New African Trade Agreement

Yulia Vnukova advises the World Bank in the Department of Trade and Regional Integration (ETIRI). Based on more than a decade of experience, Yulia`s current work focuses on trade policy and regional integration, focusing on macroeconomic and microeconomic analyses of trade, trade and sectoral competitiveness, global value chains and private sector development in emerging countries in Europe, Asia and Africa. Companies frustrated by trade barriers could use a “non-tariff barrier mechanism” in the agreement to signal commitments on trade problems and ask for solutions, Muchanga says. What complicates matters further is that Africa was already divided into eight separate free trade zones and/or union unions, with different regulations. [Note 1] These regional bodies will continue to exist; The African Continental Free Trade Agreement aims firstly to remove barriers to trade between the various pillars of the African Economic Community and, finally, to use these regional organizations as building blocks of the ultimate goal of an African-wide customs union. [21] [30] [31] [32] The African Continental Free Trade Agreement (AfCFTA) will create the largest free trade area in the world in terms of the number of participating countries. The pact connects 1.3 billion people in 55 countries for a total gross domestic product (GDP) of $3.4 trillion. It has the potential to lift 30 million people out of extreme poverty, but achieving its full potential will depend on the introduction of meaningful political reforms and trade facilitation. The framework itself stipulates that by 2022, participating countries will have to remove tariffs on 90% of the products they produce and eliminate non-tariff barriers, such as border duty delays, import quotas, subsidies, regulatory bottlenecks, etc. Indeed, Africa will benefit even more from trade diversification and value chain growth than through a single free trade agreement. Most African exports are raw materials: agriculture and mineral products, with about 70% of the value added outside the continent. The limited value-added is partly the result of trade agreements that penalize processed products from Africa in favour of raw materials. And these agreements need to be amended so that the continent benefits the most from afCFTA.

The Continental Free Trade Area (AfCFTA) [9] is a free trade area with 28 countries from 2018. [1] [10] [11] [12] It was created by the African Free Trade Agreement between 54 of the 55 african union nations. [13] The free trade area is the largest in the world, in terms of the number of participating countries since the creation of the World Trade Organization. [14] Accra, Ghana, is the secretariat of AFCFTA and was commissioned by Ghanaian President Nana Addo Dankwa Akuffo Addo on 18 August 2020 in Accra and handed over to the AU. WASHINGTON, July 27, 2020 – The Continental Free Trade Area (AfCFTA) is a great opportunity for countries to boost growth, reduce poverty and increase economic integration, according to a new World Bank report. If fully implemented, the trade pact could increase regional income by 7% or $450 billion, accelerate women`s wage growth and lift 30 million people out of extreme poverty by 2035. Whatever its historical significance, much remains to be done before countries can benefit from a free trade area. Countries committed to the agreement are expected to present their timetables for concessions for trade in goods and services by next year.

Concession schedules outline products and services that countries will no longer tax. 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.