Talking CFTA with Albert Muchanga, the AU’s Commissioner for Trade and Industry

20 September 2017

Bridges Africa met with Albert Muchanga, the African Union’s Commissioner for Trade and Industry, to discuss the Continental Free Trade Area (CFTA) currently under negotiation.

Negotiations towards the establishment of the CFTA kicked off in February 2016. With six meetings of the CFTA Negotiating Forum having now taken place, what progress has been achieved so far?

[Commissioner Albert Muchanga] The negotiations of the CFTA are at a critical juncture, with significant progress made. At the last meeting of African Ministers of Trade, held in Niamey, Niger, ministers successfully adopted the modalities for the liberalisation of trade in goods as well as trade in services. Ministers have adopted liberalisation targets for trade in goods of 90 percent of tariff lines, with additional provisions made for lists of sensitive and excluded products. An approach has also been agreed for the liberalisation of priority services sectors, as well as regulatory cooperation in those services sectors. In addition, significant technical work has been done on the CFTA Agreement texts, with language agreed to, or mostly agreed to, on the main CFTA agreement text, as well as on key annexes and issues including sanitary and phytosanitary measures (SPS), technical barriers to trade (TBT), customs cooperation, and trade facilitation. In addition, there is a roadmap towards concluding the remaining texts on outstanding issues, as well finalising tariff and trade in services offers by the end of 2017.

The indicative deadline to conclude the CFTA negotiations was set at end 2017. What exactly do CFTA members expect to achieve by then? And what will be the subsequent steps towards an operational free trade area?

[AM] As stated in the decisions of the African Union Assembly, the AU member states negotiating the CFTA intend to conclude negotiations on the first phase of the CFTA, covering trade in goods and trade in services, by the end of 2017. Subsequently, it is planned that African leaders will sign the agreement at an appropriate occasion in early 2018, followed by an aggressive drive to get the requisite number of ratifications, which will then bring the agreement into force for those ratifying members. At the same time in 2018, work will continue on any outstanding issues from the first phase of the negotiations as well as on issues covered in the second phase, namely investment, competition policy, and intellectual property. Alongside the technical work, the African Union Commission (AUC) will be making the necessary institutional and administrative arrangements for the administration and implementation of the agreement.

What will be the main challenges in bringing about a successful and economically meaningful CFTA? How can they be overcome?

[AM] The key challenges in bringing about a successful CFTA relate to the technical complexity of the negotiations themselves, as well as the breadth and heterogeneity of negotiating members, cutting across developing and least developed countries with different economic contexts. There is therefore a need to strike a subtle balance between the liberalisation ambitions of the CFTA and the need to cater for the economic vulnerabilities and sensitivities of the negotiating countries. There is no shortcut to overcoming these challenges, and addressing them thus requires adequate technical preparations and flexibility to address the concerns of the affected countries, as well as the mobilisation of the necessary political will to get the agreement concluded. The heads of state and/or government have made it clear that the political will to conclude the CFTA is there. The negotiators and the AUC – as the secretariat for the negotiations – are playing their part in terms of the necessary technical work for ensuring a successful agreement.

It is expected that the CFTA will build on the achievements of regional economic communities and the Tripartite Free Trade Area. Can you explain this building-block function?

[AM] The CFTA Guiding Principles explain the building block relationship as the CFTA building upon the trade liberalisation and integration programs of the regional economic communities (RECs). In this context, the CFTA does not seek to roll back liberalisation already attained at the RECs level, but rather it seeks to consolidate these achievements towards the continental project. In practical terms, the CFTA seeks to gradually build on the liberalisation commitments at the RECs level until the continental liberalisation matches and eventually exceeds that of the RECs where possible. In addition, the CFTA text draws on the best practices and approaches that have worked at the regional level in developing the trade legal framework for the continent.

With 55 member states, the CFTA is a huge undertaking. Some experts argue that prioritising economic integration in smaller groups such as regional economic communities would be more fruitful, in particular because smaller membership can make it easier to achieve deeper integration. What is your response to this line of argument?

[AM] Integration in smaller regional groups such as RECs leading towards eventual continental integration has been the approach to integration at the African Union, and it is part of the idea of using the RECs as building blocks for African integration. By establishing the CFTA, we are climbing up the ladder of Africa’s economic integration agenda. While there is indeed a role and a place for deeper integration in smaller groups at the regional level, this does not negate the need for continental integration in order to get the full benefits of integration. It is clear that in terms of market size, regional markets such as COMESA, EAC, SADC and ECOWAS are still quite small relative to players like the US, India, China, and the EU. Consequently, African integration is not sufficient if restricted to regional economic groupings. The aim has been and continues to be deeper African and continental integration. Continental integration, while more challenging, offers a larger payoff than integration at the RECs level in terms of market size, which will help attract large-scale investments from both within and outside Africa.

A human rights impact assessment of the CFTA has recently been published, highlighting the need to ensure the agreement leaves no one behind. How have CFTA members dealt with the issue of inclusivity so far, and what can be further done to make the CFTA a development tool that benefits all Africans?

[AM] The need for inclusivity and for ensuring that all Africans benefit from the CFTA has been a preoccupation of the CFTA negotiations. The negotiating members have tried to do this by building sufficient flexibilities into the agreement and taking commitments that can ensure that the issue of vulnerability and inclusivity is addressed, including through longer time frames for transitions and the implementation of commitments. Studies are currently underway which will assist us in designing policies that will ensure win-win outcomes in the CFTA integration process.

Some studies have shown that complementing the CFTA with trade facilitation measures could significantly boost its impact on trade flows. Will trade facilitation be addressed in the CFTA, and if so, how?

[AM] Trade Facilitation is a key focus of the CFTA Agreement. The CFTA will include annexes on customs cooperation, trade facilitation, transit, and elimination of non-tariff barriers, as well as annexes on SPS and TBT issues. This is a reflection of the importance placed on trade facilitation by the CFTA negotiating parties. The CFTA agreement, through its provisions in these annexes, will be the most significant African commitment on legally-binding trade facilitation measures and administrative cooperation towards trade facilitation since this issue became important in trade policy circles.

Economic development is a complex and multi-faceted process, which requires more than trade and market integration. The Tripartite initiative for example includes two additional pillars related to infrastructure and industrial development. How will the CFTA take this broader dimension of development into account?

[AM] The CFTA initiative must be looked at in the context of the other AU initiatives. While the Tripartite FTA was a stand-alone initiative among the participating member states, which explains the specific need to develop initiatives on infrastructure and industrialisation, the CFTA is a flagship program of the AU’s Agenda 2063 towards the structural transformation of the continent. Other flagship programmes of Agenda 2063 include the Program for the Infrastructural Development of Africa (PIDA), the Action Plan for the Accelerated Industrial Development Africa (AIDA), as well as the Action Plan for Boosting Intra-African Trade (BIAT). These initiatives are driven by their respective institutional frameworks up to the ministerial level.

The CFTA therefore does not try to duplicate, set aside, or reinvent the existing continental initiatives on industrialisation and infrastructure development – but rather, it seeks to complement these initiatives by addressing the critical market issues hindering the continent’s industrial development. In a more specific context, the CFTA is being negotiated within the context of developmental regionalism. Trade is seen as a means to an end; in this case, the hoped-for end is the structural transformation of Africa. The CFTA Agreement therefore includes provisions that can complement and support Africa’s industrialisation drive. Furthermore, the undertaking of commitments in infrastructure-related services by CFTA member states within the context of the CFTA also helps in creating an environment for market-driven solutions to Africa’s infrastructure challenges.

The CFTA is not an end in itself, but a milestone towards the larger goal of establishing an African Economic Community. Can you briefly outline the path towards this objective?

[AM] The establishment of the CFTA is a necessary first step on the way to deeper economic integration, such as through the creation of the African Customs Union, and the African Economic Community. The CFTA can be best described as laying the necessary foundation for the African Economic Community by liberalising trade in goods and services on the continent.

This interview was conducted on 18 September 2017.

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