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Business News of Friday, 17 April 2020

Source: Goldstree Business

Goldstreet Editorial: Why AfCFTA’s start must be postponed

CUTS International, a widely respected public policy think tank, has made a call for the commencement of the African Continental Free Trade Agreement, AfCFTA to be postponed because of the challenges thrown up all around the world by the outbreak of the coronavirus pandemic. The only surprise in this call is that it needed to be made in the first place; it had been widely assumed by most, including this newspaper, that the implementation of Africa’s new common market had already been postponed indefinitely in the light of the global pandemic and the inevitable response of most African countries that have signed up to trade with each other on duty free basis.

Since this is not the case, we find it imperative to add our voice to CUTS’ call for the postponement of the commencement of the pan-continental free trade agreement.

The reasons are obvious. It would not be pragmatic to try and start the implementation at a time that many African countries have closed their borders to human traffic, including Ghana which host’s the AfCFTA secretariat.

True, national borders are necessarily still open to cargo traffic. But the commencement of the agreement will inevitably require direct contact between counterparties for negotiations of all kinds of bilateral trade deals between enterprises all around the continent; while such deals can be executed without direct, face to face discussions between respective counterparties, once they have been finalized, the initial structuring of such agreements necessarily require direct negotiations, which are simply not possible under the current circumstances.

Besides, a couple of key multilateral meetings were still required before the original commencement date of July 1, and these too have had to be postponed. Going ahead without those meetings implies either that they were not crucial in the first place – or much more likely that their agendas would be swept under the carpet, despite their clear importance.

Furthermore, as CUTS itself has correctly pointed out, commencing the implementation of AfCFTA under the current situation of closed borders gives member states free pass to apply all sorts of trade protectionism under the supposed guise of travel restrictions and public health concerns; it should be recognized that African countries have had plenty or reason to protest the European Union’s trade related health regulations, which are widely seen really as trade restrictions. If European countries with huge trade surpluses against their African trading counterparties can resort to such ploys, how much more fellow African countries who are seeking to use intra-African trade to reduce their overall trade deficits.

Anyway, AfCFTA is still a work in progress; the commencement date of July 1 is only for phase one implementation. The second phase, covering investment and intellectual property among other things has been slated for December 2020, with lots of related issues still to be negotiated and agreed upon. It is still possible to keep to that aspect of the overall time table, while postponing the commencement of phase one, as long as the COVID 19 outbreak is brought under control within the next few months.

Meanwhile though, it is essential that AfCFTA as a whole is not rushed in such a way that years of careful preparation are put in jeopardy, simply because of a desire to cross the finishing line at the original deadline, even when extraordinary circumstances have clearly arisen that call for its postponement.

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