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On the African Continental Free Trade Area

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Regional Integration, Trade and Industry in Africa

Abstract

Africa-wide integration projects have competed with step-wise regional integration since independence. This chapter examines the new project of an African Continental Free Trade Area (AfCFTA). The project’s potential to become an economic game-changer for Africa is analysed alongside the likely pitfalls of the arrangement. We conclude that while a well-staged AfCFTA can resolve a number of critical issues associated with intra-African integration, it cannot replace existing RECs, especially not with respect to negotiating extra-regional trade agreements. It is argued that to avoid undercutting the entire process, the entrenched logic of exceptions and exclusions from tariff liberalization must not be reproduced at the continental level, and a generic developmental set of rules of origin must be defined. The chapter closes with a description of the essential elements that must be included in a higher-order project of economic integration at both the regional and continental level in order to respond to what the literature calls transformative or developmental regionalism.

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Notes

  1. 1.

    See https://au.int/en/cfta.

  2. 2.

    Therefore, Annex No. 11 (trade liberalization schedule) of all fifteen annexes remains under negotiation and is not publicly available.

  3. 3.

    See TRALAC AfCFTA Ratification Barometer.

  4. 4.

    With five priority sectors: business, communication, finance, transport, tourism. Education and health are also to be considered. There has been a debate since the launch of the CFTA as to which services to prioritize during negotiations. Some experts have pleaded for health in the exceptional circumstances of 2020/21.

  5. 5.

    We will see in Part III why the same parallel approach is generally not appropriate in North–South trade negotiations, where the most productive service providers are located in the North.

  6. 6.

    The application of the MFN principle is, however, negotiable among African signatories on a reciprocal basis. Furthermore, FTAs with third parties also contain MFN clauses which open the door to serious conflict if these legal documents do not legally privilege the treatment among African or ACP countries over the treatment of extra-African partners. We will report a case in which exactly such a loophole exists in Part III on trade arrangements with the European Union.

  7. 7.

    The Statistics Unit at the COMESA Secretariat has introduced national constituencies to look at the impact of their proposed CFTA market access offers by using the World Bank’s Tariff Reform Impact Simulation Tool (TRIST). Such exercises can indeed help identify partial equilibrium outcomes of potential CFTA integration, including the identification of sensitive products for the CFTA exclusion lists.

  8. 8.

    Communication of Wamkele Mene to the Frankfurter Allgemeine Zeitung 2.1.2021.

  9. 9.

    For the alternatives considered during negotiations to avoid violation of the CET, see again Lunenborg (2019).

  10. 10.

    Mold/Mukwaya from UNECA come to a different, more upbeat conclusion with CGE modelling (based on GTAP 9), but this remains largely conditional on the very small increase of industrial output in the region, with no economies of scale (which is, however, one of the core arguments in NEG). Their research is nonetheless insightful as to likely sectoral consequences of large integration schemes (Mold and Mukwaya 2016).

  11. 11.

    South Africa’s position vis-à-vis the TFTA was already contradictory—to an extent necessarily so. Scholwin tries to portray the South African stance as applied developmental regionalism, although his evidence on the perceptions of South African officials points to deep-seated reluctance to liberalize trade in goods and, in particular, in services. In this sense the actual course of TFTA negotiations was a good predictor of what is likely to happen for the CFTA (Scholvin 2018).

  12. 12.

    South Africa later signed with four other countries at the regular AU summit in Nouakchott on 1 July 2018. Significantly, Nigeria and Tanzania signed the agreement with further delay—the same two countries which blocked the West and East African Economic Partnership Agreement with the EU, not without good reason (see Part III).

  13. 13.

    The definition of green goods can be based on OECD and subsequent UNIDO work (Cantore and Cheng 2018; Steenblik 2005).

  14. 14.

    In Part III, we come back to the issue and discuss why too low requirements of RoO for South–North trade are not developmental, either.

  15. 15.

    Some observers expected a kind of reverse domino effect with Brexit, with more member countries lured into independence from ‘Brussels’. Despite centrifugal tendencies in the EU which increased for other reasons, this kind of reverse domino effects appear unlikely. It is not even sure whether the Brexit process will undermine international confidence in deep regional integration, as the values of a common market become more obvious when a single member state negotiates its departure.

  16. 16.

    It definitely does not yet work out this way in Southern and Central Africa.

  17. 17.

    The term ‘variable geometry’ is sometimes erroneously applied to the situation in East and West Africa, where would-be customs unions deal differently with a proposed bi-regional trade agreement—in this case with the EU—with some members signing individually and others not. It is a misnomer in this case. Variable geometry cannot exist with regard to an essential issue which defines the whole REC at its given stage, as the think tank SEATINI has also criticized.

  18. 18.

    Apart from the fact that customs unions, common markets, etc., do not at all build on border measures alone but on behind- and between-the-borders policy as well.

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Correspondence to Helmut Asche .

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Asche, H. (2021). On the African Continental Free Trade Area. In: Regional Integration, Trade and Industry in Africa. Advances in African Economic, Social and Political Development. Springer, Cham. https://doi.org/10.1007/978-3-030-75366-5_6

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