The implementation phase of the African Continental Free Trade Area (AfCFTA), which went live on January 1, is still bogged down by technicalities as key provisions of the agreement are yet to be concluded.
The technical provisions that are proving to be a hurdle to trade are the rules of origin, the tariff offer and Customs Union.
A meeting held at the AfCFTA headquarters in Accra, Ghana on September 18-19, to review the agreement nine months after its inception, found that without these provisions no trade can take place, at least not as easily as envisaged.
East Africa’s private sector was represented in Accra by the East African Business Council’s (EABC) Chief Executive John Bosco Kalisa who emphasised the importance of establishing the Rules of Origin in the continent’s FTA.
“So far no trading has taken place because we are still ironing out issues. Before anyone starts trading, there are a number of key components such as tariffs and Rules of Origin — the criteria needed to determine the national source of a product — which have to be agreed on. The rules of origin are basically the ‘passport for goods’ and if these rules are not yet agreed on and concluded, it is very difficult to trade. The third key component is the harmonisation of Customs Union procedures,” he said.
Rules of Origin determine which products can be subject to tariffs and duties.
“These three instruments are very critical and despite the official trading having started in July, because these are still underway, we are yet to fully operationalise the AfCFTA,” said Kalisa adding that the AfCFTA eliminates tariffs on 90 percent of goods produced on the continent, tackles non-tariff barriers to trade and guarantees the free movement of persons. However, none of the regional blocs has made the tariff threshold of 90 percent.
“The EAC hasn’t started trading given that we haven’t made the tariff offer threshold. Currently we are around 83 percent and we need to attain a 90 percent tariff offer for us to be able to trade under AfCFTA,” said Kalisa.
The Accra meeting was a preparatory technical meeting for the first co-ordination meeting of the heads of regional economic communities (RECs) on the implementation.
Representing the East African Community bloc in Accra, Peter Mathuki, the Secretary General said, “the AfCFTA is yet to negotiate the Rules of Origin yet these normally determine whether preferential trade liberalisation can be or is applicable. Their importance is derived from the fact that duties and restrictions in several cases depend upon the source of imports.”
Dr Mathuki also said a general lack of awareness was denying companies the chance to discover markets for manufactured goods on the continent.
“Someone making coffee in Thika, Kenya, may not know whether there is demand for that coffee in Ghana, Nigeria or Senegal. Therefore, they continue exporting to their traditional markets in Europe and elsewhere.”