African Countries Make Headway Towards the Creation of the CFTA
African countries concluded an intense month of talks as part of the negotiating process towards the establishment of the Continental free trade area (CFTA), with the fourth Meeting of African Ministers of Trade (AMOT) taking place on 1-2 December in Niamey, Niger. The meeting was preceded by technical work and discussions under the other CFTA bodies, including technical working groups, the CFTA Negotiating Forum, as well as the Meeting of Senior Trade Officials.
If concluded and put in place successfully, the CFTA will bring together all members of the African Union into a single market spanning the continent, with a total population of over 1 billion people and a cumulated GDP of more than 3.4 trillion US$. As such, it will constitute the largest free trade area in the world in terms of number of participating countries.
“It [the CFTA] will bring about economic stability and growth in Africa and will address issues of trade policy, trade facilitation, productive capacity and trade information on the continent,” said AU Commissioner for Trade and industry, Albert Muchanga, at the second edition of the African Export-Import Bank Trade and Development Seminar Series on Wednesday.
Hopes are high among the African trade community that by reducing tariff and non-tariff barriers alike across Africa, the CFTA will significantly boost intra-regional trade, which is remarkably low level as compared to other regions, and help put the continent on the path to economic transformation and sustainable development (See Bridges Africa’s special issue on the CFTA).
“The conclusion of the CFTA will be a significant milestone in Africa’s integration process and the CFTA should promote industrial development and the development of regional value-chains,” indicated South African Minister of Trade Rob Davies in a press release on Tuesday.
According to sources close to the talks, substantial progress was achieved on the drafting of the CFTA agreements – the Agreement Establishing the Continental Free Trade Area, the Protocol on Trade in Goods, and the Protocol on Trade in Services – over the last month. This should allow for the process of legal scrubbing to start, while members will deploy additional efforts to bridge remaining differences on trade in goods with a view towards adopting the CFTA texts at a Summit in March 2018.
Progress on CFTA agreements
The CFTA negotiating process was launched in June 2015, with the objective of concluding the first phase of negotiations – covering trade in goods and trade in services – and establishing the CFTA by the end of 2017. The second phase of the process will address investment, intellectual property, and competition policy.
Since 2015, eight meetings of the CFTA dedicated negotiating body, the CFTA Negotiating Forum (CFTA-NF), were held, with the last one taking place in November. At the Sixth meeting of the CFTA-NF held in June in Niamey, negotiators agreed on the CFTA modalities both for trade in goods and trade in services, which were then adopted by the Third Meeting of African Ministers of Trade (See Bridges Africa, 24 August 2017).
Meetings held last month allowed CFTA members to remove all remaining brackets and thus finalise the Agreement Establishing the Continental Free Trade Area, which is the framework agreement specifying the objective, scope, and principles guiding the CFTA. The agreement also addresses “horizontal” aspects such as governance and institutional arrangements, procedures regarding entry into force, ratification, and amendment, as well as a rendez-vous clause.
Regarding the institutional structure of the CFTA, members decided that an autonomous CFTA Secretariat will be established, with the African Union Commission tasked with producing a technical note on its functioning as well as budgetary and financial aspects.
African negotiators and ministers also finalised the Protocol on Trade in Services, which provides that liberalisation will be conducted through a request and offer approach based on nine identified priority sectors.
On trade in goods, however, sources indicate that additional work is needed, although members managed to resolve some of the remaining sticking points and agreed on provisions regarding special economic zones, infant industries, balance of payments, and export duties.
Specifically, negotiators will need to continue discussions on rules of origin as well as specific points related to the application of the modalities agreed in June, in particular regarding sensitive and excluded products and the way they should be treated. Work is also expected to continue on a few aspects of the annexes of the Protocol on Trade in Goods, such the finalisation of sets of guidelines on topics such as trade remedies or infant industries.
The legal scrubbing of agreed texts and agreed sections of the Protocol on Trade in Goods will be starting in January, sources indicate, with the objective of resolving outstanding issues on trade in goods in order to enable the adoption of the CFTA agreements by members in March 2018.