Africa: Member states of Continental Free Trade Area to enjoy flexible terms

Continental Free Trade Area (CFTA). Image/Courtesy of Trademark Southern Africa

By Christabel Ligami

85 – 95 percent of tariff lines to be liberalized

African countries have agreed to give more options to countries joining the Continental Free Trade Area (CFTA) when it comes to removal of duties on items critical for their economic progress.
At the 5th CFTA Negotiating Forum held in the Ethiopian capital, Addis Ababa, last month, member states agreed to liberalize between 85 and 95 percent of their tariff lines in a tiered manner over a decade.

“There is a need to have agreed criteria to determine what to include in the sensitive lists. If not, countries may exclude or have sensitive lists that target products of interest to others. Countries with more diversified economies tend to have more tariff lines for purposes of taxation and protection of their industries,” said East African Community (EAC) trade expert Peter Kiguta.
The EAC has around 5,000 tariff lines while South Africa and Egypt have over 7,000.

“Developed countries can be mischievous by offering nothing new beyond the level they have opened under Regional Economic Communities (RECs) while they will enjoy more market access in less developed countries. CFTA should have incremental value by opening market access more than is current in the RECs,” said Kiguta.

David Luke, director of the African Trade Policy Center at the Economic Commission for Africa (ECA) said trade liberalization efforts must be balanced.
“In addition, to easing of procedures, the negotiators should address the rights to movement, work and food, and how people are to be made aware of these rights,” said Luke.

Single Continental Market

African countries have set December 2017 as the deadline for completion of negotiations on the establishment of the CFTA even though more work remains. The pending issues to be negotiated under CFTA are trade and non-tariff barriers, sanitary and phytosanitary measures, rules of origin, trade in services and customs procedures.

According to ECA, Africa spends US$64 billion a year on food imports, with 20 percent of intra-African trade stemming from agriculture. Since the bulk of African trade hinges largely on movement, any meaningful free trade agreement requires facilitating cross-border movement.

The CFTA aims to create a single continental market for goods and services, ensure free movement of business people and investments and expand intra-African trade. The CFTA is also expected to enhance competitiveness at the industry and enterprise levels on the continent.
The CFTA has the potential to boost intra-African trade by 52.3 percent between 2010 and 2022.

Trade in industrial products is expected to receive the largest boost, with an additional increase of 53.3 percent over the same period. The African Union (AU) is currently developing a capacity building plan in accordance with the needs expressed by member states before rolling out activities.

Out of the amount secured so far from development partners, AU member states have contributed US$3 million for 2016 and US$4.9 million for the year 2017 towards the action plan.

Source: The East African