African Union Free Trade Agreements


The African Union Free Trade Agreements: A Comprehensive Guide

In a bid to create a single market, boost economic growth, and increase intra-African trade, the African Union (AU) has been working on creating Free Trade Agreements (FTAs) for its member states. The latest of these FTAs is the African Continental Free Trade Agreement (AfCFTA), which was signed on March 21, 2018, and came into effect on May 30, 2019.

The AfCFTA is the world`s largest free trade area, covering 54 of the 55 African Union member states, with a combined gross domestic product (GDP) of over $3.4 trillion and a population of 1.2 billion people. The agreement aims to eliminate tariffs on 90% of goods traded between African countries, foster intra-African trade, and promote industrialization, economic diversification, and job creation.

The AfCFTA is built on the pillars of the AU`s Agenda 2063, which seeks to create “an integrated, prosperous, and peaceful Africa, driven by its own citizens and representing a dynamic force in the global arena.” The agreement has a five-phase implementation plan, with the first phase focusing on the immediate liberalization of a selected number of tariff lines and the elimination of non-tariff barriers (NTBs) on trade in goods.

The second phase, which is currently ongoing, aims to liberalize trade in services, including transportation, communication, financial, and professional services. The third phase will focus on competition policy, investment, and intellectual property rights, while the fourth phase will tackle e-commerce, digital trade, and the movement of natural persons. The fifth and final phase will deal with the harmonization of trade rules, customs procedures, and trade facilitation measures.

The AfCFTA is expected to have significant benefits for African economies and businesses. According to the United Nations Economic Commission for Africa (UNECA), the agreement could increase Africa`s intra-regional trade by 52% by 2022, promote industrialization, and create millions of jobs. The AfCFTA could also attract more foreign investment, enhance the competitiveness of African firms, and provide more opportunities for small and medium-sized enterprises (SMEs) to participate in regional and international trade.

However, the AfCFTA also faces some challenges, including the need to coordinate trade policies and regulations across different countries, address infrastructure deficits, and tackle corruption, among others. African governments and businesses need to invest in improving trade-related infrastructure, such as transport, energy, and telecommunications, and enhance the skills and knowledge of their workforce to take advantage of the opportunities presented by the AfCFTA. The private sector also has a role to play in promoting regional value chains and enhancing the competitiveness of African products and services.

In conclusion, the African Union Free Trade Agreements, particularly the AfCFTA, represent a significant step towards integrating African economies and promoting sustainable development. The agreement provides a framework for African countries to work together to unlock the potential of intra-African trade and create a more prosperous and peaceful continent. While challenges exist, the opportunities presented by the AfCFTA are immense, and African governments, businesses, and citizens need to embrace the agreement and work towards its successful implementation.