African Continental Free Trade Agreement (AfCFTA)
The much-anticipated African Continental Free Trade Agreement (AfCFTA) was signed on 30 May 2019. What this means is that as of 7 July 2019 there will be a free-trade zone covering 52 of the African Union’s 55 member countries - these 52 countries account for more than a billion people and a total GDP of over US$2 trillion. The main aims of AfCFTA are to bring about economic integration and enhance intra-continental trade. Where this process will end remains to be seen - a full customs union, a single currency, common laws, a unitary IP regime as in the EU...
There will undoubtedly be problems ahead - in Africa there are serious deficiencies when it comes to infrastructure and skills. But there were very good reasons for African countries to enter this brave new world. At present trade within Africa is tiny - a mere 17% of exports from African countries find their way to other African countries. Differing tariffs and trading laws are regarded as major obstacles to intra-African trade.
One of the standout features of AfCFTA is that member states will be required to drop 90% of their tariffs for African imports. As for the remaining 10%, member states will be able to retain these for a period of 10 years in order to protect their major industries.
But there will be much more to follow. In due course the member states will need to tackle difficult issues such as competition policy and intellectual property. At this stage there is no way of knowing what direction negotiations about intellectual property will take, but commentators have suggested that these will need to take account of, inter alia, the regional registration systems, informal sector innovation and TRIPS flexibilities.
Three countries have yet to sign the agreement - Nigeria, Benin and Eritrea. Nigeria is one of Africa’s largest economies, so its absence is obviously significant. But the latest indications are that Nigeria will also join AfCFTA, now that South Africa has chosen to do so.
contact us for further information