The African Continental Free Trade Area Agreement

Providing the first book-length analysis of the African Continental Free Trade Area (AfCFTA), this volume asks how can it be ensured that the AfCFTA is effectively implemented to deliver inclusive trade in Africa. The African Continental Free Trade Area (AfCFTA) will cover an African market of 1.2 billion people and GDP of over $2.5 trillion, across all 55 member States of the African Union. Yet, trade policy increasingly appreciates that free trade is not enough; trade must also be inclusive to deliver developmental benefits. With contributions from leading trade policy authors across Africa and beyond, this book offers insights into the development and implementation of the AfCFTA and serves as a reference for stakeholders interested in trade in Africa more broadly. The contributors assess what important lessons can be drawn from the experiences of regional integration in and beyond Africa, including from success stories like ASEAN as well as from failures like the Free Trade Agreement of the Americas. An important new work for researchers and policymakers focusing on African trade and economic policy, and trade policy more generally.

Political momentum towards Africa-wide free trade has been intensifying. In March 2018, over 40 countries signed the African Continental Free Trade Area (AfCFTA) agreement. Once fully implemented, the AfCFTA is expected to cover all 55 African countries, with a combined GDP of about US$2.2 trillion. This SDN takes stock of recent trade developments in Sub-Saharan Africa and assesses the potential benefits and costs of the AfCFTA, as well as challenges to its successful implementation. In addition to increased trade flows both in existing and new products, the AfCFTA has the potential to generate substantial economic benefits for African countries. These benefits include higher income arising from increased efficiency and productivity from improved resource allocation, higher cross-border investment flows, and technology transfers. Besides lowering import tariffs, to ensure these benefits, African countries will need reduce other trade barriers by making more efficient their customs procedures, reducing their wide infrastructure gaps, and improving their business climates. At the same time, policy measures should be taken to mitigate the differential impact of trade liberalization on certain groups as resources are reallocated in the economy and activities migrate to locations with comparatively lower costs.

In March 2018, representatives of member countries of the African Union signed the African Continental Free Trade Area (AfCFTA) agreement. This agreement provides a framework for trade liberalization in goods and services and is expected to eventually cover all African countries. Using a multi-country, multi-sector general equilibrium model based on Costinot and Rodriguez-Clare (2014), we estimate the welfare effects of the AfCFTA for 45 countries in Africa. Three different model specifications—comprising both perfect competition and monopolistic competition—are used. Simulations include full elimination of import tariffs and partial but substantial reduction in non-tariff barriers (NTBs). Results reveal significant potential welfare gains from trade liberalization in Africa. As intra-regional import tariffs in the continent are already low, the bulk of these gains come from lowering NTBs. Overall gains for the continent are broadly similar under the three model specifications used, with considerable variation of potential welfare gains across countries in all model structures.

In 2018, the members of the African Union adopted the African Continental Free Trade Area Agreement (AfCFTA). This book examines the AfCFTA, dissecting its key provisions. It stresses the importance of the AfCFTA in the context of increasing episodes of trade protection in Africa, and it theorizes on the role of the treaty organs. The book also examines the importance of citizen participation for the success of the AfCFTA, as well as exploring the role sub-state actors can play. Ultimately, the study adds to the understanding of the array of problems that are associated with regional trade in Africa and the role law plays in resolving these problems. It will be of importance to academics and students of international law, especially those with an interest in African trade law, as well as legal professionals and policymakers.

This book provides a comprehensive assessment of African economic integration through the lens of International Economic Law. The analysis is contextualised within the prevailing regional economic integrations, the WTO and the peculiarity of the AfCFTA. Through legal analysis, bolstered by economic and political dimensions, the book illustrates the complex interplay of diverse factors that shape the AfCFTA. Each chapter presents a separate element of economic integration within the principles of international economic law, with an interdisciplinary approach encompassing legal, economic and political perspectives. Covering topics such as economic integration and multilateralism, market access, exceptions, trade facilitation, rules of origin and non-tariff barriers, the book also discusses trade remedies, dispute settlement, investment, intellectual property and completion policy. Additionally, human rights, corporate social responsibility and sustainable development principles are discussed, alongside small and medium-sized enterprises (SMEs), digital trade and gender in economic integration. The book will be of interest to students, instructors, practitioners and nonpractitioners in this area of international economic law.

The African Continental Free Trade Area (AfCFTA) agreement will create the largest free trade area in the world, measured by the number of countries participating. The pact will connect 1.3 billion people across 55 countries with a combined GDP valued at $3.4 trillion. It has the potential to lift 30 million people out of extreme poverty by 2035. But achieving its full potential will depend on putting in place significant policy reforms and trade facilitation measures. The scope of the agreement is considerable. It will reduce tariffs among member countries and cover policy areas, such as trade facilitation and services, as well as regulatory measures, such as sanitary standards and technical barriers to trade. It will complement existing subregional economic communities and trade agreements by offering a continent-wide regulatory framework and by regulating policy areas—such as investment and intellectual property rights protection—that have not been covered in most subregional agreements. The African Continental Free Trade Area: Economic and Distributional Effects quantifies the long-term implications of the agreement for growth, trade, poverty reduction, and employment. Its analysis goes beyond that in previous studies that have largely focused on tariff and nontariff barriers in goods—by including the effects of services and trade facilitation measures, as well as the distributional impacts on poverty, employment, and wages of female and male workers. It is designed to guide policy makers as they develop and implement the extensive range of reforms needed to realize the substantial rewards that the agreement offers. The analysis shows that full implementation of AfCFTA could boost income by 7 percent, or nearly $450 billion, in 2014 prices and market exchange rates. The agreement would also significantly expand African trade—particularly intraregional trade in manufacturing. In addition, it would increase employment opportunities and wages for unskilled workers and help close the wage gap between men and women.

In 2019, African heads of state and governments launched in fanfare the African Continental Free Trade Agreement (AfCFTA), a historic agreement for economic transformation across the continent. But now comes the hard bit: how to make the agreement a success? In this book, senior experts from across the world come together to provide a comprehensive analysis of the conditions needed for AfCFTA to successfully spur economic development in Africa. It puts forward three foundations for success: demography dividend, digital economy, and economic diversification. In addition to trade policy, the book recommends that African policymakers should strengthen fiscal and monetary policy coordination, adopt and implement the appropriate regulatory environment, and build suitable connectivity infrastructure. The stakes are high. If implemented correctly, the book argues that AfCFTA could speed up trade within Africa, which could double every five years. Success would mean growth, investment, changing trade patterns, jobs, economic transformation, poverty reduction, and a continental market for services. Driven by concrete, evidence-based strategies for long-term growth, this book is an essential read for policy makers, development practitioners, economics researchers, and everyone with an interest in the future of Africa.

The publication contains an explanation of Most Favored Nation (MFN) treatment and some of the key issues that arise in its negotiation, particularly the scope and application of MFN treatment to the liberalization and protection of foreign investors in recent treaty practice. The paper provides policy options as regards the traditional application of MFN treatment and identifies reactions by States to the unexpected broad use of MFN treatment, and provides several drafting options, such as specifying or narrowing down the scope of application of MFN treatment to certain types of activities, clarifying the nature of "treatment" under the IIA, clarifying the comparison that an arbitral tribunal needs to undertake as well as a qualification of the comparison "in like circumstances" or excluding its use in investor-State cases.