The African Continental Free Trade Area is a landmark achievement, in the context of the continent’s long and rich history, in fostering regional integration to unify the continent. The African Continental Free Trade Area will lead to the creation of a single continental market of more than 1.3 billion people, with a combined annual output of $2.2 trillion. The transition phase to the Continental Free Trade Area alone could generate welfare gains of $16.1 billion and boost intra-African trade by 33 per cent.
Realizing the full potential gains from the African Continental Free Trade Area will require a broad range of complementary policies, to address multiple challenges, designed to enhance an emerging trade–industrialization nexus on the continent: from business and trade facilitation to infrastructure, from productive capacities to entrepreneurship policies. But, under the African Continental Free Trade Area, it is the rules of origin – establishing the nationality of products produced in Africa – that will determine whether preferential trade liberalization can be a game changer for Africa’s industrialization.
How these rules are designed, enforced and verified will critically determine the size and distribution of the economic gains from the African Continental Free Trade Area, and will shape the future regional value chains on the continent. How lenient, flexible, easy to use and understand and accessible rules of origin are will shape the net benefits to the African private sector under the African Continental Free Trade Area. African countries should also consider the differing levels of productive capacities and competitiveness of African countries when enforcing rules of origin. Policies are needed to build institutional capacities of customs authorities to ensure impartial, transparent and predictable implementation of agreed rules of origin. New and emerging technologies must also be leveraged to lower compliance costs for the private sector.
The African Continental Free Trade Area is Africa’s renewed opportunity to steer its economic relations away from a reliance on external donors, foreign creditors and excessive commodity dependence, ushering in instead a new economic and political era focused on self-reliant cooperation, deeper integration and higher levels of intra-African trade. The African Continental Free Trade Area could boost African economies by harmonizing trade liberalization at the continental level, promote economic diversification and intra-African trade, and foster a more competitive manufacturing sector.
The United Nations Conference on Trade and Development (UNCTAD), as the leading United Nations body on trade and development, has embarked on this historic initiative with African member states to support them in exploiting the potential gains of the African Continental Free Trade Area. I am certain that this report will prove to be a valuable guide to policymakers as we journey along the road towards the African Continental Free Trade Area and beyond.
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