By Ibrahim Mohammed
#TrackNigeria – The United Nations Conference on Trade and Development (UNCTAD), has called on African countries to consider the differing levels of productive capacities and competitiveness of African nations when enforcing rules of origin, noting that African Continental Free Trade Agreement (AfCFTA), which came into effect on May 30, is a landmark achievement, in the context of the continent’s long and rich history, in fostering regional integration to unify the continent.
UNCTAD stated this in its ‘‘Economic Development in Africa Report 2019.’’
According the UN body ‘‘policies are needed to build institutional capacities of customs authorities to ensure impartial, transparent and predictable implementation of agreed rules of origin. New and emerging technologies must also be leveraged to lower compliance costs for the private sector.’’
The report also noted that the AfCFTA will lead to the creation of a single continental market of more than 1.3-billion people, with a combined annual output of $2.2 trillion. The transition phase to the Continental Free Trade Area alone could generate welfare gains of $16.1 billion and boost intra-African trade by 33 per cent.
Realizing the full potential gains from the AfCFTA ‘‘will require a broad range of complementary policies, to address multiple challenges, designed to enhance an emerging trade–industrialization nexus on the continent: from business and trade facilitation to infrastructure, from productive capacities to entrepreneurship policies. But, under the African Continental Free Trade Area, it is the rules of origin – establishing the nationality of products produced in Africa – that will determine whether preferential trade liberalization can be a game changer for Africa’s industrialization.
‘‘How these rules are designed, enforced and verified will critically determine the size and distribution of the economic gains from the African Continental Free Trade Area, and will shape the future regional value chains on the continent. How lenient, flexible, easy to use and understand and accessible rules of origin are will shape the net benefits to the African private sector under the African Continental Free Trade Area. African countries should also consider the differing levels of productive capacities and competitiveness of African countries when enforcing rules of origin. Policies are needed to build institutional capacities of customs authorities to ensure impartial, transparent and predictable implementation of agreed rules of origin. New and emerging technologies must also be leveraged to lower compliance costs for the private sector.
‘‘The African Continental Free Trade Area is Africa’s renewed opportunity to steer its economic relations away from a reliance on external donors, foreign creditors and excessive commodity dependence, ushering in instead a new economic and political era focused on self-reliant cooperation, deeper integration and higher levels of intra- African trade. The African Continental Free Trade Area could boost African economies by harmonizing trade liberalization at the continental level, promote economic diversification and intra-African trade, and foster a more competitive manufacturing sector,’’ the report stated.
United Nations Conference on Trade and Development stated in the report that as the leading United Nations body on trade and development, it embarked on this historic initiative with African member states to support them in exploiting the potential gains of the African Continental Free Trade Area. I am certain that this report will prove to be a valuable guide to policymakers as we journey along the road towards the African Continental Free Trade Area and beyond.
Experts say the African Continental Free Trade Agreement, signed by all but three of Africa’s 55 countries, establishes the largest free trade area in the world since the creation of the World Trade Organization in 1995.
Besides, once the remaining countries join, AfCFTA will cover more than 1.2 billion people and over $3 trillion in GDP. While AfCFTA promises to unlock Africa’s economic potential, the agreement still faces an uphill battle for implementation.
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.
It 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 for Africa estimates that the agreement will boost intra-African trade by 52 percent by 2022.
Newsdiaryonline recalls that Nigeria, Benin Republic and Eritrea, have not signed up to AfCFTA.
Nigeria, which is Africa’s largest economy has not signed the AfCFTA due to concerns that membership would harm domestic manufacturers, besides market observers posits that Nigeria’s actions reflect larger concerns that protectionism could hinder the effectiveness of the agreement.
