African Continental Free Trade Area (AfCFTA) Legal Texts and Policy Documents
The African Continental Free Trade Area (AfCFTA) is flagship project of the African Union’s Agenda 2063, a blueprint for attaining inclusive and sustainable development across the continent over the next 50 years. It aims to boost intra-African trade by providing a comprehensive and mutually beneficial trade agreement among the member states, covering trade in goods and services, investment, intellectual property rights and competition policy.
The Agreement entered into force on 30 May, 2019 for the 24 countries that had deposited their instruments of ratification with the African Union Commission (AUC) Chairperson – the designated depositary for this purpose. As at April 2022, 41 countries have both signed and deposited their instruments of AfCFTA ratification with the AUC Chairperson. Of the 55 AU member states, only Eritrea has yet to join.
The operational phase of the AfCFTA was subsequently launched during the 12th Extraordinary Session of the Assembly of the African Union in Niamey, Niger on 7 July 2019. The AfCFTA will be governed by five operational instruments, i.e. the Rules of Origin; the online negotiating forum; the monitoring and elimination of non-tariff barriers; a digital payments system and the African Trade Observatory. As at January 2022, Rules of Origin have been agreed on 87.7% of total tariff lines and the operationalisation of the Pan-African Payments and Settlements System (PAPSS) has been officially launched.
The AfCFTA Secretariat – charged with various responsibilities related to the implementation of the AfCFTA – will be hosted by Ghana. H.E. Mr. Wamkele Mene was officially appointed the first Secretary General of the Secretariat on 19 March 2020. The AfCFTA Secretariat was officially handed over in Accra, Ghana on 17 August 2020.
An Extraordinary Summit of the AU Assembly on the AfCFTA took place virtually on 5 December 2020. The Assembly approved the start of trading under the AfCFTA Agreement as 1 January 2021. To date, however, no trade has taken place under the AfCFTA.
An update on the status of negotiations on outstanding issues and steps needed for commercially meaningful trade to take place under the AfCFTA was held on 28-29 January 2022.
The 18th Ordinary Session of the Assembly of Heads of State and Government of the African Union, held in Addis Ababa, Ethiopia in January 2012, adopted a decision to establish a Continental Free Trade Area by an indicative date of 2017. This deadline was, however, not met. The Summit also endorsed the Action Plan on Boosting Intra-Africa Trade (BIAT) which identifies seven priority action clusters: trade policy, trade facilitation, productive capacity, trade related infrastructure, trade finance, trade information, and factor market integration. See tralac’s e-booklet on the AfCFTA here.
The AfCFTA will bring together all 55 member states of the African Union covering a market of more than 1.2 billion people, including a growing middle class, and a combined gross domestic product (GDP) of more than US$3.4 trillion. In terms of numbers of participating countries, the AfCFTA will be the world’s largest free trade area since the formation of the World Trade Organisation. Estimates from the Economic Commission for Africa (UNECA) suggest that the AfCFTA has the potential both to boost intra-African trade by 52.3 percent by eliminating import duties, and to double this trade if non-tariff barriers are also reduced.
The main objectives of the AfCFTA are to create a single continental market for goods and services, with free movement of business persons and investments, and thus pave the way for accelerating the establishment of the Customs Union. It will also expand intra-African trade through better harmonisation and coordination of trade liberalisation and facilitation and instruments across the RECs and across Africa in general. The AfCFTA is also expected to enhance competitiveness at the industry and enterprise level through exploitation of opportunities for scale production, continental market access and better reallocation of resources.
African leaders held an Extraordinary Summit on the African Continental Free Trade Area (AfCFTA) from 17-21 March 2018 in Kigali, Rwanda, during which the Agreement establishing the AfCFTA was presented for signature, along with the Kigali Declaration and the Protocol to the Treaty Establishing the African Economic Community relating to the Free Movement of Persons, Right to Residence and Right to Establishment. In total, 44 out of the 55 AU member states signed the consolidated text of the AfCFTA Agreement, 47 signed the Kigali Declaration and 30 signed the Protocol on Free Movement. To date, only Eritrea has yet to sign the consolidated text of the AfCFTA Agreement.
According to Article 23 of the African Continental Free Trade Area Agreement, entry into force occurs 30 days after the 22nd instrument of ratification is deposited with the Chairperson of the African Union Commission (AUC) – the designated depositary for this purpose – an essential step for the AfCFTA to enter into force. The Agreement entered into force on 30 May 2019 for the 24 countries that had deposited their instruments of ratification before this date.
As at April 2022, 41 of the 54 signatories (76%) have deposited their instruments of AfCFTA ratification with the AUC Chairperson.
Rules of Origin and tariff offers
As at January 2022, tariff and rules of origin (RoO) negotiations under the AfCFTA are not yet complete. Agreed RoO cover 87.7% of tariff lines. June 2022 is the deadline to complete the RoO and tariff negotiations. There is an interim arrangement for trade to take place from 1 January 2021. Trade in goods, for which RoO are finalised, can take place under the tabled tariff offers. These offers must comply with the agreed modalities for tariff negotiations.
On trade in services, 46 countries have submitted their Schedules of Specific Commitments.