CFTA negotiators establish their launch pad

29 February 2016

The first meeting of the Continental Free Trade Area Negotiating Forum (CFTA-NF) laid the groundwork for upcoming substantive negotiations on Africa’s largest free trade area. Negotiators are reported to have built the procedural foundation on which the CFTA negotiations will be conducted until the CFTA’s 2017 deadline during a five-day meeting that took place in Addis-Adaba, Ethiopia last week.

The Continental FTA will create a single market for goods and services in Africa of over a billion people with a Gross Domestic Product (GDP) of over US$3 trillion, providing a good reason to invest in Africa, explained African Union Commissioner for Trade and Industry Fatima Haram Acyl at the beginning of the first CFTA-NF meeting.

“As trade negotiators, let us position our continent to take advantage of the trade and investment opportunities that will result from these positive developments,” said Haram Acyl.

The CFTA is expected to build on the successes and commitments of the Tripartite Free Trade Area (TFTA). The TFTA comprises the three largest regional economic communities (RECs) in Africa: the Common Market for Eastern and Southern Africa (COMESA); the East African Community (EAC); and the Southern African Development Community (SADC) in an integrated market with a combined population of almost 600 million people and a total Gross Domestic Product (GDP) of about US$1 trillion.  

The TFTA was launched in July 2015 and then followed by the beginning of CFTA discussions. This first meeting of the CFTA-NF is the first negotiating session since the establishment of the TFTA.

The first meeting

The first meeting of the CFTA-NF kicked off on 22 February with a two-day workshop for Member States and other stakeholders in order to strengthen the capacity of chief negotiators on how to support trade negotiations. Meetings continued until 27 February.

During the first meeting, experts discussed post-launch preparatory issues, essential process issues, and technical documents that will enable the procedure of negotiations. Studies conducted on the establishment of the CFTA were considered within the context of capacity needs and technical issues for the CFTA negotiations.

The first session was preceded earlier this month by a meeting in Abidjan, Ivory Coast. Representatives from the AU Commission, the African Development Bank, the UN Economic Commission for Africa, and the UN Commission on Trade and Development met to discuss the possible structure and content of a CFTA agreement. Experts from seven African regional economic commissions also shared their experience of trade liberalisation and potential lessons for the CFTA.

From tripartite to continental

The CFTA is a priority initiative under the African Union’s (AU) Agenda 2063 which has laid out a vision for the trajectory of African development during the next five decades. The CFTA is one of the pillars for the implementation of the Agenda 2063 aspiration for a prosperous Africa based on inclusive growth and sustainable development (See Bridges Africa, Volume 4 Issue 6).

Successful conclusion and implementation of a CFTA agreement encompassing all 54 AU member states could lead to a 52 percent (US$35 billion) increase in intra-African trade by 2022 above a 2017 baseline scenario, if complemented with efforts to improve trade related infrastructure and customs procedures and reduce transit and other trade costs, according to research by the UN Economic Commission for Africa (UNECA).

A CFTA agreement on trade in goods could begin with the TFTA and the Economic Community of West African States (ECOWAS) regional economic community which already has a common external tariff, according to African trade coordinators Zodwa Mabuza and David Luke. Commitments in the TFTA could be used as a starting point for CFTA negotiations with ECOWAS and the north and central African blocs. The main implication of the TFTA for the CFTA is that the TFTA Agreement is now part of the acquis of continental trade integration, meaning the CFTA will build on the success of the TFTA.

Hurdles before the finish line

The conflicting trade commitments of the various RECS involved in the process will need to be harmonised to establish a consistent CFTA, experts have noted. In addition, the trade agreements that African countries have established at the multilateral, regional, and bilateral levels will need to be taken into accord when negotiating on the terms of the CFTA. (See Bridges Africa, Volume 5 Issue 1).

The 2017 deadline to establish the CFTA is dependent on the schedule of implementation of the Abuja Treaty. The Abuja Treaty, a roadmap to economic union in Africa through the progressive integration of RECs, forms the legal basis for the negotiations.

Some critics have brought up the fact that the three regional economic communities which make up the TFTA have been slow to make progress and still exhibit low levels of intra-regional trade.

Most African countries’ production base is narrow and their exports are traditionally geared towards supplying developed countries, as explained recently in an article published by the Economist. Few have significant manufacturing bases and, unlike in developing Asian countries, there is little trade in inputs or services that might lead to African chains of production, reads the article.

Most regional economic communities have also missed the 2014 deadline to establish FTAs, and consideration should be given to the effect of the adjustments of their calendars on the CFTA timeline itself.

In addition to time constraints, so far negotiations for the TFTA and CFTA have mainly focused on trade in products and have failed to take into account that “21st century production is increasingly taking the form of trade in tasks (i.e. services),” according to Jaime de Melo, scientific director at the Fondation pour les études et recherches sur le développement international (Ferdi).

The CFTA is a complex institutional and legal structure and the first CFTA-NF meeting is important in relation to the technical preparations for the CFTA negotiations, as representatives from the AU Commission, the New Partnership for Africa's Development, the African Development Bank, and UNECA stated earlier this month. In order to meet the CFTA’s establishment deadline of 2017, negotiators will have to proceed effectively in their discussions throughout 2016. A procedural structure for discussions will be essential for the provisions of the CFTA to be worked out expeditiously, and the first meeting will be fundamental.

ICTSD Reporting: “African Experts in Talks for a Continental Free Trade Agreement,” UNECA, 10 February 2016. “The 1st Meeting of the Continental Free Trade Area Negotiating Forum (CFTA-NF),” African Union, 18 February 2016. “The African Union Commission opens the two-day Capacity Building Workshop for CFTA Members prior to the 1st Continental Free Trade Area Negotiating Forum,” Tralac, 23 February 2016.

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