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Achieving Continental Free Trade Area pact with quality content

Oil tankers heading to Uganda queue at Busia border. FILE PHOTO | NMG
Oil tankers heading to Uganda queue at Busia border. FILE PHOTO | NMG 

As Africa launches its massive Continental Free Trade Area (CFTA) at an extra-ordinary Summit of the African Union in Kigali on March 21, the priority for the last minute preparatory meetings must be to ensure good content and quality to avoid launching an empty or redundant CFTA.

The CFTA promises enormous benefits and welfare gains by doubling intra-Africa trade, but this will all depend on how good the deal finally agreed is and how soon it kicks in.

As one of the 12 flagship programmes under the African Union’s Agenda 2063, the CFTA is a key test of the determination of Africa to work resolutely towards achieving an integrated, peaceful and prosperous Africa by 2063. Africa must, therefore, get it right.

The CFTA will include trade in services, which is of huge strategic importance for Africa. Services contribute on average to more than 50 per cent of the gross domestic product of African countries.

Services constitute key enablers for development, such as communication, transport, banking, insurance, energy, education, and health. Services are high growth areas, such as tourism and construction. In many cases, skills are all that young professionals have for earning a living.

The idea of entrepreneurial universities, where course work and dissertations should result in ideas that can be monetised and business propositions, rather than just paper degrees at graduation, will need vibrant services markets.

What will be required soon, however, is to go beyond the framework of rules and disciplines that have been agreed in the protocol, and identify the services sectors in which to create an African integrated services market and in which to attract investment.

This would be followed by sector regulatory frameworks and trade and investment terms and conditions and creating awareness about these trade and investment opportunities.

The good news is the Single African Air Transport Market was launched and a protocol on the movement of persons concluded only last month, which provide an early harvest of services.

In the area of trade in goods, the main approach to market opening or tariff liberalisation will be the linear cut. This is a straightforward approach, in being easy to stage and monitor implementation of. What is required now is to agree on a periodic percentage cut, preferably a transparent common approach. Before this is agreed upon, there will be no tariff reduction schedule.

However, bilateral tariff negotiations will be a supplementary modality. Bilateral negotiations could be complex in terms of multiple partners to negotiate with and uncertain haggling over specific tariff lines.

It will be important to keep the number of negotiation partners to a minimum where possible, through negotiating as groups and to set a fairly short timeframe for completing the negotiations so they don’t go on endlessly.

A critical consideration in agreeing on thresholds or finalising product-specific rules of origin is to promote the production of and trade in inputs and other intermediate products within Africa, towards ‘Made in Africa’, while fully recognising the reality of global sourcing of some inputs for ‘Made in the World’ products.

Francis Mangeni is Director, trade and customs, Comesa secretariat.

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