Photographer: Issue Sanogo / AFP / Getty Images
Photographer: Issue Sanogo / AFP / Getty Images
Supply Lines is a daily newsletter that tracks Covid-19’s impact on trade. Register here, and subscribe to our Covid-19 podcast for the latest pandemic news and analysis.
The first products will begin to flow under a free trade pact for all of Africa on Friday, the culmination of more than five years of negotiations on cutting international tariffs.
The deal comes at a time when trade tensions are increasing in much of the rest of the world. The African Union of 55 nations marked the occasion in a ceremony that took place just hours after the United Kingdom left the European Union’s single market and a new post-Brexit trade agreement entered into force.
It is “a day when we take Africa one step closer to a vision of an integrated Africa, a vision of an integrated market on the African continent,” said Wamkele Mene, secretary general of the African Continental Free Trade Area, during the event .
The treaty aims to reduce or eliminate cross-border tariffs on most goods, facilitate the movement of capital and people, promote investment and pave the way for a continental customs union. The bloc has a potential market of 1.2 billion people with a combined gross domestic product of $ 2.5 trillion and could be the largest free trade area in the world by area when the treaty becomes fully operational in 2030.
The deal will help the continent recover from the “devastating impact” of the coronavirus pandemic, said South African President Cyril Ramaphosa, who holds the rotating AU presidency.
Intra-African trade fell to 14.5% of the total in 2019, from 15% in the previous year. The free trade pact may increase the proportion to 22%, and trade within the continent may increase to more than $ 231 billion, even if all other conditions remain unchanged, said the African Bank for Export and Import in report published on 15 December. Domestic remittances accounted for 52% of total trade in Asia and 72% in Europe, according to data from Afreximbank.
Read more: As the world shakes free trade, Africa embraces it: QuickTake
All but one of the 55 nations recognized by the African Union have signed up to the area and more than half have ratified the agreement. Eritrea, which has a largely closed economy, is the only stronghold.
The pact will help Africa to industrialize on a large scale, said President Nana Akufo-Addo of Ghana, host country of the bloc’s secretariat.
All outstanding issues regarding the bloc’s various operating instruments, such as an online tariff negotiation platform and a digital payment and settlement system, will be finalized and put into operation by the end of March, said Akufo-Addo.
(Updates with comments made during the launching ceremony starting from the third paragraph.)