African Continental Free Trade Agreement (AfCFTA) – Meaning and policy guide

The African Continental Free Trade Agreement (AfCFTA) is a trade agreement which is in force between 25 African Union member states, with the goal of creating a single market followed by free movement and a single-currency union. The AfCFTA was signed in Kigali, Rwanda, on 21 March 2018. As of July 2019, 54 states have signed the agreement. Ratification by 22 countries was required for the agreement to enter into force and the African Continental Free Trade Area to become effective. The agreement will function as an umbrella to which protocols and annexes will be added. Read the full details here.

Negotiations continued in 2018 with Phase II, including Competition Policy, Investment and Intellectual Property Rights. A draft shall be submitted for the January 2020 AU Assembly.

Kenya and Ghana were the first countries to deposit the ratification instruments on 10 May 2018 after ratification through their parliaments

MEANING:
The African Continental Free Trade Area (AfCFTA) is a free trade area, outlined in the African Continental Free Trade Agreement among 52 of the 55 African Union nations. The free trade Area is the largest in the world in terms of participating countries since the formation of the World Trade Organisation.

WHAT IS IN THE AGREEMENT?

The agreement was brokered by the African Union(AU) and was signed on by 44 of its 55 member states in Kigali, Rwanda on March 21, 2018. The agreement initially requires members to remove tariffs from 90% of goods, allowing free access to commodities, goods, and services across the continent. The United Nations Economic Commission of Africa estimates that the agreement will boost intra-African trade by 52 percent by 2022. The proposal was set to come into force 30 days after ratification by 22 of the signatory states. On April 2, 2019, The Gambia became the 22nd state to ratify the agreement, and on April 29 the Saharawi Republic made the 22nd deposit of instruments of ratification.

WHEN WILL THE AFCFTA START WORKING?


The agreement went into force on May 30 and will enter its operational phase following a summit on July 7, 2019.

HOW IS AFCFTA GOING TO WORK?

AfCFTA secretariat

The secretariat will be responsible for coordinating the implementation of the agreement and shall be an autonomous body within the AU system. Though it will have independent legal personality, it shall work closely with the AU Commission and receive its budget from the AU. The Council of Ministers responsible for trade will decide on the location of the headquarter, structure, role and responsibilities.

 

Ratification

After the Kigali summit, more signatures were added to the AfCFTA. At the African Union summit in Nouakchott on 1 July 2018, five more nations joined the agreement including South Africa. Kenya and Ghana were the first nations to ratify the agreement, depositing their ratifications on 10 May 2018. Of the 44 original signatories, 22 needed to ratify the agreement for it to come into effect, and this occurred on 29 April 2019 when both Sierra Leone and the Saharawi Arab Democratic Republic ratified the agreement. As a result, the agreement came into force 30 days later on 30 May 2019; at this point, only Benin, Nigeria, and Eritrea had not signed.

The 12th Extraordinary Session of the African Union on AfCFTA was called to launch the new agreement, which was hosted in Niamey. At this summit, Benin and Nigeria signed the agreement, leaving Eritrea as the only African state not a part of this agreement; Eritrea has since asked to join the agreement. At the date of the launch, there were 25 states who had ratified the agreement.

Implementation

The AfCFTA is set to be implemented in phases, with some of the future phases still under negotiation.


At the Kigali summit, areas of agreement were found on trade protocols, dispute settlement procedures, customs cooperation, trade facilitation, and rules of origin. This was part of Phase I of the agreement, which covers goods and services liberalization. There was also agreement to reduce tariffs on 90% of all goods. Each nation is permitted to exclude 3% of goods from this agreement.

At its launch on July 7, 2019, five operational instruments that will govern the AfCFTA were activated: “the rules of origin; the online negotiating forum; the monitoring and elimination of non-tariff barriers; a digital payment system; and the African Trade Observatory.

 

AfCFTA Ratification Barometer 03 06 2019


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