What Is The African Continental Free Trade Area Agreement

Intra-African trade offers great potential to build regional value chains and boost growth and development. Indeed, more industrial goods are traded in Africa than African states export to third countries. High value-added products, such as vehicles and cosmetics, account for about 40% of intra-African trade (raw materials 44%, agricultural products about 16%). Exports to countries outside Africa, on the other hand, are still largely dominated by raw materials (about 75%). Sierra Leone, Namibia, Lesotho, Burundi and South Africa have since signed the AfCFTA at the 31st African Union Summit in Nouakchott. [50] As of July 2019, 54 states had signed the agreement. [51] There are many good reasons to complete the AfCFTA. Especially in small African economies like Namibia with about 2.5 million people, market expansion under a free trade area would allow economies of scale for industry. These are potentiated by the constellation of a growing middle class within a rapidly growing population. According to United Nations estimates, Africa`s population is expected to double to about 2.6 billion by 2050. The African Continental Free Trade Area (AfCFTA)[9] is a free trade area comprising 28 countries in 2018. [1] [10] [11] [12] It was created by the African Continental Free Trade Agreement between 54 of the 55 nations of the African Union. [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 founded on the 18th. August 2020 by the President of Ghana, His Excellency Nana Addo Dankwa Akuffo Addo Addo, in Accra and handed over to the AU. The objectives of market opening are set out in the agreement, but how they are to be achieved remains uncertain. Important conditions for effective trade liberalization have yet to be negotiated; These are, for example, specific agreements on which products should be reduced, to what extent and when they should be reduced (so-called liberalisation lists) and rules of origin. The latter are an essential element of any free trade agreement in order to prevent manufacturers from third countries from benefiting from the agreement. The rules of origin specify the extent to which a product must have been processed in the partner country in order to benefit from the tariff reduction. These provisions are still missing from the AfCFTA agreement. In other words, now that it has entered into force, its importance is that negotiations continue while the economic impact must wait. There is also overlap between the different REBs (see figure). Most African states belong to several free trade zones, which may have different tariffs and rules of origin Israel Osorio Rodarte is an economist in the World Bank`s Department of Trade and Regional Integration.

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