By Prince I. Nwafuru, MCIArb (UK)
![image](/2020/10/lawreport.jpg")
The fears around the issue of dumping and border security should
not outweigh the huge benefits that AfCFTA offers to the
member-states.
![image](/2021/01/payne-alex.jpg")
The Agreement (the “Agreement”) establishing
the African Continental Free Trade Area (the
“AfCFTA”) has continued to generate discussions
following the commencement of trading under the new economic bloc.
The Agreement was signed on 21 March 2018 at the Extra-Ordinary
Summit of the African Union held in Kigali Rwanda and came into
force on 30 May 2019 after the Gambia became the
22nd State to ratify it.
Nigeria signed the Agreement on 7th July 2019
and after initial dilly-dallying, ratified it in November 2020
leading to the formal deposit of the Instrument of ratification
before the 05 December 2020 submission deadline. Paradoxically,
Nigeria (34th member State to ratify the treaty)
who was at the forefront of developing and negotiating the AfCFTA
Agreement later became jittery at the point of ratification. The
initial hesitation has been explained on the basis that prior
consultation with the manufacturing community and other
stakeholders was needed before ratification.
COVID-19 pandemic delayed the phase 2 negotiations and
commencement of trading under AfCFTA which was earlier scheduled to
start on 1st of July 2020. Trading eventually
kicked off on 1st January 2021 and it is too early
to assess the impact of trading yet particularly as some countries
are yet to ratify the treaty. The AfCFTA has been lauded as a
game-changer and ambitious project capable of lifting over 30
million people out of poverty on the continent, through trade
liberalization and economic integration in line with the Pan
African Vision (Agenda 2063) of an integrated, prosperous and
peaceful Africa.
In terms of structure, the main Agreement is divided into 7
Parts and 30 Articles. In addition, there are Protocols, Annexes
and Appendices which equally form part of the AfCFTA Agreement.
Three of these Protocols are (i) the Protocol on Trade in Goods
(ii) the Protocol on Trade in Services, and (iii) the Protocol on
Rules and Procedures on the Settlement of Disputes. Article 8 of
the Agreement is to the effect that the Protocols, Annexes and
Appendices shall, upon adoption, form integral of the
Agreement.
Read Also: AfCFTA:
NESG advises FG to strengthen domestic value chains[1]
The Phase Two Negotiations for both Trade in Goods and Trade in
Services include (i) the Protocol on Investment (ii) the Protocol
on Intellectual Property and (iii) the Protocol on Competition
Policy as well as the associated Annexes and Appendices. As common
with most treaties, the AfCFTA Agreement is expected to be organic
as future amendments and updates are possible, provided that any
additional instruments deemed necessary are to be concluded in
furtherance of the objectives of AfCFTA and shall upon adoption,
form an integral part of the Agreement.
Modelled after the principles of the World Trade
Organization/General Agreement on Tariffs and Trade and General
Agreement on Trade in Services (WTO/GATT/GATS), the AfCFTA has some
of the trappings of custom union and common market even though one
of the AfCFTA objectives is the creation of Continental Customs
Union at a later stage. Conceptually, economic integration is
broadly classified into five stages, viz: free trade area, Custom
union, Common market, Economic union (single market) and Political
union.
One key feature of Custom Union being the acceptance of a
unified external common tariff against non-members. The European
Union presents a unique example of the Customs Union through the
instrumentality of the Union Customs Code which applies a uniform
tariff system for imports from outside the EU. Unlike the Custom
Union, the AfCFTA under its rules on Most-Favoured-Nation Treatment
allows member States to conclude or maintain preferential trade
arrangements including different tariff arrangements with Third
Parties provided that such trade arrangements do not impede or
frustrate the objectives of the Protocol on Trade in Goods. By
default, WTO member countries trade based on conditions laid down
under GATT. It is in a bid to address the tariff and
non-tariff barriers existing under the WTO, that some regions have
opted for more favourable trade deals as seen in Europe, Asia,
North America and now Africa.
As with any WTO-based trade treaty, there are key non-exhaustive
underlying principles that underpin the AfCFTA. Some of these
principles will form the subject of our discussions in subsequent
publications. These include (i) the Most-Favoured-Nation Treatment
and (ii) the Rules of Origin. Whilst the former mandates the State
Parties to accord preferential treatment to one another, the latter
spells out criteria for goods that will be eligible for
preferential treatment under the AfCFTA. Equally important is the
Anti-dumping and Countervailing Measure which provides trade
remedies and remedial actions against imports which are detrimental
to local industries. In relation to the Trade in Services, the
Most-Favoured Nation exemptions afford State Parties a margin of
leeway to exclude certain sectors or sub-sectors from their
Schedule of Commitments and limit market access to those sectors or
sub-sectors.
Key Objectives
The overarching objective behind the AfCFTA is the elimination
or reduction of tariff and non-tariff barriers amongst the 54
Countries that agreed to be members of the bloc by providing a
single market for goods and services, facilitated by movement of
persons in order to deepen the economic integration and prosperity
of the African continent. This key objective is to be achieved
through successive rounds of negotiations that are to be done in
phases.
In specific terms, the Agreement also seeks to (i) lay the
foundation for the establishment of a Continental Customs Union;
(ii) promote and attain sustainable and inclusive socio-economic
development, gender equality and structural transformation of the
State Parties, (iii) enhance the competitiveness of the economies
of State Parties within the continent and global market, (iv)
promote industrial development through diversification and regional
value chain development, agricultural development and food
security, and resolve the challenges of multiple and overlapping
memberships and expedite the regional and continental integration
processes. In order to actualize these noble objectives, Article 4
of the Agreement mandates State Parties to:
Progressively eliminate tariffs and non-tariff barriers to trade
in goods;
Progressively liberalise trade in services;
Cooperate on investment, intellectual property rights and
competition policy;
Cooperate on all trade-related areas;
Cooperate on customs matters and the implementation of trade
facilitation measures;
Establish a mechanism for the settlement of disputes concerning
their rights and obligations; and
Establish and maintain an institutional framework for the
implementation and administration of the AfCFTA.
There is no doubt that the actualization of these objectives will
put Africa on the part of economic posterity and industrialization.
It is expected that each State Party should demonstrate commitment,
sincerity, and integrity in dealing with other member States. The
success of the European Union and other similar regional trade
blocs has shown that with the right political will and commitment
from member-states, regional trade deals as seen in AfCFTA often
contribute to the economic development of the participating
region.
Benefits
The AfCFTA is the world’s largest free trade zone since the
establishment of the WTO in 1994 and offers a lot of benefits to
member States particularly those with competitive advantage and
enabling infrastructures. Africa has a population of 1.3 Billion
people and a combined GDP of over $2.6 Trillion (more than 6 times
of Nigeria’s GDP). According to the Brookings Institution’s report,
intra-African trade accounts for 17 percent of Africa’s exports
compared to 59 percent in Asia and 69 percent in Europe.
The report projected that the removal of tariffs if well
implemented could boost intra-regional trade up to 50 percent by
2040, from the current 17 percent. Nigeria has a competitive
advantage in a number of sectors and stands in a position to
benefit from the newly enlarged market. This will further increase
investment in the distribution and logistics supply chain as
cross-border trades will spiral up. Nigeria’s increasing
unemployment rate of over 30% which has been made worse by the
pandemic is expected to reduce when trading starts in commercial
quantity.
The AfCFTA will progressively reduce trade tariffs by over 90%
by 2022 and by extension address the increasing inflation and
infrastructural deficits within the continent. Nigeria, being the
largest economy in the continent with strong service sector should
position itself to benefit from the economies of scale that will
follow the localization of industries. Oil refineries, cement,
agriculture, food processing, minerals, banking and financial
services, aviation, information technology and legal services have
been identified as some of the critical sectors where Nigeria has
competitive advantage.
Coronation ads
The fears around the issue of dumping and border security should
not outweigh the huge benefits that AfCFTA offers to the member
States. Rather, this should be a wake-up call for Nigeria to invest
heavily in rail and road transport, port infrastructure, border
security, internal security, electricity, education, and other
enabling infrastructures. The last border closure was largely
attributed to the issue of dumping and security as it was alleged
that Nigeria was amongst other things being swamped with fake and
sub-standard goods mostly from Asian countries through the Benin
Republic.
The AfCFTA Rules of Origin provision is meant to address this,
and it is hoped that the AfCFTA member States should demonstrate
the political will to ensure strict compliance. While the regime of
Trade in Goods appears to be taking shape, particularly with the
commencement of trading early this year, the progressive framework
for the negotiations of specific commitments by the member-states
in the area of Trade in Services, should afford Nigeria the
platform to ensure that the service sectors benefit from the huge
opportunities provided under the AfCFTA.
Written By Prince I. Nwafuru, MCIArb (UK), Lagos, Nigeria
By Prince I. Nwafuru, MCIArb (UK)
The fears around the issue of dumping and border security should
not outweigh the huge benefits that AfCFTA offers to the
member-states.
The Agreement (the “Agreement”) establishing
the African Continental Free Trade Area (the
“AfCFTA”) has continued to generate discussions
following the commencement of trading under the new economic bloc.
The Agreement was signed on 21 March 2018 at the Extra-Ordinary
Summit of the African Union held in Kigali Rwanda and came into
force on 30 May 2019 after the Gambia became the
22nd State to ratify it.
Nigeria signed the Agreement on 7th July 2019
and after initial dilly-dallying, ratified it in November 2020
leading to the formal deposit of the Instrument of ratification
before the 05 December 2020 submission deadline. Paradoxically,
Nigeria (34th member State to ratify the treaty)
who was at the forefront of developing and negotiating the AfCFTA
Agreement later became jittery at the point of ratification. The
initial hesitation has been explained on the basis that prior
consultation with the manufacturing community and other
stakeholders was needed before ratification.
COVID-19 pandemic delayed the phase 2 negotiations and
commencement of trading under AfCFTA which was earlier scheduled to
start on 1st of July 2020. Trading eventually
kicked off on 1st January 2021 and it is too early
to assess the impact of trading yet particularly as some countries
are yet to ratify the treaty. The AfCFTA has been lauded as a
game-changer and ambitious project capable of lifting over 30
million people out of poverty on the continent, through trade
liberalization and economic integration in line with the Pan
African Vision (Agenda 2063) of an integrated, prosperous and
peaceful Africa.
In terms of structure, the main Agreement is divided into 7
Parts and 30 Articles. In addition, there are Protocols, Annexes
and Appendices which equally form part of the AfCFTA Agreement.
Three of these Protocols are (i) the Protocol on Trade in Goods
(ii) the Protocol on Trade in Services, and (iii) the Protocol on
Rules and Procedures on the Settlement of Disputes. Article 8 of
the Agreement is to the effect that the Protocols, Annexes and
Appendices shall, upon adoption, form integral of the
Agreement.
Read Also: AfCFTA:
NESG advises FG to strengthen domestic value chains[1]
The Phase Two Negotiations for both Trade in Goods and Trade in
Services include (i) the Protocol on Investment (ii) the Protocol
on Intellectual Property and (iii) the Protocol on Competition
Policy as well as the associated Annexes and Appendices. As common
with most treaties, the AfCFTA Agreement is expected to be organic
as future amendments and updates are possible, provided that any
additional instruments deemed necessary are to be concluded in
furtherance of the objectives of AfCFTA and shall upon adoption,
form an integral part of the Agreement.
Modelled after the principles of the World Trade
Organization/General Agreement on Tariffs and Trade and General
Agreement on Trade in Services (WTO/GATT/GATS), the AfCFTA has some
of the trappings of custom union and common market even though one
of the AfCFTA objectives is the creation of Continental Customs
Union at a later stage. Conceptually, economic integration is
broadly classified into five stages, viz: free trade area, Custom
union, Common market, Economic union (single market) and Political
union.
One key feature of Custom Union being the acceptance of a
unified external common tariff against non-members. The European
Union presents a unique example of the Customs Union through the
instrumentality of the Union Customs Code which applies a uniform
tariff system for imports from outside the EU. Unlike the Custom
Union, the AfCFTA under its rules on Most-Favoured-Nation Treatment
allows member States to conclude or maintain preferential trade
arrangements including different tariff arrangements with Third
Parties provided that such trade arrangements do not impede or
frustrate the objectives of the Protocol on Trade in Goods. By
default, WTO member countries trade based on conditions laid down
under GATT. It is in a bid to address the tariff and
non-tariff barriers existing under the WTO, that some regions have
opted for more favourable trade deals as seen in Europe, Asia,
North America and now Africa.
As with any WTO-based trade treaty, there are key non-exhaustive
underlying principles that underpin the AfCFTA. Some of these
principles will form the subject of our discussions in subsequent
publications. These include (i) the Most-Favoured-Nation Treatment
and (ii) the Rules of Origin. Whilst the former mandates the State
Parties to accord preferential treatment to one another, the latter
spells out criteria for goods that will be eligible for
preferential treatment under the AfCFTA. Equally important is the
Anti-dumping and Countervailing Measure which provides trade
remedies and remedial actions against imports which are detrimental
to local industries. In relation to the Trade in Services, the
Most-Favoured Nation exemptions afford State Parties a margin of
leeway to exclude certain sectors or sub-sectors from their
Schedule of Commitments and limit market access to those sectors or
sub-sectors.
Key Objectives
The overarching objective behind the AfCFTA is the elimination
or reduction of tariff and non-tariff barriers amongst the 54
Countries that agreed to be members of the bloc by providing a
single market for goods and services, facilitated by movement of
persons in order to deepen the economic integration and prosperity
of the African continent. This key objective is to be achieved
through successive rounds of negotiations that are to be done in
phases.
In specific terms, the Agreement also seeks to (i) lay the
foundation for the establishment of a Continental Customs Union;
(ii) promote and attain sustainable and inclusive socio-economic
development, gender equality and structural transformation of the
State Parties, (iii) enhance the competitiveness of the economies
of State Parties within the continent and global market, (iv)
promote industrial development through diversification and regional
value chain development, agricultural development and food
security, and resolve the challenges of multiple and overlapping
memberships and expedite the regional and continental integration
processes. In order to actualize these noble objectives, Article 4
of the Agreement mandates State Parties to:
Progressively eliminate tariffs and non-tariff barriers to trade
in goods;
Progressively liberalise trade in services;
Cooperate on investment, intellectual property rights and
competition policy;
Cooperate on all trade-related areas;
Cooperate on customs matters and the implementation of trade
facilitation measures;
Establish a mechanism for the settlement of disputes concerning
their rights and obligations; and
Establish and maintain an institutional framework for the
implementation and administration of the AfCFTA.
There is no doubt that the actualization of these objectives will
put Africa on the part of economic posterity and industrialization.
It is expected that each State Party should demonstrate commitment,
sincerity, and integrity in dealing with other member States. The
success of the European Union and other similar regional trade
blocs has shown that with the right political will and commitment
from member-states, regional trade deals as seen in AfCFTA often
contribute to the economic development of the participating
region.
Benefits
The AfCFTA is the world’s largest free trade zone since the
establishment of the WTO in 1994 and offers a lot of benefits to
member States particularly those with competitive advantage and
enabling infrastructures. Africa has a population of 1.3 Billion
people and a combined GDP of over $2.6 Trillion (more than 6 times
of Nigeria’s GDP). According to the Brookings Institution’s report,
intra-African trade accounts for 17 percent of Africa’s exports
compared to 59 percent in Asia and 69 percent in Europe.
The report projected that the removal of tariffs if well
implemented could boost intra-regional trade up to 50 percent by
2040, from the current 17 percent. Nigeria has a competitive
advantage in a number of sectors and stands in a position to
benefit from the newly enlarged market. This will further increase
investment in the distribution and logistics supply chain as
cross-border trades will spiral up. Nigeria’s increasing
unemployment rate of over 30% which has been made worse by the
pandemic is expected to reduce when trading starts in commercial
quantity.
The AfCFTA will progressively reduce trade tariffs by over 90%
by 2022 and by extension address the increasing inflation and
infrastructural deficits within the continent. Nigeria, being the
largest economy in the continent with strong service sector should
position itself to benefit from the economies of scale that will
follow the localization of industries. Oil refineries, cement,
agriculture, food processing, minerals, banking and financial
services, aviation, information technology and legal services have
been identified as some of the critical sectors where Nigeria has
competitive advantage.
Coronation ads
The fears around the issue of dumping and border security should
not outweigh the huge benefits that AfCFTA offers to the member
States. Rather, this should be a wake-up call for Nigeria to invest
heavily in rail and road transport, port infrastructure, border
security, internal security, electricity, education, and other
enabling infrastructures. The last border closure was largely
attributed to the issue of dumping and security as it was alleged
that Nigeria was amongst other things being swamped with fake and
sub-standard goods mostly from Asian countries through the Benin
Republic.
The AfCFTA Rules of Origin provision is meant to address this,
and it is hoped that the AfCFTA member States should demonstrate
the political will to ensure strict compliance. While the regime of
Trade in Goods appears to be taking shape, particularly with the
commencement of trading early this year, the progressive framework
for the negotiations of specific commitments by the member-states
in the area of Trade in Services, should afford Nigeria the
platform to ensure that the service sectors benefit from the huge
opportunities provided under the AfCFTA.
Written By Prince I. Nwafuru, MCIArb (UK), Lagos, Nigeria
Read more afcfta-the-underlying-principles-objectives-and-benefits/