Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1698138571337.pdf (South Africa)
7th ed.

August 2020 Where does the AfCFTA fit in Africa’s development agenda?

The Agreement establishing the African Continental Free Trade Area (AfCFTA) was signed at the 10th Extraordinary Summit of the AU Assembly on 21 March 2018 in Kigali, Rwanda.

The AfCFTA Agreement entered into force on 30 May 2019.

The AfCFTA is the continent’s most ambitious integration initiative.

The AfCFTA is the con- tinent’s most ambitious integration initiative.
The main objectives of the AfCFTA are: • create a single continental market for goods and services, with free move- ment of business persons and investments • expand intra-Africa trade across the regional economic communities and the continent in general • enhance competitiveness and support economic transformation Eight RECs have been officially recognised as building blocs of the AfCFTA: ECCAS, ECOWAS, EAC, SADC, COMESA, AMU, CEN-SAD and IGAD.
Agenda 2063 is Africa's framework for structural transformation.

It builds on and aims to facilitate the implementation of existing continental initiatives (AIDA, PIDA, BIAT and CAADP).

The establishment of the AfCFTA, a single African air transport market (SAATM), and the free movement of people are Agenda 2063 flagship projects.

The AU has adopted legal instruments for the effective implementation of these flagship projects.
Importantly, the UN Agenda 2030's 17 SDGs are incorporated in the 20 goals of Agenda 2063.

By implementing Agenda 2063, Africa will also meet its global com- mitments under the SDGs.

2 PIDA BIAT AIDA CAADP Agenda 2063 Protocol on Free Movement of People SAATM Decision AfCFTA Agreement Yamous- soukro Decision 3 Architecture of the AfCFTA The AfCFTA Agreement is a framework agreement covering Trade in Goods and Services, Investment, Intellectual Property Rights and Competition Policy.
The Protocols on Trade in Goods, Trade in Services, Investment, Intellectual Prop- erty Rights, and Competition Policy, as well as Dispute Settlement, form an integral part of the Agreement.

The Protocols on Trade in Goods and Trade in Services each have several Annexes covering substantive disciplines.

Trade in Goods and Trade in Services are being negotiated in Phase 1; with negotiations on a number of issues (e.g.
tariff concessions, rules of origin for goods and schedules of specific commitments for services) still ongoing.

Phase 2 of the negotiations will cover Investment, Competition Policy and Intellectual Property Rights.

Phase 2 negotiations and the draft texts of the Protocols on Investment, Competition Policy and Intellectual Property Rights are expected to be finalised by December 2020.

* The Assembly has also decided to add e-commerce to the AfCFTA negotiations – AfCFTA Protocol on E-Commerce.
** *Phase 2 Protocols shall enter into force 30 days after the deposit of the 22nd instrument of ratification.

**Decision on the AfCFTA Doc.
Assembly/AU/4(XXXIII) Assembly/AU/Dec.751(XXXIII) available at https://au.int/sites/default/files/decisions/38180-assembly_au_dec_749-795_xxxiii_e.pdf 4 Agreement establishing the AfCFTA Protocol on Trade in Goods Protocol on Trade in Services Protocol on Rules and Procedures on the Settlement of Disputes Protocol on Competition Policy Protocol on Intellectual Property Rights Annexes • Schedules of Specific Commitments • MFN Exemption(s) • Air Transport Services • List of priority sectors • Framework document on Regulatory Cooper- ation Protocol on Investment Phase Two Annexes • Working Procedures of the Panel • Expert Review • Code of Conduct for Arbitrators and Panellists Annexes • Schedules of Tariff Concessions • Rules of Origin • Customs Cooperation and Mutual Administrative Assistance • Trade Facilitation • Non-Tariff Barriers • Technical Barriers to Trade • Sanitary and Phytosanitary Measures • Transit • Trade Remedies: Guidelines on implementation of Trade Remedies 5 Institutions of the AfCFTA The institutions established under the AfCFTA, and their powers, represent a compromise between the typical institutional arrangements of a stand- alone Free Trade Agreement (FTA) and the AfCFTA as a flagship project of the African Union (AU) under Agenda 2063.
The founding Agreement does not state that this arrangement will be a legal person (as is the case in several regional economic communities, including SADC and EAC).

It does provide an institutional architecture for this arrange- ment (shown below).

Notably, the apex institution is the Assembly – this is the Assembly of the African Union.

The Assembly of the African Union comprises all AU Heads of State and Government, not just those of State Parties to the Agreement.
It provides oversight and guidance on the AfCFTA and is the ultimate decision-making body for the AfCFTA.

The Council of Ministers comprises Ministers for Trade or other nominees from State Parties.

It has authority to take decisions in accordance with the AfCFTA Agreement.

and works in collaboration with the relevant AU organs and institutions.
It reports to the Assembly through the Executive Council of the AU and makes recommendations to the Assembly for the adoption of an authoritative interpretation of the Agreement.

It is separate from the African Union Ministers of Trade (AMOT) committee under the AU.

The Committee of Senior Trade Officials consists of Permanent Secretaries or other officials designated by State Parties.

It is responsible for the development of programmes and action plans for the implementation of the AfCFTA Agreement.
The AfCFTA Secretariat is the administrative organ to coordinate the implementation of the AfCFTA.

It is based in Accra, Ghana.

The Parliament of Ghana ratified the Agreement to host the AfCFTA Secretariat on 03 August 2020.

The Dispute Settlement Mechanism replicates, with the necessary adaptations, the WTO dispute settlement system.

The principles and procedures appear in a dedicated Protocol.

Only State Parties will be able to bring applications.

Private party litigation is not possible.


6 7 AfCFTA Committees The Protocols of the AfCFTA Agreement establish various technical com- mittees to assist with the implementation of the Agreement.

The com- mittees will comprise designated representatives from State Parties.

The Committee on Trade in Goods will facilitate the operation of the Protocol on Trade in Goods.

The Committee will establish sub-committees responsi- ble for the operationalisation of the annexes of the Trade in Goods Proto- col.
The Committee on Trade in Services will facilitate the operation of the Protocol on Trade in Services 8 Other AfCFTA initiatives African Trade Observatory: the African Trade Observatory (ATO) aims to create a continent-wide trade information portal to facilitate intra-African trade and to support the roll-out of the AfCFTA.

The ATO will seek to collect trade-related data from member states and provide trade intelligence to both market players and governmental and non-governmental agencies.
The ATO will also include services trade, exchange rate and competitiveness indicators, internal tax data and foreign direct investment data.

The AfCFTA Online Mechanism for Reporting, Moni- toring and Elimination of NTBs* provides a facility for online reporting of identified non-tariff barriers (NTBs) including for reporting via SMS.

Reported NTBs and the status of their resolution can be ac- cessed on the public domain.
Various informative pages on the website, including FAQs, assist in the use of the system.

NTB notifications will be received by the focal points of the reporting country, the re- sponding country and the AfCFTA Secretariat for processing.

In a non-public space, the system then allows information exchange between the concerned State Parties to monitor and resolve NTBs.
*Available at https://tradebarriers.africa/about 9 Intra-African trade at a glance For 2019* intra-African exports were valued at US$69 billion; 15% of Africa’s world exports.
Between 2018 and 2019 intra-Africa exports and Africa’s world exports respectively declined by 5% and 8% • Although South Africa is the main intra-Africa exporter and importer; (accounting for 35% of intra-Africa exports and 17% of intra-Africa imports), South Africa’s intra-Africa trade declined while intra-Africa exports from Nigeria and Zimbabwe and intra-Africa imports by Gha- na and Mozambique increased significantly.
Other main intra-African exporters Nigeria, Egypt, Ivory Coast and Zimbabwe account for 31% of intra-Africa exports.

23% of intra-Africa exports are mineral fuels, followed by exports of machinery, floating structures, vehicles and precious metals.

Apart from South Africa, all other main intra-Africa imports except Ghana are also in southern Africa (Botswana, Mozambique, Namibia and Zambia).

Between 2018 and 2019 Ghana’s intra-Africa imports more than doubled, while Mozambique’s imports increased by 22%.
• • • • The biggest portion of Africa’s world exports of cereals, photographic equipment, arms and ammunitions, printed books and articles of base metals are intra-Africa exports.

* Intra-Africa data is based on the up-to-date trade data from 26 African countries as of the end of August.
10 Sources: ITC TradeMap 2020, tralac calculations 11 Intra-REC trade* For 2019 the share of intra-SACU exports in intra-Africa exports by all African coun- tries is 21% and the respective shares of intra-ECOWAS, intra-EAC and intra-CEMAC exports are 17%, 3% and 0.4%.

Intra-REC exports as a percentage of total African ex- ports by a REC show most countries trade more with their REC counterparts with the exceptions being AMU and ECCAS members.
*Measuring intra-REC trade is complicated by overlapping membership to different RECs and bilateral trade agreements in place.

Accordingly, it is difficult to gauge under which agreement countries are trading with one another.
12 Intra-REC exports as a % of the RECs total intra-Africa exports Sources: ITC Trademap 2020, tralac calculations 13 Agricultural trade In 2019, total intra-African agricultural trade was valued at US$24 billion (US$11.6 billion exports and US$10.7 billion imports) representing some 17% of total intra-African exports and 16% of intra-African imports.
Only 23% of Africa’s total agricultural exports are intra-Africa exports, while only 15% of Africa’s total agricultural imports are sourced from within the continent.

South Africa is the main exporter of agricultural commodities to the rest of the continent, followed by Zimbabwe, Egypt, Kenya and Ivory Coast.

Ivory Coast (mainly cocoa beans) accounts for most of the agricultural exports to beyond the continent, followed by South Africa (citrus & wine) and Egypt (citrus, onions & potatoes).
South Africa, Kenya, Botswana, Namibia and Egypt are the main intra-Africa agricultural importers.

A quarter of agricultural imports African sourced from outside the continent are imports by Egypt, mainly wheat, maize, soya beans and frozen beef.
Main intra-Africa agricultural export products 14 Intra-Africa agricultural trade Sources: ITC Trademap 2020, tralac calculations 15 Trade in Commodities Commodities include both agricultural and non-agricultural goods - intra-Africa com- modity exports for 2019 accounted for 29% of intra-Africa exports.

However, 62% are exports of petroleum oil.

The rest are mainly gold, petroleum gas, ores and con- centrates and limited agricultural commodities*.
Traded commodities include: Energy—natural gas and oil—19% of intra-Africa exports Precious metals—gold—2% of intra-Africa exports Industrial metals—copper, nickel and iron ore—3% of intra-Africa exports Agriculture—including sugar, maize, palm oil and cocoa—5 % of intra- Africa exports Only 1% of cocoa, 6% of iron ore and 5% of petroleum gas remain on the continent.

On the contrary, almost all wheat, oats, live cattle and soybean oil remain on the continent.
Gold is mainly exported by Zimbabwe and Ivory Coast; almost all of which destined for South Africa.

Almost all of the crude petroleum oil exports are by Nigeria, while half of the non-crude exports are from South Africa and Egypt.

Algeria and Mozam- bique account for 82% of intra-Africa petroleum gas exports; 86% of these gas ex- ports are destined for Morocco, South Africa and Egypt.
*Diamonds are excluded here due to it not being a standardised commodity like gold as each diamond has its own cut, clarity, colour & size that determines its value.

Accordingly intra-Africa diamond trade is included under trade in non-commodity and non-agriculture products.
16 Intra-Africa trade in specific commodities Sources: ITC Trademap 2020, tralac calculations 17 Non-commodity, non- agriculture trade Approximately 57% of intra-Africa exports are neither commodities nor agri- cultural products and include flexible tubing, vessels, electrical energy, dia- monds, motor vehicles and cement.
Main intra-Africa export products Sources: ITC Trademap 2020, tralac calculations 18 19 Intra-African tariffs Many African countries trade under the free-trade areas of their regional economic communities (RECs), with reduced or zero tariffs and members of fully fledged customs unions such as SACU trade duty-free with one another.

Tariffs are therefore highest between those countries that do not already have a preferential agreement in place, they trade under the Most Favoured Nation (MFN) terms.
Non-REC intra-Africa tariffs Ethiopia is a member of COMESA, but still in the process of joining (or acceding) to the COMESA FTA.

It also belongs to IGAD which does not have an FTA.

PAFTA and AGADIR members have duty-free access to Egypt’s market, while imports from COMESA (except Eswatini & DRC) are granted preferential access.

CENSAD is not yet an FTA.

20 Kenya is party to 4 RECs in Africa, however, the CENSAD and IGAD preferential arrangements are not yet in force.
Countries that are members of COMESA and the EAC enjoy preferential access into Kenya.

South Africa is a member state of both SACU and SADC.

SACU is a customs union with duty-free intra-SACU trade and a common external tariff applicable to all goods entering from outside the Union.

Nigeria is a member of ECOWAS and CENSAD.

CENSAD is not yet an FTA.

All qualifying goods, under the ECOWAS Trade Liberalisation Scheme (ETLS) imported from approved ECOWAS producers into Nigeria enter duty-free.
21 MFN tariffs for key Goods vehicles Portland cement Refined sugar Copper ores & concen- trates CEMAC CET EAC CET 10 0 10; 20* 0; 10; 25* ECOWAS CET 5 5; 10* SACU CET Algeria Angola Cabo Verde DRC Djibouti Egypt Ethiopia Madagascar Malawi Mauritania Mauritius Morocco 0 5 2 0 5 26 2 5 5 10 5 0 2.5 Tunisia Zambia Zimbabwe 0 0 5 Mozambique 2.5 5 20 25 20 0 15 0; 10; 20; 25* 0; 5* 0; 2; 20; 30; 40* 2; 30* 0; 5; 10; 20* 5 5 26 5; 10; 20; 30* 10; 35* 10 0; 10; 25* 13; 5; 20* 0 5; 10* 13; 26* 0 10 10 10 13; 20* 0 30 100 or US$460/t 20 476.71c/kg 30 20; 30* 5 20 0; 13* 5; 20* 5 10 25 5; 20* 15 2.5; 10; 25* 2.5;10; 17.5* 25; 55; 60* 0; 20* 15; 30 7.5 20 5 7.5 0; 36* 25 5; 10; 25; 40; 60* US$100/t 10% + US$100/t Sources: ITC MacMap 2020 22 intra-Africa imports (%) Maize Articles of iron or steel Beer Trousers Palm oil CEMAC CET 30 10; 20; 30* EAC CET 50 0; 10; 25* ECOWAS CET SACU CET Algeria Angola 5 0 5 5; 10; 20* 5; 10; 15; 20; 30* 5; 15; 30* 30 2; 10; 20;30* Cabo Verde 0; 20* 0; 10; 20* 10 5; 10; 20* 13; 26* DRC Djibouti Egypt Ethiopia 1 0 5 0; 5; 10; 30; 60* 1200 5; 20;35* Madagascar 10 0; 5; 10;20* Malawi Mauritania Mauritius 0 5 0 0; 10; 25* 5; 13; 20* 0; 15* Morocco 2.5 2.5; 10; 17.5; 25* Mozambique 7.5 2.5; 7.5; 20* Tunisia Zambia Zimbabwe 15 15 0 0; 20* 0; 5; 15; 25* 30 25 20 5 60 60 50 20 26 35 20 25 20 15 49 20 36 25 30 35 20 40; 45* 30 10 30 20 13 40 35 20 25 20 0 25 20 20 25 30 25; US$500/t* 10; 35* 10 5; 30* 0 0; 5* 5; 20* 1; 13* 0 20 5; 10* 10; 25* 0; 13* 0 2.5; 25* 20 36 0; 15; 25* *The import tariff varies depending on which specific product at national tariff line level is imported.
23 5; 10; 15; 20; 25; 40; 60; 65* 25; 100* 40% + US$3/kg 5; 15; 40* Trade in Services Between 2018 and 2019 Africa’s services exports declined by 3%, while glob- al services exports increased by 2%.

Implementation of services liberalisation commitments and regulatory reform under the AfCFTA will be critical to achieve the aims of the African integration agenda.

State Parties will schedule commitments in 5 priority sectors: financial services, travel, transport, business services and communi- cations.
Exports—5 priority services sectors (2019) 24 Source: ITC TradeMap 2020, World Bank 2020 & tralac calculations 25 Trade facilitation Improving trade facilitation is essential to improving trade outcomes.

High transport costs, delays, port inefficiencies and cumbersome border proce- dures can have a more negative impact on the trade of goods than any tariffs.

Trading across borders The World Bank Doing Business Index includes a ‘Trading Across Borders’ Score.
The average score of African Union members is 54.88/100.

This has increased slightly (improved) since 2019.

The score is based on 8 indicators of costs of imports and exports and time taken to cross borders.

Top 5 Eswatini Lesotho Botswana Morocco Mauritius Score Bottom 5 Score 92.9 91.9 86.7 85.6 85.6 Eritrea DRC Cameroon Sudan Liberia 0 3.5 16 19 19.2 26 Logistics performance index The World Bank Logistics Performance Index (LPI) is based on a survey of freight forwarders and express carriers.
It ranks countries on customs, international ship- ments, quality and competence, tracking and tracing, timeliness and infrastructure.

A higher score indicates higher performance.

South Africa is the best performing African country, with Angola at 2.05 the lowest scoring African country.

Most of the higher performing countries are located in west Africa, including Ivory Coast, Benin & Burkina Faso.
OECD trade facilitation indicators The OECD trade facilitation indicators assess a range of facilitation areas including information availability, fees and charges, border agency cooperation, governance and impartiality, documents and governance.
Selected country scores for designated measures (out of 2 (best)) Availability of trade- related information Automation of the trade ad- ministration process Good governance—transparency, efficiency & compliance Mauritius 1.714 Mauritius 1.846 Mauritius 1.889 South Africa 1.619 South Africa 1.615 Kenya 1.444 Nigeria 1.05 Kenya 1.462 Cameroon 1.222 Angola 1.105 Senegal 1.25 Togo 1.111 Ghana 0.9 Botswana 1.15 Ghana 0.889 Malawi DRC 0.85 0.15 Ghana 1.083 Ethiopia 0.889 Ivory Coast 0.385 Madagascar 0.778 27 About tralac (Trade Law Centre) tralac is a public benefit organisation based in South Africa.
We develop technical expertise and capacity in trade governance across Africa.

We are committed to the principles of rules-based governance at the national, regional and international levels.

We believe that better governance and strong institutions are essential elements for inclusive and sustainable growth.

tralac’s activities are anchored on three pillars.


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