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South Africa shows its commitment to promoting Intra-African Trade

17 January 2019

It is refreshing to see that South Africa has finally articulated its resolve through approving the agreement for the establishment of the African Continental Free Trade Area. The country will continue to champion the socio-economic transformation of Africa.

On 6 December 2018, the South African Parliament assured the 54-member states of the African Union that it is committed to promoting intra-African trade which will be based on equal partnerships and mutual opportunities. The country becomes one of the recent African states to ratify the agreement establishing the African Continental Free Trade Area.

The country’s position on the continent is perceived to be one of leadership through its economic dominance, thus the approval by Parliament of the transcontinental free trade area agreement will inspire countries which are part of its trade regimes (such as the Southern African Customs Union and Southern African Development Community countries) to ratify the agreement. At present, SADC countries such as Seychelles have already begun domestic consultations with key stakeholders such as the private sector on the agreement.

To date, 49 countries out of 55 have signed the agreement for the establishment of the African Continental Free Trade Area. And 18 countries out of the 49 have either deposited their instruments of ratification with the African Union Commission chairperson or have had parliamentary approval and will deposit their instruments in 2019. The 15 countries are as follows, according to regional or geographic representation (not Regional Economic Communities membership representation):

Southern Africa: (1) eSwatini*, (2) Namibia, (3) South Africa*, (4) the Democratic Republic of Congo,

East Africa: (5) Djibouti, (6) Kenya*, (7) Rwanda*, and (8) Uganda*,

West Africa: (9) Cote D’Ivoire, (10) Ghana*, (11) Guinea, (12) Mali, (13) Mauritania; (14) Senegal, (15) Sierra Leone; (16) Togo;

Central Africa: (17) Chad* and (18) Niger*

North Africa: None has ratified, and only some are signatories of, the Kigali Declaration on the establishment of the African Continental Free Trade Area.

(*Denotes countries that have deposited their instruments of ratification with the African Union Commission chairperson.)

For the African Continental Free Trade Area to be implemented 22 ratifications are required, and the African Union Commission is optimistic that this will be attained by March. The achievement of above 80% turnout in the first year of signing ratifications signifies an important milestone towards realising the objective of creating one African market.

Despite a plethora of scholarly literature on the potential benefits of the African Continental Free Trade Area, it is too early to evaluate whether the agreement will be feasible or if it offers the economic prospects the African Union Commission claims it will yield considering the current transcontinental infrastructural position. Worthy of note is that, at present, there is a “basket” of several multilateral, regional and bilateral trade agreements in sub-Saharan Africa, which have lowered trade tariffs among countries and regions. However, due to overlapping membership, some of these agreements are not yielding the envisioned economic and trade-related-outcomes.

Overlapping membership refers to countries having membership in two or more regional trade agreements with concurrent goals of trade and economic liberalisation. This a prevalent phenomenon in Africa, which is affecting the implementation of rules of origin, which are legal mechanisms that regional trade agreements articulate to enhance intra-regional trade agreement trade. The African Continental Free Trade Area “contains a rendezvous clause in which the state parties undertake to continue negotiations in the outstanding areas”.

There is an incorporated schedule for negotiations on tariffs, rules of origins and the priority services sectors, which are yet to be agreed upon and approved by member states. It appears that for the foreseeable future, the regional economic communities will continue to implement their own regional agendas.

 

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The Pan African Chamber of Commerce and Industry was established in 2009 by 35 founding national business chambers to influence government policy and create a better operating environment for business.

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