African Continental Free Trade Agreement

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African Continental Free Trade Agreement (AfCFTA)
AfricanContinentalFreeTradeArea.svg
Status as of 7 July 2019
  Ratifying parties
  Signed March 2018, not ratified
  Signed July 2018 or later, not ratified
Type Trade agreement
Signed21 March 2018
Location Kigali, Rwanda
Effective30 May 2019
ConditionRatification by 22 states
Original
signatories
Signatories
Parties
Depositary African Union Commission
Languages English, French, Portuguese, Arabic, Spanish

The African Continental Free Trade Agreement (AfCFTA) is a trade agreement which is in force between 27 African Union member states. [1] [8] [9] [10] It was signed in Kigali, Rwanda, on 21 March 2018. As of July 2019, 54 states have signed the agreement. [11] Ratification by 22 countries was required for the AfCFTA to enter into force and the African Continental Free Trade Area to become effective. The agreement will function as an umbrella to which protocols and annexes will be added.

Trade agreement wide ranging taxes, tariff and trade treaty

A trade agreement is a wide-ranging taxes, tariff and trade treaty that often includes investment guarantees. It exists when two or more countries agree on terms that helps them trade with each other. The most common trade agreements are of the preferential and free trade types are concluded in order to reduce tariffs, quotas and other trade restrictions on items traded between the signatories.

African Union Supranational union

The African Union (AU) is a continental union consisting of 55 member states located on the continent of Africa, with exception of various territories of European possessions located in Africa. The AU was announced in the Sirte Declaration in Sirte, Libya on 9 September 1999, calling for the establishment of the African Union. The bloc was founded on 26 May 2001 in Addis Ababa, Ethiopia and launched on 9 July 2002 in South Africa. The intention of the AU is to replace the Organisation of African Unity (OAU), established on 25 May 1963 in Addis Ababa by 32 signatory governments. The most important decisions of the AU are made by the Assembly of the African Union, a semi-annual meeting of the heads of state and government of its member states. The AU's secretariat, the African Union Commission, is based in Addis Ababa.

African Continental Free Trade Area African trade bloc

The African Continental Free Trade Area (AfCFTA) is a free trade area, outlined in the African Continental Free Trade Agreement among 54 of the 55 African Union nations. The free-trade area is the largest in the world in terms of participating countries since the formation of the World Trade Organization.

Contents

Negotiations continued in 2018 with Phase II, including Competition Policy, Investment and Intellectual Property Rights. A draft shall be submitted for the January 2020 AU Assembly. [12]

Kenya and Ghana were the first countries to deposit the ratification instruments on 10 May 2018, after ratification through their parliaments. [3] With ratification by Sierra Leone and the Sahrawi Republic on 29 April 2019, the threshold of 22 ratifying states for the free trade area to formally exist was reached. [2] As a result, the AfCFTA came into force on 30 May 2019. Outstanding issues like the trade concession agreements and rules of origin remain under negotiation. On 7 July 2019, at a summit in Niger, the AfCFTA entered its operational phase. [13] [14]

Kenya republic in East Africa

Kenya, officially the Republic of Kenya, is a country in Africa with 47 semiautonomous counties governed by elected governors. At 580,367 square kilometres (224,081 sq mi), Kenya is the world's 48th largest country by total area. With a population of more than 52.2 million people, Kenya is the 27th most populous country. Kenya's capital and largest city is Nairobi while its oldest city and first capital is the coastal city of Mombasa. Kisumu City is the third largest city and also an inland port on Lake Victoria. Other important urban centres include Nakuru and Eldoret.

Ghana Republic in West Africa

Ghana, officially the Republic of Ghana, is a country located along the Gulf of Guinea and Atlantic Ocean, in the subregion of West Africa. Spanning a land mass of 238,535 km2 (92,099 sq mi), Ghana is bordered by the Ivory Coast in the west, Burkina Faso in the north, Togo in the east and the Gulf of Guinea and Atlantic Ocean in the south. Ghana means "Warrior King" in the Soninke language.

Sierra Leone republic in West Africa

Sierra Leone, officially the Republic of Sierra Leone, informally Salone, is a country on the southwest coast of West Africa. It is bordered by Liberia to the southeast and Guinea to the northeast. Sierra Leone has a tropical climate, with a diverse environment ranging from savanna to rainforests, and a total area of 71,740 km2 (27,699 sq mi) and a population of 7,075,641 as of the 2015 census. The capital and largest city is Freetown, and the country is divided into five administrative regions, which are further subdivided into sixteen districts.

History

Background

In 1963, the Organization of African Unity (OAU) was founded by the independent states of Africa. The OAU aimed to promote cooperation between African states. The 1980 Lagos Plan of Action was adopted by the organization. The plan suggested Africa should minimize reliance upon the West by promoting intra-African trade. This began as the creation of a number of regional cooperation organizations in the different regions of Africa, such as the Southern African Development Coordination Conference. Eventually this led to the Abuja Treaty in 1991, which created the African Economic Community, an organization that promoted the development of free trade areas, customs unions, an African Central Bank, and an African common currency union. [15] [16]

The Lagos Plan of Action was an Organisation of African Unity-backed plan to increase Africa's self-sufficiency. The plan aimed to minimized Africa's links with Western countries by maximizing Africa's own resources.

The Southern African Development Coordination Conference (SADCC), the forerunner of the Southern African Development Community (SADC), was a memorandum of understanding on common economic development signed in Lusaka, Zambia, on 1 April 1980. It is formalised as the Lusaka Declaration ratified by the nine signing states. Some of the main goals for the Member States were to be less dependent on apartheid South Africa and to introduce programmes and projects which would influence the Southern African countries and whole region.

African Economic Community international organization

The African Economic Community (AEC) is an organization of African Union states establishing grounds for mutual economic development among the majority of African states. The stated goals of the organization include the creation of free trade areas, customs unions, a single market, a central bank, and a common currency thus establishing an economic and monetary union.

In 2002, the OAU was succeeded by the African Union (AU), which had as one of its goals to accelerate the "economic integration of the continent". [17] A second goal was to "coordinate and harmonize the policies between the existing and future Regional Economic Communities for the gradual attainment of the objectives of the Union." [18] At the 2012 African Union summit in Addis Ababa, leaders agreed to create a new Continental Free Trade Area by 2017. At the 2015 AU summit in Johannesburg, the summit agreed to commence negotiations. This began a series of ten negotiating sessions which took place over the next three years. [15] [19]

Addis Ababa Capital in Ethiopia

Addis Ababa is the capital and largest city of Ethiopia. According to the 2007 census, the city has a population of 2,739,551 inhabitants.

Johannesburg Place in Gauteng, South Africa

Johannesburg is the largest city in South Africa and one of the 50 largest urban areas in the world. It is the provincial capital and largest city of Gauteng, which is the wealthiest province in South Africa. While Johannesburg is not one of South Africa's three capital cities, it is the seat of the Constitutional Court. The city is located in the mineral-rich Witwatersrand range of hills and is the centre of large-scale gold and diamond trade.

2018 Kigali Summit

In 2018, at the 10th Extraordinary Session of the African Union on AfCFTA, three separate agreements were signed: the African Continental Free Trade Agreement, the Kigali Declaration; and the Protocol on Free Movement of Persons. The Protocol on Free Movement of Persons seeks to establish a visa-free zone within the AfCFTA countries, and support the creation of the African Union Passport. [20] At the summit in Kigali on 21 March 2018, 44 countries signed the AfCFTA, 47 signed the Kigali Declaration, and 30 signed the Protocol on Free Movement of People. While a success, there were two notable holdouts: Nigeria and South Africa, the two largest economies in Africa. [21] [22] [23]

African Union Passport Common passport document for citizens of African Union memeber states

The African Union Passport is a common passport document that is set to replace existing nationally-issued African Union member state passports and exempt bearers from having to obtain any visas for all 55 states in Africa. It was launched on July 17, 2016 at the 27th Ordinary Session of the African Union that was held in Kigali in Rwanda by Rwandan President Paul Kagame and Chadian President Idriss Déby. As of June 2018, the passport was planned to be rolled out and ready for use at borders worldwide by 2020.

Kigali Capital city in Kigali Province, Rwanda

Kigali is the capital and largest city of Rwanda. It is near the nation's geographic centre. The city has been Rwanda's economic, cultural, and transport hub since it became capital at independence in 1962. The city hosts the main residence and offices of the President of Rwanda and government ministries. The city is within the province of Kigali City, which was enlarged in January 2006, as part of local government reorganisation in the country. Kigali's city limits cover the whole province; it is consolidated. The city's urban area covers about 70% of the municipal boundaries.

Nigeria Federal republic in West Africa

Nigeria, officially the Federal Republic of Nigeria, is a country in West Africa, bordering Niger in the north, Chad in the northeast, Cameroon in the east, and Benin in the west. Its coast in the south is located on the Gulf of Guinea in the Atlantic Ocean. The federation comprises 36 states and 1 Federal Capital Territory, where the capital, Abuja, is located. The constitution defines Nigeria as a democratic secular state.

One complicating factor in the negotiations was that Africa had already been divided into eight separate free trade areas and/or customs unions, each with different regulations. [note 1] These regional bodies will continue to exist; the African Continental Free Trade Agreement initially seeks to reduce trade barriers between the different pillars of the African Economic Community, and eventually use these regional organizations as building blocks for the ultimate goal of an Africa-wide customs union. [15] [23] [24] [25]

Declarations signed at the 2018 Kigali summit [26]
CountrySigned ByafCFTA Consolidated Text (signature)Kigali DeclarationFree Movement Protocol
Flag of Algeria.svg  Algeria Prime Minister Ahmed Ouyahia YesYesNo
Flag of Angola.svg  Angola President João Lourenço YesYesYes
Flag of the Central African Republic.svg  Central African Republic President Faustin Archange Touadéra YesYesYes
Flag of Chad.svg  Chad President Idriss Déby YesYesYes
Flag of the Comoros.svg  Comoros President Azali Assoumani YesYesYes
Flag of Djibouti.svg  Djibouti President Ismaïl Omar Guelleh YesYesNo
Flag of Equatorial Guinea.svg  Equatorial Guinea Prime Minister Francisco Pascual Obama Asue YesYesYes
Flag of Eswatini.svg  Eswatini Prime Minister Barnabas Sibusiso Dlamini YesYesNo
Flag of Gabon.svg  Gabon President Ali Bongo Ondimba YesYesYes
Flag of The Gambia.svg  Gambia President Adama Barrow YesYesYes
Flag of Ghana.svg  Ghana President Nana Akufo-Addo YesYesYes
Flag of Cote d'Ivoire.svg  Ivory Coast Vice President Daniel Kablan Duncan YesNoNo
Flag of Kenya.svg  Kenya President Uhuru Kenyatta YesYesYes
Flag of Lesotho.svg  Lesotho Prime Minister Tom Thabane NoYesYes
Flag of Mauritania.svg  Mauritania President Mohamed Ould Abdel Aziz YesYesYes
Flag of Morocco.svg  Morocco Prime Minister Saadeddine Othmani YesNoNo
Flag of Mozambique.svg  Mozambique President Filipe Nyusi YesYesYes
Flag of Niger.svg  Niger President Mahamadou Issoufou YesYesYes
Flag of the Republic of the Congo.svg  Republic of the Congo President Denis Sassou Nguesso YesYesYes
Flag of Rwanda.svg  Rwanda President Paul Kagame YesYesYes
Flag of the Sahrawi Arab Democratic Republic.svg  Sahrawi Arab Democratic Republic President Brahim Ghali YesYesNo
Flag of Senegal.svg  Senegal President Macky Sall YesYesYes
Flag of the Seychelles.svg  Seychelles Vice President Vincent Meriton YesYesNo
Flag of South Africa.svg  South Africa President Cyril Ramaphosa NoYesNo
Flag of Sudan.svg  Sudan President Omar al-Bashir YesYesYes
Flag of Tanzania.svg  Tanzania Prime Minister Kassim Majaliwa NoYesNo
Flag of Uganda.svg  Uganda President Yoweri Museveni [27] YesYesYes
Flag of Zimbabwe.svg  Zimbabwe President Emmerson Mnangagwa YesYesNo

Ratification

After the Kigali summit, more signatures were added to the AfCFTA. At the African Union summit in Nouakchott on 1 July 2018, five more nations joined the agreement, including South Africa. Kenya and Ghana were the first nations to ratify the agreement, depositing their ratifications on 10 May 2018. Of the signatories, 22 needed to ratify the agreement for it to come into effect, and this occurred on 29 April 2019 when both Sierra Leone and the Saharawi Arab Democratic Republic ratified the agreement. As a result, the agreement came into force 30 days later on 30 May 2019; at this point, only Benin, Nigeria, and Eritrea had not signed. Eritrea was not part of the initial agreement due to an ongoing state of war, but the 2018 peace agreement between Ethiopia and Eritrea ended the conflict and ended the barrier to Eritrean participation in the free trade agreement. [8] [23] [28] [29] [30] The unrecognized state of Somaliland was not a party to the discussions related to the creation of the agreement.

The 12th Extraordinary Session of the African Union on AfCFTA was called to launch the new agreement, which was hosted in Niamey on 7 July 2019. At this summit, Benin and Nigeria signed the agreement, leaving Eritrea as the only African state not a part of this agreement; Eritrea has since asked to join the agreement. Gabon and Equatorial Guinea also deposited their ratifications at this summit. At the date of the launch, there were 27 states who had ratified the agreement. [8] [28] [30] [31] [32]

Partner states

As of July 2019, 54 of the 55 African Union states had signed the agreement, with Eritrea the only country not signing the agreement. Of these member states 27 have deposited their instrument of ratification. [33] [34] The 27 countries that have deposited their instruments of AfCFTA ratification with the AUC Chairperson are Ghana, Kenya, Rwanda, Niger, Chad, Congo Republic, Djibouti, Guinea, Eswatini, Mali, Mauritania, Namibia, South Africa, Uganda, Ivory Coast (Côte d’Ivoire), Senegal, Togo, Egypt, Ethiopia, The Gambia, Sierra Leone, Saharawi Republic, Zimbabwe, Burkina Faso, São Tomé and Príncipe, Gabon, and Equatorial Guinea. [34]

Ratification Status of African Nations [33]
CountrySignedDate of SigningRatifiedDate of Ratification
Flag of Algeria.svg  Algeria YesMarch 21, 2018No
Flag of Angola.svg  Angola YesMarch 21, 2018No
Flag of Benin.svg  Benin YesJuly 7, 2019No
Flag of Botswana.svg  Botswana YesFebruary 10, 2019No
Flag of Burkina Faso.svg  Burkina Faso YesMarch 21, 2018YesMay 27, 2019
Flag of Burundi.svg  Burundi YesJuly 2, 2018No
Flag of Cameroon.svg  Cameroon YesMarch 21, 2018No
Flag of the Central African Republic.svg  Central African Republic YesMarch 21, 2018No
Flag of Cape Verde.svg  Cape Verde YesMarch 21, 2018No
Flag of Chad.svg  Chad YesMarch 21, 2018YesJune 29, 2018
Flag of Cote d'Ivoire.svg  Ivory Coast YesMarch 21, 2018YesNovember 13, 2018
Flag of the Comoros.svg  Comoros YesMarch 21, 2018No
Flag of the Republic of the Congo.svg  Republic of the Congo YesMarch 21, 2018YesFebruary 7, 2019
Flag of the Democratic Republic of the Congo.svg  Democratic Republic of the Congo YesMarch 21, 2018No
Flag of Djibouti.svg  Djibouti YesMarch 21, 2018YesFebruary 5, 2019
Flag of Egypt.svg  Egypt YesMarch 21, 2018YesFebruary 27, 2019
Flag of Equatorial Guinea.svg  Equatorial Guinea YesMarch 21, 2018YesJune 28, 2019
Flag of Eritrea.svg  Eritrea NoNo
Flag of Eswatini.svg  Eswatini YesMarch 21, 2018YesJune 21, 2018
Flag of Ethiopia.svg  Ethiopia YesMarch 21, 2018YesMarch 23, 2019
Flag of Gabon.svg  Gabon YesMarch 21, 2018YesJuly 2, 2019
Flag of The Gambia.svg  Gambia YesMarch 21, 2018YesApril 11, 2019
Flag of Ghana.svg  Ghana YesMarch 21, 2018YesMay 7, 2018
Flag of Guinea.svg  Guinea YesMarch 21, 2018YesJuly 31, 2018
Flag of Guinea-Bissau.svg  Guinea-Bissau YesFebruary 8, 2019No
Flag of Kenya.svg  Kenya YesMarch 21, 2018YesMay 6, 2018
Flag of Lesotho.svg  Lesotho YesJuly 2, 2018No
Flag of Liberia.svg  Liberia YesMarch 21, 2018No
Flag of Libya.svg  Libya YesMarch 21, 2018No
Flag of Madagascar.svg  Madagascar YesMarch 21, 2018No
Flag of Malawi.svg  Malawi YesMarch 21, 2018No
Flag of Mali.svg  Mali YesMarch 21, 2018YesJanuary 11, 2019
Flag of Mauritania.svg  Mauritania YesMarch 21, 2018YesJanuary 31, 2019
Flag of Mauritius.svg  Mauritius YesMarch 21, 2018No
Flag of Morocco.svg  Morocco YesMarch 21, 2018No
Flag of Mozambique.svg  Mozambique YesMarch 21, 2018No
Flag of Namibia.svg  Namibia YesJuly 2, 2018YesJanuary 25, 2019
Flag of Niger.svg  Niger YesMarch 21, 2018YesMay 28, 2018
Flag of Nigeria.svg  Nigeria YesJuly 7, 2019No
Flag of Rwanda.svg  Rwanda YesMarch 21, 2018YesMay 25, 2018
Flag of the Sahrawi Arab Democratic Republic.svg  Sahrawi Arab Democratic Republic YesMarch 21, 2018YesApril 27, 2019
Flag of Sao Tome and Principe.svg  São Tomé and Príncipe YesMarch 21, 2018YesMay 28, 2019
Flag of Senegal.svg  Senegal YesMarch 21, 2018YesMarch 12, 2019
Flag of the Seychelles.svg  Seychelles YesMarch 21, 2018No
Flag of Sierra Leone.svg  Sierra Leone YesJuly 2, 2018YesNovember 7, 2018
Flag of Somalia.svg  Somalia YesMarch 21, 2018No
Flag of South Africa.svg  South Africa YesJuly 2, 2018YesJanuary 31, 2019
Flag of South Sudan.svg  South Sudan YesMarch 21, 2018No
Flag of Sudan.svg  Sudan YesMarch 21, 2018No
Flag of Tanzania.svg  Tanzania YesMarch 21, 2018No
Flag of Togo.svg  Togo YesMarch 21, 2018YesJanuary 9, 2019
Flag of Tunisia.svg  Tunisia YesMarch 21, 2018No
Flag of Uganda.svg  Uganda YesMarch 21, 2018YesNovember 20, 2018
Flag of Zambia.svg  Zambia YesFebruary 10, 2019No
Flag of Zimbabwe.svg  Zimbabwe YesMarch 21, 2018YesApril 25, 2019

Implementation

The AfCFTA is set to be implemented in phases, and some of the future phases still under negotiation. [25]

At the Kigali summit, areas of agreement were found on trade protocols, dispute settlement procedures, customs cooperation, trade facilitation, and rules of origin. This was part of Phase I of the agreement, which covers goods and services liberalization. There was also agreement to reduce tariffs on 90% of all goods. Each nation is permitted to exclude 3% of goods from this agreement. [19]

At its launch on July 7, 2019, five operational instruments that will govern the AfCFTA were activated: "the rules of origin; the online negotiating forum; the monitoring and elimination of non-tariff barriers; a digital payment system; and the African Trade Observatory." [35]

Some Phase One issues that remain to be negotiated include the schedule of tariff concessions and other specific commitments. Negotiations are also underway to see which city will host the AfCFTA. [19] [25]

Negotiations for Phase II began in February 2019. These negotiations will cover protocols for competition, intellectual property, and investment. Negotiations on Phase II issues are expected to finish in 2020. [19] [25]

Nigerian opposition

Nigeria was one of the last nations to sign the agreement. At 200 million people, Nigeria is Africa's most populous country and has about the population of the second and third most-populous countries, Ethiopia and Egypt, combined, each of which have a population around 98 million. With a nominal GDP of US$376 billion, or around 17% of Africa's GDP, it is just ahead of South Africa, which accounts for 16% of Africa's economy. Because Nigeria is such a significant country in terms of its population and its economy, its absence at the initial signing of the agreement was particularly conspicuous. South African President Cyril Ramaphosa underscored this in comments on 12 July 2018, saying "The continent is waiting for Nigeria and South Africa. By trading among ourselves, we are able to retain more resources in the continent." South Africa later signed the agreement. [36]

44 countries initially signed the agreement on March 21, 2018. Nigeria was one of 11 African Union nations to avoid initially signing. At the time, Nigerian President Muhammadu Buhari said that Nigeria couldn't do anything that would undermine local manufacturers and entrepreneurs. [37] The Manufacturers Association of Nigeria, which represents 3,000 Nigerian manufacturers, praised the decision to back out of the agreement. [37] The Nigerian foreign minister tweeted that more domestic consultation was needed before Nigeria could sign the agreement. [38] Former president Olusegun Obasanjo said Nigeria's delay was regrettable. [39] The Nigeria Labour Congress called the agreement a "renewed, extremely dangerous and radioactive neo-liberal policy initiative", suggesting increased economic pressure would pressure workers into migration under difficult and unsafe conditions. [40]

On 21 July 2018, five more nations signed the agreement, including South Africa. At that time, the Nigerian government emphasized its non-participation was a delay, not a withdrawal, and promised to soon sign the agreement. [41] As the foreign minister had earlier emphasized, the Nigerian government intended to consult further with local businesses in order to ensure private sector buy-in to the agreement. [42]

As the Nigerian government continued to consult with local business groups in the latter half of 2018, a key concern was whether the agreement adequately prevented anti-competitive practices such as dumping. [43] As 2018 drew to a close, former President Olusegun Obasanjo said the delay was "regrettable", emphasizing the lack of trade in goods amongst African countries, the difficulties in travelling from one African country to another, and the colonial legacy which these restrictions on Africa's growth represented. [44] The government steering committee in charge of the consultative process was due to release its report on the agreement in January 2019. [45]

Nigeria's president announced on 2 July 2019 that Nigeria would sign the AfCFTA in Niger the following week. Nigeria signed the AfCFTA on 7 July 2019. [46]

Notes

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