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African Continental Free Trade Agreement Objectives

2020/12/02 02:57

In the area of liberalisation of services, Member States have also agreed on a demand and supply approach based on seven priority sectors: logistics and transport, financial services, tourism, professional services, energy services, construction and communication. Phase I of the AfCFTA came into force on 30 May 2019, 30 days after handing over the 22nd ratification instrument to the AU Commission President.21 Eritrea has not signed due to tensions with Ethiopia, but after the Eritrea-Ethiopia summit in 2018, the AU Commissioner for Trade and Industry expects Eritrea to sign the agreement. [93] The overall objectives of the agreement are:[20] In March 2018, three separate agreements were signed at the 10th African Union Extraordinary Meeting on AfCFTA: the African Continental Free Trade Agreement, the Kigali Declaration; and the protocol on the free movement of people. The Protocol on the Free Movement of Persons aims to create a visa-free zone within AfCFTA countries and to support the creation of the African Union passport. [27] At the Kigali Summit on 21 March 2018, 44 countries signed the AfCFTA, 47 signed the Kigali Declaration and 30 signed the protocol on the free movement of persons. Although a success, there were two remarkable holdouts: Nigeria and South Africa, the two largest economies in Africa. [28] [29] [30] African states and regions have already concluded several agreements with partners outside Africa. The main ones are the Economic Partnership Agreements (EPAs) with the European Union; There are also free trade agreements and preferential agreements (the latter cover only a selection of sectors) with other countries and regions such as the European Free Trade Association (EFTA) or Mercosur. Other free trade agreements are being negotiated, for example with the United Kingdom, between SACU and India and soon with the United States.

In countries where the domestic economy was traditionally less favourable to regional trade integration, AfCFTA`s potential to support industrialization will largely depend on its ability to change the interests and incentives of businesses and political elites, either by creating new opportunities for trade benefits or by facilitating new coalitions of actors who can benefit more from the implementation of the AfCF. In order to maximize the benefits of AfCFTA, they should also be complemented by efforts to improve trade-related infrastructure and remove non-tariff barriers, including inefficient customs practices. An analysis by the International Monetary Fund suggests that the coverage of infrastructure needs and non-tariff barriers could have a much greater influence on intra-African trade than customs liberalization under afCFTA. There is a lot of literature on continental free trade agreements and socio-economic growth. Hosny argues that regional integration is characterized by improved competition, investment flows, economies of scale, technology transfers and increased productivity7. 8 Wandrei believes that trade agreements ultimately lead to trade gains for participating countries9 Intra-African trade has great potential to establish regional value chains and stimulate growth and development.

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