Plan for World’s Biggest Free-Trade Area Set Back by Virus

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Plan for World’s Biggest Free-Trade Area Set Back by Virus

Published Date: 5/8/2020

The Africa-wide free-trade agreement will create the world’s biggest commerce zone by area, with a potential market of 1.2 billion people and a combined gross domestic product of $2.5 trillion when fully operational in 2030. But the coronavirus pandemic could delay its start by up to six months.

“The consideration for postponement doesn’t mean that there no longer is political will and that there is no longer political commitment,” said Wamkele Mene, the secretary general of the African Continental Free Trade Area. “We have to adjust to conditions that unfortunately nobody could have anticipated and we have to give the space to governments to solve the public health crisis as a matter of priority.”

Legally, the agreement is already in force, but to make the July 1 deadline for the start of trade in goods and services under the new tariff rules, several details need to be ironed out as part of phase one of the process. When Covid-19 hit, negotiations to conclude rules of origin and tariff reductions were at an advanced stage. But talks were set back by 2 1/2 months due to the disruptions caused by the pandemic, he said.

The African Union was scheduled to have an extraordinary summit in Johannesburg this month to finalize the agreement. The AfCFTA’s secretariat is exploring the feasibility of moving talks involving more than 50 countries and real-time translation into four languages online. However, full border closures by some 30 nations aimed at limiting the spread of the virus is likely to restrict trade flows over the coming months, Mene said.

Africa lags other regions in terms of internal trade, with intracontinental commerce accounting for only 15% of the total, compared with 58% in Asia and more than 70% in Europe. The agreement aims to lower or eliminate cross-border tariffs on 90% of goods, facilitate the movement of capital and people, promote investment and pave the way for the establishment of a continent-wide customs union.

—  Prinesha Naidoo in Johannesburg and Leanne de Bassompierre in Abidjan

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— With assistance by Zoe Schneeweiss
Source: Bloomberg

Source: ITN