The past year has been a significant one for trade-related matters. The very current news of a ‘phase one’ trade deal between the United States and China, and the definitive victory for the Conservative Party and Boris Johnson in the United Kingdom to ‘get Brexit done’ have lifted the spirits of the markets across much of the global economy. Of course, much work remains to be done on both, so 2020 can still be expected to bring interesting trade developments.
The crisis in the World Trade Organisation (WTO) continues. Since 10 December the Appellate Body has only one member – making its function impossible. It remains to be seen how this will play out. Meanwhile the African Union has applied for Observer Status in the WTO (see related Blog
). Africa’s WTO members recently met to reconfirm their commitment to multilateral trade governance. Specifically, they expressed their desire for the completion of the Doha Development Round. Sadly, this is highly unlikely. It is a great pity that Africa’s WTO members are not, for the most part, participating in the plurilateral initiatives (also referred to as joint sector initiatives) covering areas such as Womens’ Economic Empowerment, Micro, Small and Medium Enterprise Development and e-commerce. A future WTO seems sure to feature such plurilterals rather than the multilateral agreements that were possible towards the end of the 1980s/early 1990s. The world has moved on. The crisis of multilateralism extends well beyond trade; including the climate crisis, migration and financial governance too.
On the continent, 30 May signalled the entry into force of the African Continental Free Trade Agreement (AfCFTA). The sub-text of course, is that negotiations on key elements of the free trade area are still under negotiation. Despite entry into force of the Agreement, no trade under the AfCFTA is yet possible. Negotiators are working seriously on the rules of origin and tariff concessions for trade in goods and preparations for specific commitments for the five priority services sectors (financial, communications, transport, tourism and business services). These are key for trade in goods and services under the AfCFTA to begin. Implementation of the AfCFTA has to become a priority for the State Parties – signature and ratification will mean very little unless the States Parties conscientiously implement every obligation under the Agreement. See our Blog here
The AfCFTA will have its own institutions – in a Blog
we look closely at the institutional architecture of the AfCFTA and the interconnections to the institutions of the African Union. The Assembly of the African Union is the highest decision-making organ of the AfCFTA. This is a clear reminder that the AfCFTA has two lives. It is a free trade area, but also a flagship project of the African Union, alongside many other flagship projects such as BIAT (Boosting Intra-Africa Trade), AIDA (Accelerated Industrial Development for Africa) and others. The Secretariat will be hosted in Accra, Ghana – the Secretary General will be announced on 8 February at the African Union Summit.
Non-tariff barriers (NTBs) are acknowledged as generally more pernicious than tariff barriers – in a Blog
we look at the continental NTB notification mechanism. Although there is still work to be done to address NTBs systemically, it is clear that many lessons have bene learned from regional notification mechanisms such as www.tradebarriers.org
During 2019, very important collateral AfCFTA support initiatives were also started. Here Africa’s largest trade bank – Afreximbank – is taking a lead not only in its traditional areas of business. In addition to the Pan African Payments and Settlements System (PAPSS), an Adjustment Facility to assist especially least developed countries to manage the adjustment processes following liberalisation, and support to develop Africa’s quality infrastructure (in collaboration a development partner) have been announced. These trade-supporting initiatives are essential to make the AfCFTA work for Africa’s development. They can also contribute to boosting Africa’s capacity to produce tradeables competitively – arguably a much greater challenge than improving market access.
Our updated FAQ on the AfCFTA
reflects on some of the basic features of the Agreement and provides an update on recent developments.
We would like to thank you very much for your support and collaboration during 2019, and we look forward to engaging again in 2020.
Wishing you all a happy and peaceful holiday season.
Trudi and the tralac team
Please note that tralac’s offices will close on Friday, 20 December 2019 and reopen on Monday, 6 January 2020.