East African Community member countries have engaged the services of the Economic Commission for Africa to come up with a policy that will ensure that the region does not lose out in the African continent free trade area (AfCFTA) which came into force this January 1.
The EastAfrican has learnt that the EAC Secretariat with the support of the Commission is designing a regional strategy for the implementation of the pact that seeks to liberalise trade in goods and services on the continent by opening up a market of 1.2 billion people. The plan is meant to ensure that regional member countries take advantage of the of the larger continent market for goods and services for the benefit of individual countries as well as the bloc at large.
“The strategy will complement the broader trade landscape of the EAC and identify opportunities, gaps and steps required to take full advantage of continental and global markets resulting from the AfCFTA induced opportunities,” Kenya’s Principal Secretary in the State Department of EAC Affairs Dr Kevit Desai told the East African last week. “Currently, relevant stakeholders are being consulted on various aspects to gather necessary information and inputs to ensure that the strategy reflects the interests and aspirations of both the partner states and the region,” added Dr Desai.
The initial draft of the strategy is expected to be concluded next month.
East African council of ministers have given Tanzania, Burundi and South Sudan six months to ratify the agreement to allow for the resolution of outstanding issues on rules of origin and be qualified for trading under the pact.
The regional sectoral council of the Ministers of Trade, Industry, Finance and Investment (SCTIFI) in a meeting held on December last year said ratification of the AfCFTA Agreement is a prerequisite for all African Union (AU) member states. “It is therefore imperative for non-State Parties to ratify the AfCFTA Agreement including all EAC Partner States,” according to the report of the meeting.
The ministers urged Tanzania, Burundi and South Sudan which have not yet ratified the AfCFTA Agreement to do so by June 2021 in alignment with the African Union Ministers of Trade (AMOT) decision to have the outstanding Rules of Origin concluded within that period
On March 21 2018, member states of the African Union (AU) convened in Kigali, Rwanda, to sign the AfCFTA.
So far, only one country (Eritrea) out of the 55 African countries has not signed the agreement while 20 countries, among them Tanzania, Burundi and South Sudan have signed but have not ratified
The agreement which brings together 55 countries with a combined gross domestic product of $3 trillion had initially been scheduled to be launched on July 1 2020 but was differed to January 1 2021 due to the Covid-19 Pandemic which made physical interaction impossible.
Under the agreement, 90 percent of goods originating from an exporting country within the free trade area would be subject to preferential treatment (zero import tariffs), with projections that the pact could boost intra-African trade by 33 percent.
The United Nations Economic Commission for Africa (UNECA) estimates the AfCFTA could help push African consumer and business combined spending to $ 6.7 trillion by 2030, up from $ 2.7 trillion in 2015.
It is also argued that the AfCFTA has the potential to accelerate industrial development, expand economic diversification and facilitate quality job creation across Africa.
Under the AfCFTA liberalization of Trade is being carried out through regional trading blocs—East African Community (EAC), Common Market for Eastern and Southern Africa (COMESA), Southern African Development Community (SADC) and the Economic Community of West African States (ECOWAS) —which run separate customs union.
Each bloc is required to prepare its tariff offers, rules of origin and schedules of commitments in trade and services and submit to the AfCFTA Secretariat.
However in East Africa, negotiations on tariff concessions, trade in services and rules of origin for critical items such as motorvehicles, clothing and textile, sugar and edible oils are yet to be concluded .
In addition, there is lack of consensus amongst the EAC partner states on the modalities of preparing schedules of tariff offers for goods meant for liberalization
Burundi, Kenya, Rwanda and Uganda are of the view that the EAC continue with the preparation of the initial tariff offer based on the adopted modality specifying 90 percent for immediate liberalization, seven (7) percent sensitive products and three (3) percent exclusion.
Tanzania, on the other hand is of the view that the tariff offer be aligned to the agreed rules of origin based on the Decision of the 12th African Ministers of Trade (AMOT) Meeting which decided that agreed Rules of Origin should be used as the basis on which tariff offers are submitted and finalized to facilitate the start of preferential trade on January 1 2021.