Making the most of the African Continental Free Trade Area

Given that trading arrangements under the REC act as building blocks of the AfCFTA, the EU should align its agreements with the grouping. By implementing this strategy, Europe and Africa can promote sustainable development, stability, and security in both regions. The title arises from the disintegration of African trade in most of its primary exports as the continent is excluded, marginalized, and made vulnerable. The book’s investigation is based on the solid ground of empirical research on agro-food products and labor-intensive manufacturing . The information arises from the Danish Institute for International Studies and its Globalization and Economic Restructuring in Africa research program.

In this sense, the coexistence of FTAs among smaller groups of countries can help develop the AfCFTA, particularly as it expands to new regulatory horizons in keeping with the demands of a rapidly changing global economy. The establishment of the AfCFTA has implications for pre-existing trade agreements in Africa, both at the sub-regional level in the framework of Regional Economic Communities, as well as between African countries and extra-regional trading partners such as the EU. As discussed, the EU has far more trade agreements with African countries than any other external partner. It is important that European policymakers understand how these agreements and future ones can shape the AfCFTA integration process. The new African Continental Free Trade Area is the first large-scale agreement on deep integration in Africa to cover areas such as services, investment, competition policy, intellectual property rights, and digital trade. On November 16th, 2017, the Wilson Center Africa Program held the third annual Signature Event of the Brown Capital Management Africa Forum.

The second track will require the EU to cooperate with African countries on the forms of deep integration laid out in the AfCFTA – starting with services, investment, competition, intellectual property rights, and digital trade. Such a partnership for deep integration will be crucial to creating a level playing field for European countries and firms. Furthermore, the AfCFTA will set a precedent for the international trade system under the World Trade Organization that both sides support. African policymakers, she says, need to pursue and implement productivity-enhancing policies on road, rail, electricity, digital, and other connectivity infrastructure in order to give African enterprises the opportunity to access export markets including China’s. At the same time, Chinese policymakers need to relax strict trade barriers with preferential market access agreements for African businesses seeking to export to the Asian country, Usman adds.

Therefore, the EU should revise rules of origin in its trade agreements to remove an obstacle to intercontinental integration. One of the challenges of moving to an intercontinental strategy is that EU trade policy on Africa is fragmented – in terms of its treatment of least-developed and developing countries, and of countries to the north and south of the Sahara. These differences in the EU’s multitude of African trading arrangements could deter region-wide integration. Moreover, the economic and geographical divisions in these arrangements may be outdated or operate differently from the AfCFTA and other AU initiatives. The fragmented approach can create challenges for EU trade policy in engaging with Africa as a single region. The concept of open regionalism emerged from Asia-Pacific efforts to address these challenges of complexity.

This new supply chain strategy is called “friend-shoring.” Advanced countries are creating friend-shoring alliances which are, in turn, reshaping our global economy. Over the past few years, the world’s supply chains have been strained and disrupted by the COVID pandemic, Russia’s invasion of Ukraine, and rising geopolitical tensions. These started with the US-China trade war and then intensified following the war in Ukraine. Across the world policies to address the pandemic have limited and https://cryptolisting.org/ halted work and mobility, and as a result value chains and trade have slowed. While uncertainty remains over the total costs of the virus across Africa, estimates suggest anything from $29 billion to $120 billion might be wiped from the continent’s economy. With Africa’s economy scheduled to shrink for the first time in 25 years, boosting trade between African countries will be crucial to offsetting the dire economic impacts of Covid-19, says a new report from London-based think tank ODI.

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Hence, the negotiation of these protocols in tandem can help ensure that policies in these areas complement one another. This will require a more coherent approach to EU trade agreements with individual African countries, including through a revision of rules of origin. Rules of origin are used to determine a product’s eligibility for preferential tariffs under a free trade agreement and have major implications for the extent of trade under the agreement and the growth of regional value chains. Industrialization drives the sustained growth in jobs and productivity that marks the developmental take-off of most developed economies. Yet, academics and policy makers have questioned the role of manufacturing in development for late industrializers, especially in view of rapid advancements in technologies and restructuring of international trade.

Article 5 of the AfCFTA explicitly describes the FTAs of the Regional Economic Communities grouping as its “building blocks”. The AfCFTA states that it aims to preserve – and, if possible, improve – what has been agreed on trade within the grouping. Moreover, Article 12 of the AfCFTA specifies that the REC “shall be represented in the Committee of Senior Trade Officials, in an advisory capacity”.

These include forging strong and effective friend -shoring alliances with the advanced economies and defending the rules-based multilateral trading system. But with $402 million in contracts generated in just the first year, the long-term market opportunity is obvious. Based on the concept of the “Global Value Chain” , it moves the Africanist researcher away from the traditional center of attention—country studies—and focuses instead on certain key crops and their international trade. The perspective shifts from the world of GATT and Produce Marketing Boards to the post-1994 scenario of the WTO and contemporary production and exchange in a neoliberal and globalized world, with retail trade becoming increasingly international. The African Export-Import Bank was established in 1993 as a crisis management institution on the heels of the Latin American debt crisis of the 1980s.

Financial and business services were among those facing medium exposure to GVCs restructuring and with scope for diversification as a resilience strategy. Commercial services remained resilient due to increased adoption of digital financial services and governments’ Covid response measures against spill overs of the crisis in the financial sector. For instance, the digital economythrived due to increased digital technology adoption, with a significant surge in market valuation of technology enabled services in health and education services, e-commerce, and digital financial services. South Africa remained resilient and gained a reputation as an adaptable business environment and an FDI destination for business process outsourcing , while Rwanda is making significant investments in its competitiveness and capturing emerging GVCs opportunities.

“Companies need to buy materials from the United States, but there’s no way to get the money there — they’re left with no option but to use USDT.” He cited China as another popular trading partner for these crypto-based commercial transactions. Despite the increase in trade, China’s exports to Africa continue to exceed Africa’s exports to the Asian country. If AfCFTA’s goals are fully realized, 50 million people could escape extreme poverty by 2035, and real income could rise by 9 percent. To realize its potential benefits, the agreement must accomplish its most ambitious goals, which include harmonizing policies on e-commerce, investment, and intellectual property.

The African Continental Free Trade Area: A Historical Moment for Development in Africa

In this context, EU policymakers should view the recent creation of an Africa-wide market under the African Continental Free Trade Area as an opportunity to consolidate and strengthen commercial and geopolitical ties with Africa. The AfCFTA, a flagship project of theAfrican Union’s Agenda 2063, is a blueprint for a prosperous Africa that promotes regional integration and structural transformation as a source of inclusive growth, decent jobs, and sustainable development. Given its comprehensive and ambitious scope, the AfCFTA could be the first large-scale effort at deep integration in Africa. The AfCFTA seeks not only to liberalise intra-African tariffs and other traditional barriers affecting trade in goods but also to address domestic regulatory measures with respect to services, investment, competition, intellectual property rights, and digital trade . The degree of convergence between EU and nascent pan-African regulatory models will be critical to the commercial and geopolitical ties between Europe and Africa. Regulatory convergence can lead to the harmonisation of rules of operation and governance, and to an increase in cross-border production chains.

Conversely, if efforts to tackle climate risks lead to a significant decline in growth and rising inequality, they would deprive millions of people of development and likely erode support for the reforms necessary to achieve a lasting economic transformation. This report offers policy options to achieve these dual objectives by easing inevitable trade-offs and maximizing potential synergies between China’s development and climate objectives. Global growth prospects have deteriorated significantly since the beginning of the year, raising the specter of global recession. This paper relies on insights gleaned from previous global recessions to analyze the recent evolution of economic activity and policies and presents plausible scenarios for the global economy in 2022–24. First, every global recession since 1970 was preceded by a significant weakening of global growth in the previous year, as has happened recently. Second, the global economy is in the midst of one of the most internationally synchronous episodes of monetary and fiscal policy tightening of the past five decades.

Iza Lejarraga is a trade policy expert with more than 15 years of experience in international organisations, academia, and the private sector. She has worked as a senior economist in leading international organisations, including the Organisation for Economic Co-operation and Development, the African Development Bank, the World Bank, and the Organization of American States. She currently teaches courses on trade and investment in the joint advanced policy programme of the University of Georgetown and the Solvay Brussels School of Economics and Management, and at the University of Paris . She has also taught short courses at the Kiel Institute for the World Economy, the European University Institute, and the World Trade Institute. She holds a master’s degree in public administration in international development from the Harvard Kennedy School, and has been a visiting scholar at Harvard’s Center for International Development.

Africa Trading Chain

However, weak commodity prices since 2014 have greatly impacted the value of African exports to China, even while Chinese exports to Africa remained steady. Our forums have brought together millers, traders, logistics companies, and banks in one place, people who traditionally do not do business with each other despite being neighbors. For example, our Ethiopian grain sellers are well versed in exporting grain to China and Italy for industrial use, but had never explored selling surplus to Kenya, despite that country’s chronic maize shortages. Moreover, despite being widely referred to as a ‘South-South’ trading arrangement, the AfCFTA brings together countries that are significantly different in their levels of development, economic structures, societies, cultures, and politics.

• The AfCFTA promises broader and deeper economic integration and would attract investment, boost trade, provide better jobs, reduce poverty, and increase shared prosperity in Africa.
• This may be a particularly attractive opportunity in the aftermath of covid-19, as European firms look to strengthen their supply chains by diversifying them away from Asia and near-shoring them.
• Currently, we don’t have information about the price of crypto currency Africa Trading Chain .
• This chart allows to forecast the Africa Trading Chain ATT price change according to the number of people searching for it in Google.
• The agreement establishing the African Continental Free Trade Area has been attracting a great deal of attention in academic and policy circles, as well as within the international development community.

The travel and tourism share of GDP in Africa dropped by 49.2% in 2020, in line with the global average, while Africa suffered disproportionately higher job losses (contracting by 7.2 million). Despite a fall in FDI in both manufacturing and services sectors in 2020, the food, beverage and tobacco industry ranked first in the value of net cross-border mergers and acquisition sales , with ICT topping the greenfield project announcement list. Reconfiguring supply chains in ways that exclusively lend a helping hand to current US and EU manoeuvring will only make it more difficult for Africa to benefit from WTO support in these important areas. In addition, friend-shoring also threatens to undermine the World Trade Organisation’s Aid for Trade initiative. This was launched in 2005 to assist developing countries reduce trade costs and thereby enhance export competitiveness.

Although some DCFTAs seemed to progress well – particularly that with Tunisia, which advanced in the negotiation of services – they have also run into difficulties and suffered from the same problems as EPAs. The split in treatment of least-developed countries and other states in sub-Saharan Africa created tensions and difficulties in the EU’s negotiation of economic partnerships with the REC. Most members of the REC are least-developed countries, which have no incentive to participate in reciprocal negotiations with the EU. This explains why the union’s EPAs have limited scope even when they carry the name of the REC. For example, the EPA with the Southern African Development Community only includes six of its 16 member states . In other instances, the union has negotiated EPAs with a group of countries that does not correspond to the REC, such as eastern and southern Africa.

Its first phase, which took effect in January 2021, would gradually eliminate tariffs on 90 percent of goods and reduce barriers to trade in services. That could raise income by 7 percent, or $450 billion, by 2035, reducing the number of people living in extreme poverty by 40 million, to 277 million, according to a World Bank report published in 2020. This study examines the impact of the African Growth and Opportunity Act using the synthetic control method, a quasi-experimental approach. The novelty in the approach is that it addresses problems of estimation that are prevalent in nonexperimental methods used to analyze the impact of preferential trade agreements.

How Africa’s free trade area is an opportunity for recovery and development

The negotiations and reforms that 54 African countries are undertaking through the AfCFTA integration process will inevitably influence their commitment in future FTAs with the EU, as well as with other members of the WTO under the multilateral trade regime. Agenda 2063 places great import in the role that trade plays in developing economies and recognises that trade is a powerful engine for economic growth and development. The challenges arising from continually fluctuating commodities prices and Africa’s limited value addition to its natural resources renders Africa vulnerable to the external shocks derived from export dependency. The EU can help improve connectivity in Africa by investing in both the soft elements of infrastructure, such as the provision of services and their regulatory underpinnings, and physical infrastructure.

The findings show that most of the eligible countries registered gains in exports due to the African Growth and Opportunity Act. Second, the EU should also develop an effective friend-shoring strategy with African partners, even as it pushes for an expansion of intra-bloc supply chains. Again, it is paramount that African policy makers take the lead and justify the importance of entering into a strong friend -shoring relationship with the EU. This is because US and EU friend-shoring initiatives heavily favour Asian and Indo-pacific partners.

The EU needs to unify its trading regimes with African countries and ensure they are consistent with the AfCFTA. This undertaking should focus on the revision of rules of origin – which is particularly What is Africa Trading Chain timely given that the AfCFTA negotiations on this issue will conclude in the coming months. Harmonised rules of origin would be an important building block of the traditional trade agenda.

ODI’s researchers found that the EU and the UK are important for the integration of African firms into global supply chains – and that the pandemic’s impact of African trade is closely linked to how fast their production and trade recover. In contrast, Chinese economic recovery is likely to have a less significant direct effect. Therefore, by providing capacity-building in the form of exchanges of experiences and peer learning, the EU can work with these states to develop a joint understanding of how regulatory cooperation would benefit Africa.