such as the AfCFTA can affect what is produced (static effects) and how it is produced (dynamic effects). All the parties to a trade in goods agreement stand to benefit from free trade because of new market access opportunities and increased demand. However, there will be winners and losers. The dynamic effects of trade agreements are important for overall success but may result in some firms being more efficient than others. Trade agreements create opportunities for new transactions but do not guarantee equal measures of success.

  5. The performance of firms in the AfCFTA State Parties will be affected by domestic policies. Appropriate domestic policies and sound trade governance are vital for the success of the AfCFTA. Industrialisation should be a priority in and among the AfCFTA State Parties.

  6. Although the objective of a trade agreement is to liberalise trade, the actual provisions are normally shaped by domestic and international political realities. Domestic and regional peace and stability are not to be overlooked when the benefits of trade deals such as the AfCFTA are discussed.

  7. The AfCFTA is not written on a clean slate. It will be implemented alongside existing regional trade arrangements and will be implemented by the same governments. The AfCFTA does not, for example, provide for a new approach to trade facilitation. It is assumed that this agreement will be properly implemented and soundly governed. If this does not happen, the perceived benefits will not materialise.

  8. Trade in services features prominently in the AfCFTA. It contains a separate Protocol on Trade in Services, with several Annexes and provides for Frameworks for Regulatory Cooperation. If it is expanded and domestic regulations are harmonised, it may well offer new benefits and deepen regional integration.


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