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Niamey, Niger – The African Continental Free Trade Area (AfCFTA) promises to raise the standard of living of more than one billion people by facilitating trade between Africans. But its impact will not be limited to the continent: the historic agreement will likely have an impact on existing agreements between Africa, China, the United States and Europe.
"For the agreement to work, we need Africa's key partners to support a multilateral trading system," warned Deputy Director-General of the World Trade Organization Yonov Frederick Agah, at the AfCFTA launch ceremony in Niger on July 7th.
As the United States and China seek common ground, the economic footprint of the Middle Kingdom in Africa continues to grow and could take advantage of both US unilateralism and the Free Trade Agreement. .
Beijing's praise
"The launch of AfCFTA opens up new prospects for China-Africa cooperation," said Geng Shuang, spokesman for China's foreign minister. Beijing will continue to invest in "infrastructure connectivity, commercial facilities and industrial promotion" as part of the country's Belt and Road Initiative.
In 2018, trade between the United States and Africa dropped to $ 61 billion, barely 45% of its value in 2008. During the same period, the value of trade between China and the United States Africa has exceeded $ 200 billion, and projections suggest continued growth.
Critics of AfCFTA claim that cheap Chinese products will "invade" the African market, causing damage to the activities of local manufacturers, but Tanzanian businessman Ali Mufuruki is not going anywhere. not of this opinion. "This is not a news: our stores are already full of household goods, electronics and Asian cars," he told Al Jazeera. "We have been importing everything for decades [ago], while all our resources are exported from the continent and our manufacturing sector is still too weak. & # 39; & # 39;
Instead, he said, "AfCFTA is an opportunity to reverse this trend." With a rapidly growing domestic market of 1.2 billion consumers, "African businesses will be encouraged to become larger and to internationalize".
Entry into force of AfCFTA
Only 28 countries have ratified the AfCFTA agreement and another 26 (Eritrea does not yet count) should follow shortly. Eritrea still has not joined. On July 1, 2020, most of the countries that have ratified the CAFTA will begin to eliminate tariffs on 90% of imported products manufactured in Africa, with the aim of removing them completely before 2035.
"As a first step, countries with fragile economies risk losing revenue through tariff exemptions and competition from cheaper products from other mainland partners," said Albert Muchange, Commissioner for Trade and Trade. 39, industry of the African Union. Half a dozen countries that have ratified the CAFTA will then begin to eliminate tariffs on only 75% of African imports in order to mitigate the impact of liberalization on their domestic market.
"The game has just begun," said Mukhisa Kituyi, secretary-general of the United Nations Conference on Trade and Development. The conference played a key role in defining the technical details of the AfCFTA. "Investing in transport, logistics and infrastructure will be a huge challenge, as it is now cheaper for an Ethiopian good to reach China than Nigeria," Kituyi told Al Jazeera.
Ghana: back door for foreign products?
Ghana will be home to AfCFTA headquarters and, even though the country is one of the rising stars of the continent, its success could prove to be a vulnerability for the bloc. With $ 3.3 billion in foreign investment in 2018, Ghana is a destination of choice for multinational companies. Nissan, Suzuki and Volkswagen will open factories in the country in 2020, turning the region into a hub for the African auto industry.
And yet it is this very openness that scares other African countries. "Let's take a Chinese company that will open a shoe factory in Ethiopia, using cheap Chinese leather," Kituyi said. "Will they exploit the tariff exemptions provided by the Trade in Commerce Agreement to sell their shoes in other African countries?"
The answer, he explained, lies in the definition of "rules of origin", which Mr. Kituyi described as "process that will give a passport to each product".
"If the shoes are considered" made in Africa ", because their local value added exceeds 40%, say, they will move freely," Kituyi said. "Otherwise, they will be considered a Chinese product."
Ongoing rules of origin negotiations will "exclude the dumping of cheap goods by third countries," Kituyi noted.
"The agreement will open opportunities for Ghanaian manufacturers," said Ghana's Minister of Trade and Industry, Alan Kyerematen. He also stressed that this "will stimulate new local businesses and attract more foreign direct investment".
Complicate relationships
While the AfCFTA could complicate the already existing trade agreements – between African countries, the United States, the European Union and China – Ghana's Minister of Trade and Industry n & # 39; Is not worried. This "will not pose any problem, as [the trade agreements] Kyeremate told Al Jazeera. Ghana is a gateway for investors who will from there reach all the countries of the West Africa Free Trade Area. "
Kituyi fears that a recent decision by the administration of US President Donald Trump to revive "bilateral agreements with African countries" is contrary to efforts by Africans to create a common market. If the United States "change position and engage in negotiations with the continent as a whole, we will have reason to rejoice," said a UN official.
Rwandan Foreign Minister Richard Sezibera said he would also welcome "negotiated agreements with the United States, such as those we have with Europe."
His country's trade policy was in the limelight in 2016, when Rwandan President Paul Kagame increased taxes on second-hand clothing imported from the West, which prompted the United States to increase their tariffs on Rwandan imports.
"If we want continental free trade to benefit us, we need products made in Africa, and the textile sector is a perfect example," Sezibera told Al Jazeera. In Rwanda, retaliation by the United States finally benefited Chinese clothing companies such as C & H Garments, which opened huge factories in Kigali. Their "made in Africa" products could soon enter the FTAA.
Sezibera pointed out that Rwanda "is the second most conducive place for business in Africa and the 29th in the world according to the World Bank."
"We are developing our airline, attracting ICT companies and working to create low-cost energy," he said. "So for us, [last month’s] The Niamey summit has been a story in the making. "
security
Even though intra-African trade is becoming easier, security remains a challenge for the continent. "Our instability also affects our trade and our economic development," Foreign Minister of the Central African Republic Sylvie Baipo-Temon told Al Jazeera of the recent peace agreement between the African Union and the African Union. Africa conflict.
But the free trade zone, she said, "motivates us to strengthen the peace process, so that we can take back control of our entire territory and fully exploit our economic potential, especially in the region. Agriculture, which employs 75% of our workforce and must become more productive. "
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