African Continental Trade Agreement
The perimeter of the AfCFTA is important. The agreement will reduce tariffs between Member States and cover policy areas such as trade facilitation and services, as well as regulatory measures such as hygiene standards and technical barriers to trade. Full implementation of AfCFTA would transform markets and economies across the region and boost production in the services, manufacturing and raw materials sectors. Maryla Maliszewska , lead author, is a senior economist in Trade and Regional Integration Unit (ETIRI) at the World Bank. His area of expertise covers various aspects of trade policy and regional integration, with particular emphasis on the impact of trade on poverty and income distribution. The African Continental Free Trade Area only came into force when 22 of the signatory countries ratified the agreement, which took place in April 2019, when The Gambia was the 22nd country to ratify it.  In August 2020, there are 54 signatories, of which at least 30 have ratified and 28 have tabled their ratification instruments.    The three countries that have ratified their ratifications but have not yet tabled are Cameroon, Angola and Somalia, although Morocco is also ratified.   At this summit, Benin and Nigeria signed the agreement, so that Eritrea is the only African state not to be part of the agreement; Since then, Eritrea has applied to join the agreement.
Gabon and Equatorial Guinea also tabled their ratifications at the summit. At the time of launch, there were 27 states that had ratified the agreement.    Eritrea was not part of the original agreement because of the continuing state of war, but the 2018 peace agreement between Ethiopia and Eritrea ended the conflict and ended the barrier to Eritrea`s participation in the free trade agreement.      The unrecognized state of Somaliland was not involved in discussions on the creation of the agreement. Basically, AfCFTA will put African economies – and African citizens – on a better economic footing. The agreement will improve competitiveness and promote investment, innovation and economic growth by improving efficiency and removing trade barriers. In fact, it will eliminate tariffs on 90% of goods and gradually apply the same to services, at a time when other parts of the world are reconsidering trade agreements and economic integration. In particular, the abolition of tariffs on goods is expected to increase the value of intra-African trade by 15-25% by 2040. That would be between $50 billion and $70 billion. Roberto Echandi is the senior private sector specialist at ETIRI. It focuses on research and policy advice on issues related to cross-border trade in services, negotiations, implementation and maximizing the potential benefits of deep integration trade agreements and the AfCFTA negotiation and implementation process.
One of the great advantages for the AfCFTA region will be the removal of trade barriers between Kenya and Ethiopia, the two largest economies in East Africa. Despite previous efforts to deepen economic relations, the volume of bilateral trade between the two remains extremely low. Bilateral trade did not reach $70 million in 2019, representing only 0.5% of Ethiopia`s total exports and 0.09% of Kenya`s exports, mainly consisting of food, live animals and certain industrial products (Table 1). It goes without saying that East Africa will continue to face a number of challenges, including one shared by all countries on the continent: the need to quickly finalize tariff offers and ongoing negotiations on rules of origin, as well as timetables for the provision of services. This common challenge will be particularly difficult, as negotiations in areas such as services and Phase II, such as competition and protection ownership measures, will inevitably be quite complex and highly technical.