The African Continental Free Trade Area: More hills to climb
The African Continental Free Trade Area (AFTA) has garnered the required 22 ratifications for it to come into force. The the latest ratification came in on April 1 from The Gambia just 11 days after the first anniversary of the signing of the Agreement on March 21, 2018 in Kigali. What was thought unthinkable has happened. It was the icon Nelson Mandela, who said “it always looks impossible until it is done”.
He also said after climbing one great hill, you only realise you have more hills to climb. The real hard work now begins - that of Implementation - on which Africa doesn’t have a very proud record. Besides, there is quite a bit of unfinished work to be done.
In addition to trade in goods, AFTA also covers services as well as innovation, competition and investment. Adding these areas was a stroke of genius, given the psychotic fear of these issues by many developing countries in international trade agreements particularly the World Trade Organisation.
However, way back in 2006, the African ministers at a conference in Nairobi chaired by the then Kenyan Trade minister Mukhisa Kituyi, now secretary general of United Nations Conference on Trade and Development (UNCTAD), took a fundamental decision to include these issues among programmes for regional economic integration in Africa.
Various service sectors are already fairly liberalised in much of Africa, such as tourism, financial, communication, computer, transport, certain professions, energy, cultural and entertainment services. This follows years of autonomous liberalisation under economic liberalism programmes, regional economic integration, and participation in negotiations at the World Trade Organisation (WTO) and other fora.
In Common Market for Eastern and Southern Africa (Comesa), for instance, services liberalisation negotiations have been completed covering transport, communication, financial (banking and insurance), and tourism services. These same areas have also been negotiated in the East African Community (EAC) and the Southern African Development Community (SADC). They are now among the priority sectors identified under ASEAN Free Trade Area (AFTA) for the first round of negotiations, together with business services. Building on progress in the regional bodies, and as acquis but subject to reciprocity, some early harvest can be obtained towards an African integrated services market.
Innovation is the cri de coeur for social economic transformation in Africa, and indeed world over. It will remain the basic way forward towards speedily growing our economies, especially in Africa, tapping into the benefits from learnt lessons and ready availability of cheaper technology arising from being a late-comer.
There are innovations and skills around the world that can be readily harnessed, customised or adapted, and deployed to boost social economic transformation in Africa, while encouraging local and regional innovation eco-systems.
In Comesa, for instance, a mere $10,000 in prize money for innovation awards, has been used by winners as seed capital to grow whole industries, with far-felt impacts in the region. A large number of prizes can be given out, especially to youth and women groups as well as institutions, with such manageable amounts.
Competition law and policy deliver and maintain functional markets, by checking monopolistic practices, including abuse of a dominant position, and cartels. On this basis, competition law and policy form a key pillar of free trade areas, through keeping markets open and fair.
Comesa, for instance, has a functioning regional competition law and policy overseen by the Regional Comesa Competition Commission, being the second regional competition authority in the world after the European Union’s. The commission can provide a suitable template for Africa. Better still, it could be rolled out or scaled up to cover the entire Africa, through adjustments to its current instruments.
Generation of foreign, regional and domestic investment is a ranking priority for practically every economy on earth. The dire poverty challenge in Africa, raises this priority to an existential question. South Africa now provides a best practice par excellence for balancing rights and obligations of various stakeholders, particularly government, investor and grassroot organisations.
These issues are up for negotiation mostly in the second phase, which starts later this year, but services negotiations started already.
The first phase, however, has some outstanding issues to be completed though it has already been a phenomenal success in achieving the AFTA Agreement, which is now ratified by the minimum number of 22 countries required for its entry into force.
Rules of origin and tariff negotiations need to be completed. Tariff schedules should be produced. A mechanism for addressing non-tariff barriers is also required. Some Regulations and Guidelines are also needed, in areas such as infant industries and export processing zones.
Other areas to be completed include operationalisation of the Africa Trade Observatory, which has already been launched; and establishment of continental payment systems, perhaps building on the existing Comesa and SADC regional payment systems. The good news is that work in all these other areas has started and is proceeding well.
One systemic lesson Africa has learnt is that clear political leadership and proactive engagement of peers at the highest level can dramatically achieve results. The Pan-Africanist energy and activism at the highest political level that has achieved the ratification of AFTA in just over a year, should now be equally deployed to ensure due completion of all key outstanding matters, so that AFTA is operationalised. It is time for Africa to get cracking yet again.
Dr Mangeni is the Director of Trade and Customs at the Comesa Secretariat.
