A pilot phase of Facilitated and Guided Trade under the AfCFTA is expected to begin towards the end of September, before the next meeting of the Council of Ministers of Trade. At their meeting held in Accra on 25-26 July, the AfCFTA Council of Ministers announced that this ”initiative seeks to demonstrate that AfCFTA is functioning and send a political message to countries that are yet to submit their provisional schedules of tariff concessions in accordance with agreed modalities.” We briefly review this announcement in a Blog which also examines dispute settlement in the AfCFTA.

The AfCFTA Facilitated and Guided Trade Initiative is designed to facilitate the start of commercially meaningful trade among a group of State Parties of the AfCFTA that ‘have met the minimum requirements for trade under the AfCFTA Agreement’. Since this refers to trade in goods, this is expected to include the submission of a modality-compliant offer of tariff concessions. Details of how trade in this pilot phase will be facilitated and guided are not yet available. Meanwhile negotiations are continuing to complete outstanding issues.
 
We understand that the list of State Parties involved in the pilot phase includes 7 countries – Ghana, Kenya, Rwanda, Tanzania, Egypt, Mauritius and Cameroon – and other State Parties are invited to join the Initiative. A Committee has been established to coordinate and operationalise the activities of the Initiative, and there will be complementary ad hoc Committees in the participating State Parties. A list of products has been identified for the pilot phase. Ceramic tiles, Batteries, Horticulture products, Avocados, Flowers, Pharmaceutical products, Palm Oil, Tea, Rubber, and Components for Air conditioners are included in the list. It is expected that other products will be added to the list.
 
Notably, Kenya, Rwanda and Tanzania belong to the East Africa Community (EAC); these countries, along with Egypt and Mauritius, participate in the free trade area of the Common Market for Eastern and Southern Africa (COMESA). In terms of the principle of preservation of the acquis, the AfCFTA trade regime will exist alongside the regional economic community (REC) trade regimes. The AfCFTA liberalises trade between those State Parties that are NOT trading under preferences. Therefore, trade in the listed products, for example, between Ghana (a member of ECOWAS) and other State Parties in the group (non-ECOWAS members), will take place under this initiative. But for ceramic tiles exported from Egypt to Mauritius, for example, the applicable trade regime remains the COMESA FTA.
 
Industrialisation has become increasingly important in Africa’s trade and integration agenda, as all seek to develop and diversify their productive capacity. In a post-pandemic phase, this takes on even more significance as we need to improve our resilience to future shocks. The impact of the Russia-Ukraine war on Africa’s food security is a case in point. The AfCFTA is now referred to as a Framework for Africa’s Industrialisation. A key focus on continental value chain development anchors this initiative. The automotive and clothing and textile value chains are among the designated priorities, and in collaboration with the automotive industry bodies across the continent, a strategy for a continental automotive value chain is already being developed. We are pleased to share a study of Africa’s clothing and textile trade – both intra-Africa trade and trade with global trade partners. The clothing value chain is a complex demand-driven value chain, and our interest is specifically in a gendered analysis of value chains. This study is a precursor to detailed transaction-level data to better understand the role of women in this value chain. Studies on other value chains will follow.
 
Dispute settlement has been in the trade news headlines, with two notable developments. The Arbitration Panel’s Ruling on the dispute between the European Union (EU) and the Southern African Customs Union (SACU) member states was delivered on 3 August. The dispute was initiated by the EU and concerns the application of a bilateral safeguard measure that SACU imposed on the imports of frozen bone-in cuts of chicken in 2018. Further details are available in the tralac daily news (EU-SACU Poultry Safeguard Measure Arbitration). As soon as the Ruling is available, we will provide a detailed analysis. In another important development, South Africa has initiated a dispute, against the EU, in the World Trade Organisation, related to the EU’s regulations for ‘cold treatment’ of citrus products exported by South Africa to the EU. The first phase will involve consultations between the parties. We’ll provide updates as the process develops.
 
These two disputes are important, as African countries have not been active users of dispute settlement. We see dispute settlement as an important process to provide clarification and legal certainty about key trade issues.
 
We are also pleased to share our ongoing work on trade facilitation, including customs and border management processes, especially the challenges that women traders face. This was the topic of tralac’s webinar at the 2022 Africa Integration Day.


We look very much forward to your feedback.
 
The tralac Team

More recent Publications

Promoting the textiles and clothing value chain: Role of the AfCFTA

Are the COMESA-EAC-SADC Tripartite Transport and Trade Facilitation Programme and the Corridor Trips Monitoring System gaining traction? 

Developments in the European Union’s Carbon Border Adjustment Mechanism Regulations and What they Mean for Vulnerable Third Countries

ILO publication: Trade and decent work: Indicator guide (2021)
 

Southern African Development Community-European Union Economic Partnership Agreement (EPA): Booklet

The SADC-EU EPA is a comprehensive economic partnership agreement between the European Union and South Africa, Botswana, Lesotho, Namibia, Eswatini, and Mozambique. Angola has applied to accede to the EPA. It is a reciprocal trade agreement, meaning that both the EU and the SADC EPA group offer preferential market access to each other; however, the EU provides greater preferential and duty-free access, while the SADC EPA group are allowed to maintain protection of sensitive sectors.

To be eligible for preferential treatment under a trade agreement, a product needs to originate (fully or partially) in a country that is party to the trade agreement. The criteria for what percentage of inputs can be sourced externally depends on the specific rules of origin (RoO) contained in the agreement. The SADC EPA RoO are formulated to support the development of regional value chains and enable producers to source inputs from various other countries without losing free access to the EU.

For more info, download the full booklet (pdf)
 

This booklet has been prepared by tralac and Wesgro, the official tourism, trade and investment promotion agency for Cape Town and the Western Cape. This activity was supported by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ)

* Excludes Ethiopia, Mali and Guinea, for comparison purposes

 

* Excludes Ethiopia, Mali and Guinea, who lost AGOA beneficiary status at the start of 2022.