Geneva panel reflects on benefits Africa’s free trade area

Geneva panel reflects on benefits Africa’s free trade area

Trade

By Andualem Sisay Gessesse – A panel discussion held in Geneva, Switzerland, on Thursday morning discuss about the benefits of the African continental free trade for least developed countries.

The panelists from various African countries and leaders of the private sector as well as international organizations discussed trade policies, regulations, and institutions needed at national levels for the Least Developed Countries (LDCs). The panelists stated that the African Continental Free Trade Area (AfCFTA) ratified by over 44 countries is a historic decision. “The African CFTA is strongly embedded in inclusive economic transformation agenda. In that sense it has really the potential to be transformative in terms of changing the economic structure of the African economies in an inclusive manner,” said Judith Fessehaie, Trade and Development Manager at the International Centre for Trade and Sustainable Development (ICTSD).

“We have heard a lot about SMEs [Small and Micro Enterprises] and about women…At national level we need industrial policies, we need agriculture policies and we also need effective services export strategies,” she said.

The panel also covered issues related to enhancing the economies of scale, structural transformation, diversification, efficiency, and productivity boosts that continental trade would require. Some of the panelists stressed that AfCFTA will boost trade within Africa and help the least Developed Countries in the continent meet the Sustainable Development Goals (SDGs).

“The issue of trade facilitation and non-tariff barriers is at the core of the current agreement itself. These issues are looked at in detail at the current architect of the agreement itself,” said Ally Gugu, from Tanzania, explaining the AfCFTA.

“When any of our ministers or higher officials travels, he/she has that obligation of sensitizing to make sure that AfCFTA is implemented. There is harmonization and coordination not only at local level, but also at regional level,” said Michel Sebera, Permanent Secretary, Ministry of Trade and Industry Rwanda, commenting on the commitment of his country for the implementation of AfCFTA.

Following the signing of AfCFTA protocol of the African Union in Kigali last March, Rwanda and Ghana have become the first two countries to ratify the AfCFTA as law by their national parliaments.

Indicating that Rwanda so far has invested in the development of nine industrial parks across the nation, Mr. Sebera stressed the need for infrastructure and locally produced goods in order to benefit from the AfCFTA.

Other participants of the panel have also underlined that increasing trade between African countries offers great potential for building sustainable economic development and integration, including creating higher-wage jobs and unlocking greater business opportunities.

Commenting on the fear of decreasing revenue as a result of the average trade tariff proposed by AfCFTA, which is between 6% to 15%, David Luke from the United Nations Economic Commission for Africa, said the finance ministers of African countries have agreed in Addis Ababa recently indicating the fact that increase in trade volume by itself will result in boosting revenue of their countries.

“They [African finance ministers] also agreed to see what investments they need to prioritize and support for the implementation of AfCFTA. They looked at issues like using VAT [Value Added Tax] to replace tariff revenues. They had fascinating debate on how to move away from dependency of trade revenues to other types of taxes,” Mr. Luke said.

Entitled, ‘Free trade in Africa: How can LDCs benefit?’ the panel is part of the Global Forum on Inclusive Trade for LCDs, which is organized by the Enhanced Integrated Framework (EIF) from June 13-14, 2018.  

The panel was live streamed by the Geneva Action Platform for Engaging, Learning and Information (Gapeli). Gapeli’s main goal is to strengthen knowledge and understanding of global challenges and thereby further build on the inclusiveness of debates and negotiations taking place especially in Geneva. It has been working as the hub for information coming from Geneva.