South Africa’s Trade, Industry and Competition Minister Ebrahim Patel, who has been elected to chair the African Ministers of Trade (AMOT), says he will prioritise the finalisation of the outstanding work and negotiations required to enable the start of trading under the African Continent Free Trade Area (AfCFTA) from January 1, 2021.
AMOT is the Ministerial body tasked with finalising negotiations on the terms of preferential trade under the AfCFTA.
Trading under the AfCFTA was meant to begin on July 1, but was delayed as a result of the Covid-19 pandemic, which affected the holding of the thirteenth Extraordinary Session of the Assembly of the African Union (AU).
The trade deal could eventually include over 50 African countries and their 1.3-billion citizens, making it potentially the largest free trade area in the world. The countries potentially involved in the bloc currently have a combined gross domestic product of $3.4-trillion.
To date, however, only 28 AU member States have deposited their instruments of ratification and two additional countries have ratified the treaty, but have not yet completed the formal depositing process.
During a virtual AMOT meeting on September 30, which Patel chaired and which was attended by Trade Ministers and senior officials from more than 40 countries, the importance of ratification was underlined, with the Ministers noting that further ratification would enhance the inclusiveness of the AfCFTA.
Ministers from Egypt, Sierra Leone and Kenya were elected as vice-chairpersons at the meeting, while the Minister of Gabon would serve as rapporteur for the AMOT Bureau.
In a statement, Patel said that the meeting reaffirmed the commitment of countries to starting preferential trade under the AfCFTA on January 1, and also discussed outstanding work on tariff and services offers as well as Rules of Origin.
“The Ministers agreed on a succinct set of deliverables and a focussed work programme for the finalisation of the outstanding negotiations for adoption by Heads of State and Government at the 13th Extraordinary AU Summit on December 5, 2020, with the aim of starting trade under AfCFTA preferences on January 1, 2021.”
Patel also linked the AfCFTA directly to the continent’s economic recovery from the effects of the pandemic, arguing that the recovery must focus on attracting increased investment into the productive sectors.
“Investment can be attracted to the continent based on the greater scale and size of markets unlocked by the AfCFTA,” he said.
That assessment was in line with a recent World Bank report, which stated that the AfCFTA could boost regional income by 7%, or $450-billion, by 2035 and help offset the negative effects of the Covid-19 pandemic, which is expected to cause up to $79-billion in output losses in Africa this year.
If fully implemented, the arrangement also has the potential to lift 68-million people out of moderate poverty and 30-million people out of extreme poverty over the same period.
Patel said that, besides tariff reductions, other critical issues included the strengthening of national customs administrations to monitor the movement of goods, as well as investment in industrial capacity and infrastructure.
“Each of us needs a strong Africa, an Africa that has deeper levels of industrialisation, more jobs for young people and greater wealth-creation. That is the goal. The African Continental Free Trade Area is the means. Effective implementation is the challenge we must address,” Patel said.