Developments on the Boosting Intra-African Trade Initiative and the Continental Free Trade Area

The Assembly of the African Union, during its eighteenth ordinary session that was held in Addis Ababa, Ethiopia, in January 2012, adopted the Decision[1] to establish a Continental Free Trade Area (CFTA) by the indicative date of 2017. It also endorsed an Action Plan for Boosting Intra-African Trade (BIAT). The historic Decision is aimed at deepening Africa’s market integration and using trade to serve more effectively as an instrument for the attainment of rapid and sustainable socioeconomic development. A directive from the Assembly of the African Union Declaration[2] expressly requests the African Union Commission, ECA, the African Development Bank and other relevant agencies, to take appropriate measures, including studies, technical support to the regional economic communities, and to raise awareness of the initiative among member States and partners, for the effective implementation of the CFTA and BIAT initiatives.

At the regional economic community and national levels, the CFTA-BIAT Action Plan is worked into implementable regional and national action plans. These action plans aim to serve as effective instruments that will leapfrog trade as a potent instrument for attaining transformative economic growth and development, enhancing African market integration, and improving and increasing participation on the continent in global trade. The action plans are targeted at tackling the constraints that limit intraregional and interregional trade, and at harnessing the opportunities of the trade for accelerated and sustainable economic growth and development across seven clusters of the BIAT Action Plan.

To date, SADC, COMESA, ECCAS, ECOWAS, AMU, EAC, Gabon, Nigeria and the United Republic of Tanzania have all held CFTA–BIAT consultative meetings. Draft CFTA–BIAT action plans have been prepared for AMU, Nigeria and the United Republic of Tanzania. COMESA and SADC meeting outcomes have pointed to the need to finalize the tripartite negotiations, but both strongly support the CFTA–BIAT agenda. ECCAS, Gabon and Tunisia are in the process of developing their own BIAT action plans.

The formal launch of negotiations for CFTA took place in June 2015, with the aim of concluding in 2017. The negotiations cover trade in goods and services, investment, intellectual property rights and competition policy. Member States of the African Union have set out the objectives for the negotiations:

• An agreement to tackle the challenges posted by multiple and overlapping memberships of regional economic communities.
• Reservation of the acquis (building on what has already been agreed through existing agreements).
• Variable geometry (different countries may reduce tariffs at different speeds), flexibility and special and differential treatment.
• Most-favoured-nation treatment (countries must extend the preferences that they grant under CFTA to all African countries equally).
• National treatment (once import tariffs have been paid, goods and services from other African countries will be treated the same as domestic goods and services by domestic regulations and internal taxes).
• Reciprocity.
• Decisions in the negotiations to be taken by consensus (unanimity).
• Adoption of a detailed Indicative Roadmap on the Negotiation and Establishment of the Continental Free Trade Area.

To recall, the process to establish CFTA takes place in the context of the steps taken by regional economic communities to establish free trade areas and customs unions, in line with the commitments set out in the 1991 Abuja Treaty. The eight regional economic communities[3] have been designated as the building blocks of African continental economic integration – CFTA and ultimately the African Economic Community. Encouraging progress has already been made in regional integration in the regional economic communities, but the level of market integration and the preparedness of these communities for CFTA vary.

Both CFTA and BIAT are expected to significantly enhance intra-African trade, with the long-term objective of boosting incomes, adding value to goods and enhancing the living standards of African people. Greater intra-African trade can also provide a cushion for African economies from global and economic crises. With this in mind, the African Union Commission has mobilized around $18 million to support the CFTA negotiations, including funds for a dedicated CFTA unit with the required expertise. The African Union Commission is coordinating an assessment of how member States and regional economic communities need to develop their negotiating capacity.[4] In cooperation with the African Union Commission, ECA is providing technical support for the CFTA process to support equal participation of African countries and stakeholders in the negotiations and surrounding activities. As shown in the Assessing Regional Integration in Africa (ARIA V) report, CFTA is expected to bring wide economic benefits to Africa, via deeper regional integration and higher incomes and gross domestic product.[5] Overall, there is strong support for the CFTA and BIAT[6] agenda from the member States and the regional economic communities in Africa.