African Union Signed African Continental Free Trade Agreement
Basically, AfCFTA will put African economies – and African citizens – on a better economic footing. The agreement will improve competitiveness and promote investment, innovation and economic growth by improving efficiency and removing trade barriers. In fact, it will eliminate tariffs on 90% of goods and gradually apply the same to services, at a time when other parts of the world are reconsidering trade agreements and economic integration. In particular, the abolition of tariffs on goods is expected to increase the value of intra-African trade by 15-25% by 2040. That would be between $50 billion and $70 billion. In 2018, Washington launched Prosper Africa to coordinate U.S. government resources and expand trade opportunities in Africa, with the goal of doubling two-way trade between the country and the continent. It is not yet known how and how quickly this project, which in principle seems great, will be implemented. Meanwhile, the official U.S. response to AfCFTA was ambivalent at best.
Much to the chagrin of African leaders, the United States continues to negotiate a bilateral trade agreement with Kenya in the hope of developing a model that could be applied later to other African countries. These efforts follow a period of declines in two-way trade between the United States and Africa: between 2014 and 2018, U.S. exports to Africa fell by 32 percent, while African exports to the United States fell by 55% over the same period. AfCFTA is a framework agreement covering trade in goods and services, including the following protocols: trade in goods, trade in services, intellectual property rights, competition policy, investment and dispute resolution. The graph below shows the structure of the agreement for the creation of the AfCFTA. The implementation phase of the Continental Free Trade Area (AfCFTA) is expected to begin in less than three months. While the COVID 19 crisis has undoubtedly complicated the situation, the East African region is indeed well placed to implement the AfCFTA. Despite the skepticism expressed by some quarters about the ability of countries to launch the pioneering trade agreement, there is good reason to be optimistic. Ghana`s Minister of Trade and Industry Alan Kyerematen listed the benefits of a free trade area in Africa, including an increase of up to 52% in intra-African trade by 2022, consolidation of currently fragmented markets, economies of scale, the added value of African natural resources and economic diversification.