Common African tariff policy plan on the way

The African Continental Free Trade Area (AfCFTA) secretariat will soon finalise a plan for a common tariff policy among all signatories to the agreement.

According to a report seen by Business Day from the secretariat of the AfCFTA, “significant progress has been made on the regulatory frameworks” especially for communications and financial services, “which aim to enhance market predictability and transparency”.

This includes an implementation plan about the “rules of origin,” common procedures in determining the eligibility of products to the AfCFTA and the “granting of tariff preferences” as provided for under the agreement.

Once this has been done, it is expected to encourage crossborder digital payments and data transfers and “developing the protocol on intellectual property rights” as mandated by the 36th ordinary session of the assembly of the AU.

“These drafts are in the final review stages, with comments due by (end) November and are (then) scheduled for presentation,” the report reads.

The report further states that once the communications and financial services road map is in place, work will begin in earnest on “transport frameworks and” . tourism services

The report was presented to the AfCFTA council of ministers this month in Addis Ababa, Ethiopia.

The ministers are understood to have received an update on the status of implementation of tariff preferences.

AMBITIOUS INITIATIVE

Nineteen AfCFTA countries have gazetted their tariff preferences on the initial 90% coverage of tariff books.

SA and other Southern African Customs Union (Sadc) countries are expected to be able to boost trade soon with the countries outside the region, including Algeria, Egypt, Kenya and Rwanda.

The AfCFTA is an ambitious economic initiative of the AU that seeks to address the challenge of Africa’s low level of participation in the global economy and world trade.

It is anchored on the development integration approach, which places emphasis on market integration, infrastructure development, and industrial development, to boost intraAfrica trade and support sustainable economic growth.

The AfCFTA, as one of the flagship projects of the AU’s Agenda 2063, aims to build an integrated African market of more than 1.2-billion people with a combined GDP of about $3.4-trillion.

LOWERING COSTS

If that is successful, the AfCFTA secretariat says that the 2035 volume of total exports is expected to increase by $560bn (29%) with intra-Africa exports increasing 81% and exports outside the continent 19%.

While some of the benefits of the AfCFTA would be derived from reduced tariffs, the biggest gains are expected from lowering trade costs by reducing nontariff barriers and improving hard and soft infrastructure at the borders.

This is significant given Reserve Bank governor Lesetja Kganyago’s warning last week that the brighter outlook for inflation in the country could be short-lived in light of global geopolitical tensions and the protectionist policies of the incoming US president-elect Donald Trump’s administration.

“There is, however, a rise of protectionism about the globe and there is a concern that the protectionism that we are seeing could impact global trade, and global trade is the lifeblood of the global economy,” Kganyago said.