Building capacity to help Africa trade better

Towards a Continental Free Trade Area: Analysis of the status of the regional trade regimes

Trade Reports

Towards a Continental Free Trade Area: Analysis of the status of the regional trade regimes

Towards a Continental Free Trade Area: Analysis of the status of the regional trade regimes

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In June 2015, the African Union (AU) Summit adopted the negotiating guidelines and roadmap for the creation of the African Continental Free Trade Area (CFTA) by 2017. The move towards a CFTA demonstrates how regional integration has remained a prominent policy objective for Africa, despite the challenges towards achieving such an ambitious goal in the wake of missed deadlines and lack of implementation of commitments within the existing regional integration communities in Africa. Weak institutions and failure of governments to meet their financial obligations to regional organisations, poor preparation before meetings, and lack of follow-up by sectoral ministries on decisions taken at regional meetings by Heads of State exacerbate the problem. Furthermore revenue loss concerns remain a major reason for the reluctance by African countries to liberalise fast enough.

The paper aims to identify the status of the regional economic communities and bilateral trade agreements. We then analyse the current applied tariffs and trade between RECs in order to highlight to what extent are goods i) being traded duty free; ii) attracting low/nuisance tariffs; and iii) high tariffs within the 8 RECs recognised by the African Union. We also explore the percentage of goods receiving preferential vs most favoured nation treatment amongst the 8 RECs. In the analysis, we also highlight (where possible) any anomalies in terms of for example tariff reduction reversals (as compared with liberalization commitments, or lack of implementation). Furthermore, although not a core focus of the study, salient reference to other taxes such as surtaxes and levies that may have been introduced and their impact thereof are also discussed.

We note that in Africa despite the Abuja Treaty aspiring for the attainment of a CFTA by 2017, regional integration has transpired albeit in different directions and at a different pace. As a result, the RECs are at different stages and levels of integration. The TFTA negotiations offered some hope as a model to be followed and become the building blocks of the CFTA. However, the TFTA has not lived up to expectations and it has not delivered on its objective of establishing a single integrated Free Trade Area comprising the Members of three recognised regional African Union (i.e. COMESA-EAC-SADC). What were originally intended to be building blocks for the creation of an integrated African market have now turned into stumbling blocks. However, regional integration remains part of the integration agenda, and therefore new approaches and ways of doing business are required.

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