Economic Integration Forecasting Models General Balance Models Open Economic Agreements Trade Barriers Trade Finance Business Models Trade negotiations The achievement of trade defence policy in Africa will be essential at a time when some of the world`s most developed economies are positioning themselves on the withdrawal of similar blocs and adopting a more protectionist attitude. UNCTAD estimates that governments on the continent will collectively face $4.1 billion in customs revenue per year, or 9.1% of current revenues that some are unlikely to forego. AfCFTA has already attempted to reduce customs revenue losses and adjustment costs by excluding sensitive products from early liberalization. The agreement enshrines Africa`s eight regional economic communities – the regional trading blocs, each of which were created by their own treaty – as „constituent elements“ of afCFTA. Many of the exact details of the agreement are still being worked out, with the various elements of the agreement being discussed and implemented in phases. The first phase of the negotiations focused on the liberalisation of goods and services. Meanwhile, the second phase of the negotiations, which includes investment protocols, competition policy and intellectual property rights, began in February 2019 and is expected to be completed in June 2020. By the end of April, however, negotiations had been delayed due to the Covid 19 pandemic. An important milestone of the agreement was reached in July 2019 at an extraordinary meeting of the AU Assembly.
At the meeting, countries agreed to eliminate tariffs on 90% of goods, with provisions to protect 3% and phase out tariffs on an additional 7% during a night day. You`ve reached the limit of premium items that you can view for free. Agriculture will also benefit from the creation of a more sustainable African food market. Strengthening agricultural trade will also promote agri-processing and other sectoral links with manufacturing. (8) Maria Filipa Seara e Pereira advises the World Bank in the Trade and Regional Integration Unit (ETIRI). It focuses on international trade and international development issues, including modelling, trade policy, trade distribution effects and global value chains. African leaders from 44 African nations met at the African Union summit in Kigali, Rwanda, March 17-21, 2018, and signed the Continental Free Trade Agreement (AfCFTA) for the creation of the world`s largest internal market. The agreement will be the largest trade agreement in history since the creation of the World Trade Organization. (1) Given the significant political consequences of inaction in this area, the top priority of the signatories to the agreement should be to ensure that jobs and businesses are able to adapt to increasing market pressure. The incident during the closure of the border in Nigeria also indicates that specific institutional arrangements will be needed to effectively resolve future trade disputes. These short-term but still considerable transitional costs will remain a challenge for African heads of state and government as they move forward.
Despite the many benefits this agreement will bring, it is expected that not all countries will benefit in the same way from the free trade agreement. While the expected average GDP growth is around 1%, growth in some countries is expected to be above 3%, while in some others, contraction is expected (Chart 5). Chart 6 shows that, in the PSP scenario, fewer countries suffer customs losses of more than 20% than the full scenario of the FREI trade agreement. (6) The abolition of import duties could potentially boost intra-African trade by more than 50%, while a reduction in non-tariff barriers will double the volume of trade, notes the Economic Commission for Africa (ECA).