Critical Issues in the Negotiations of the Continental Free Trade Area
On 15 June 2015, the African Union Assembly launched the negotiations to establish the Continental Free Trade Area (CFTA) by 2017. Experience of existing Free Trade Areas (FTAs) in the regional economic communities (RECs) in Africa; and from the ongoing Tripartite FTA (TFTA) negotiations comprising members of the Common Market for Eastern and Southern Africa (COMESA), the East African Community (EAC) and the Southern African Development Community (SADC) are relevant to fostering our understanding of the political economy dynamics of negotiating, designing and implementing FTAs in Africa. These dynamics can offer vital lessons for the continental trade policy making process in Africa.
In addition, the process by which trade policy is negotiated has become more dynamic and complex, and should take cognizance of the rapidly changing regional and global economic environment, particularly the rising prominence of global trade and production networks. Across Africa, traders and investors are confronted with similar challenges when doing business across borders, such as tariffs, complying with differing standards and regulations for the same goods and services, dealing with hurdles due to non-transparent, uncoordinated and unpredictable government regulations, etc. Negotiating trade policy is only meaningful if it is addressing these challenges.
As such, the substance of trade agreements has to adapt to this new reality. This requires a paradigm shift in the way FTAs are designed and implemented in Africa. Apart from the need to eliminate intra-African tariffs on goods (which are still relatively high), a meaningful CFTA will need to improve regulatory practices aimed at facilitating trade and investment flows across borders. This requires policy ambition to address behind-the-border trade-related issues such as services, competition, intellectual property rights, and public procurement.
To set the stage, this paper raises the question as to whether the envisaged CFTA will result in a single trading arrangement for Africa or add another layer of overlapping trade regimes in the continent. In this regard, lessons from the Tripartite FTA negotiations are highlighted. Subsequent sections deal with some negotiation, design and implementation issues in the context of new global trade and production realities.
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