The Southern African Customs Union (Sacu) has two weeks to agree on the liberalisation of 90% of its 7834 tariff lines for the African Continental Free Trade Area (AfCFTA). It has agreed on 85.7%, but negotiators have not reached agreement on about 1120 or 14.3%. Member states that have ratified the AfCFTA have until the end of November to hand over a list of the tariff lines that they will liberalise under the agreement. This must constitute at least 90% of their tariff lines. By early 2020 another 7% of the remaining 10% of tariff lines need to be added to the list, immediately liberalising a total of 97% of a country’s tariff lines under this free trade agreement. Under the AfCFTA countries will have the right to exclude 3% of their tariff lines from the agreement. This differs from the Tripartite Free Trade Agreement (TFTA) that calls for 100% liberalisation. According to Trudi Hartzenberg of Tralac, preferential trade liberalisation is the reason behind a free trade area (FTA), where member countries scrap import tariffs and quotas among themselves on most traded goods in order to confer a competitive advantage on firms within the FTA. To qualify for these preferences, firms within the FTA must meet rules of origin requirements. Concerns over the AfCFTA remain with regard to the inclusion or exclusion of tariff lines because of the currently low levels of intra-continental trade. “Even if only 3% is excluded and 90% of a country’s trade is liberalised, trade can still be blocked as there is so little diversification on the continent,” said Anton Faul, senior trade adviser at the Namibian Agricultural Trade Forum. “Some countries only trade one product with each other and liberalising the bulk of their tariff lines won’t have any impact if that product is considered sensitive and is then placed in the 3% category for example.” Faul said it was therefore essential to not just look at tariff lines, but the value of trade also had to be included in conversations around trade liberalisation. He said this was acknowledged on a continental level and the AfCFTA had therefore introduced provisions of double qualification and anti-concentration in particular to ensure those areas in any given country where most or all of the trade took place, were not excluded from the liberalisation. “This is a very clever move and will be used to open trade on the continent,” he said. The AfCFTA is expected to boost intra-African trade by 33% once full tariff liberalisation is implemented.
INSERT: Preferential trade liberalisation is the reason behind a free trade area. – Trudi Hartzenberg