Implementing the AfCFTA

While the AfCFTA has entered into force with the threshold level of ratifications reached in April 2019, much remains to be done before African countries can fully trade under the terms of the Agreement.

The framework for implementation is still under development. Schedules of concessions for trade in goods, rules of origin and schedules of specific commitments for trade in services are yet to be finalized. Technical work on various guidelines and regulations remains to be completed. Moreover, several of the critical institutions needed to administer the Agreement and monitor its implementation, and the infrastructure needed to ensure effective connectivity among member-countries, are still in the making. All of this will take time and will require significant investments.¹ Operationalizing the AfCFTA²

The ‘operational phase’ of the AfCFTA was launched by an Extraordinary AU Summit in Niamey in July 2019. The Summit decided that technical preparations be finalized to commence the dismantling of tariffs on goods traded under the AfCFTA by 1 July 2020. Accordingly, most states, or where appropriate, regional groupings, are currently at advanced stages of preparing their tariff offers, identifying which products will be liberalized in specified timeframes.

Starting 1 July 2020, tariffs on 90% of goods traded between AfCFTA state Parties are to be reduced in equal annual instalments until they are eliminated within 5 years for non-LDCs and 10 years for LDCs.³ For an additional 7% of ‘sensitive’ goods, tariff cuts will be phased over 10 years for non-LDCs and 13 years for LDCs. A final 3% of ‘excluded’ products will retain their tariffs but will be subject to a review every five years.

As regards rules of origin — a particularly thorny issue in the negotiations and yet so critical to the effective operationalization of the Protocol on Trade in Goods — 90% of the work had been completed by September 2019. The Niamey Summit directed negotiators to submit final schedules of outstanding Rules of Origin to the February 2020 session of the Assembly of the African Union. It is therefore expected that the complete schedules of Rules of Origin will be ready ahead of the 1 July 2020 deadline when tariff liberalization will formally start.

Liberalization of the services market will take longer. The AfCFTA Protocol on Trade in Services sets up the parameters for a first round of negotiations to cover just five sectors, namely business services, communication services, financial services, tourism and travel related services, and transport services, with all other service sectors to be addressed in subsequent negotiations. State Parties also need to negotiate mutual recognition agreements (MRAs) and regulatory cooperation frameworks, which will complement services market liberalization by improving regulatory convergence and harmonization.

1 https://www.chathamhouse.org/expert/comment/african-continental-free-trade-area-could-boost-african-agency-international-trade

2 AU and UNECA (2020). African Continental Free Trade Area: Questions & Answers. Updated (January 2020)

3 The so-called ‘G6’ group of countries (Ethiopia, Madagascar, Malawi, Sudan, Zambia and Zimbabwe) are allowed the extra flexibility of cutting their tariffs on 90% of goods over a longer period of 15 years. This group initially included Djibouti too.

The Niamey Summit also decided that the AfCFTA Secretariat will be established by 31 March 2020 in Accra, Ghana. Finally, it launched five complementary initiatives to support the implementation of the AfCFTA:

a. AfCFTA product-specific rules of origin covering 90 per cent of tariff lines

b. A Continental Online Mechanism for Monitoring, Reporting and Eliminating Non-Tariff Barriers

c. A Pan-African Payments and Settlements System d. An Online Portal for Trade in Goods Tariff Negotiations e. The AU Trade Observatory

AfCFTA obligations checklist

To guide the implementation process, it is expected that all countries will come up with a checklist that describes their obligations and the preparatory steps required to ensure that those obligations are effectively met. Table 5.1 gives an example of such a checklist that the ECA has prepared for Sierra Leone.

Table 5.1. AfCFTA active obligations checklist: An example

Provision Obligation Preparatory steps required

Agreement Establishing the African Continental Free Trade Area Article 7: Phase

• Identify national-level public and private sector stakeholders in each phase II topic

• Coordinate with national-level stakeholders to identify defensive and offensive negotiating interests

• Actively engage in phase II negotiations and review progress with national-level stakeholders

• Ensure ministerial-level participation is budgeted and planned for in trade ministry annual planning

• Designate and budget for, as required, country representation in Committees and Sub-Committees established by the Council of Ministers, including those on goods and services.

• Ensure Permanent Secretary’s participation in Committee of Senior Trade Officials meetings is budgeted and planned for in Trade Ministry annual planning

• Any future trade agreements, commitments and proposed trade measures to be notified to the AfCFTA Secretariat

Article 26:

Registration and Notification

WTO notification • Notify ratification of the AfCFTA agreement to the WTO through the country’s WTO representative in Geneva

Article 28:

Review

Review of the AfCFTA in 2024 • Identify issues concerning the effectiveness of the AfCFTA in preparation for the 5-year review in 2024

Provision Obligation Preparatory steps required

• General obligations requiring no immediate preparatory steps

• Direct Customs to modify tariff books in accordance with the AfCFTA-agreed tariff schedule

• Direct Customs to recognize AfCFTA Rules of Origin

• Provide training, where necessary, to customs officers on AfCFTA Rules of Origin provisions

Annex 2: Rules

• Determine authority to be charged with the issuance of AfCFTA rules of origin

• Direct such authority to share its addresses, stamp specimens and signature with the AfCFTA

Secretariat

• Designate a Customs contact point for cooperating in the prevention and investigation of customs offences and the exchange of customs information, and inform other State Parties of that contact point

Annex 4: Trade

• Nominate a trade facilitation ‘enquiry point’ for traders, and notify the AfCFTA Secretariat of their contact information

• Establish and maintain the National Trade Facilitation Committee

• Ensure that export, import and transit procedures, practical steps, laws, regulations, relevant applied duties, fees and charges, and contact information are available online

• In accordance with Annex 4 of the Protocol on Trade in Goods, ensure that advanced ruling, pre-arrival processing, expedited shipments, uniform documentation, and electronic payment of duties and fees are available for importers as well as providing for procedures for the release of goods prior to the final determination of duties and fees

Provision Obligation Preparatory steps required

• Ensure that post-clearance audits are in place for customs

• Ensure that Authorised Operators measures are available

• Nominate a National Focal Point on Non-Tariff Barriers

• Establish a National Monitoring Committee for identifying, resolving and monitoring Non-Tariff Barriers

• Ensure that the National Focal Point and

Monitoring Committee for Non-Tariff Barriers have been trained on their functions under Annex 5 of the AfCFTA Protocol on Trade in Goods, and in particular Appendix 2 to that Annex

Annex 6:

• Designate a standards liaison focal point

• Promote cooperation between the country’s standards body and those of other State Parties in the development and harmonization of standards, conformity assessment, accreditation and

metrology as well as transparency in technical standards

• Designate a National Focal Point for fulfilling the SPS notification requirements of the AfCFTA

• Ensure appropriate SPS protections

• Recognize the SPS measures of the exporting AfCFTA countries as equivalent, subject to demonstration of validity

• Cooperate over the development and harmonization of SPS measures Annex 8: Transit Provide transit traffic

freedoms

• Authorize a Transitor to prepare AfCFTA Transit Documents for those wishing to transit goods under the AfCFTA to neighbouring countries

• Ensure that customs officials are trained to acknowledge and respect AfCFTA Transit

• General obligations requiring no immediate preparatory measures

• Identify and consult with private and public sector services stakeholders to inform negotiating objectives (this can follow the suggestions of the ECA’s AfCFTA Trade in Services Toolkit)

• Outline (or consolidate in one negotiating document) commitments already made at

autonomous, GATS and regional levels, drawing on existing reviews, such as the 2013 National Study on List of Specific Commitments for the EPA Negotiations on Services

Provision Obligation Preparatory steps required

• Identify additional commitments which could be made – leading to a ‘WTO-plus’ offer consistent with the intent of the AfCFTA

• Validate identified commitments with national stakeholders

Protocol on Dispute Settlement General

Protocol Obligations

Collective Protocol obligations • Engage in consultations, conciliation and mediation, and disputes as and when required in accordance with the obligations and rights under the AfCFTA Agreement

Activity 5.1

How ready is your country to kick off tariff liberalization, starting 1 July 2020? In your answer, consider the following:

a. Has your country drawn up a checklist like that in Table 5.1 above?

b. Have key stakeholders (the business community, consumer associations, traders, etc.) been consulted/informed?

c. Have the authorities done a preliminary assessment of the potential impacts? If so, have any mitigating measures, if necessary, been identified?

d. Are the customs authorities fully cognizant of the process and the new tariff schedules? Have they received appropriate training, if needed?