THE AFRICAN CONTINENTAL FREE TRADE AREA (AfCFTA) AGREEMENT: A CHOICE FOR AFRICA?

1. THE AFRICAN CONTINENTAL FREE TRADE AREA (AfCFTA) AGREEMENT: A CHOICE FOR AFRICA? ANTHONY K. NYAME-BAAFI DIRCETOR MULTILATERAL, REGIONAL & BILATERAL TRADE MINISTRY OF TRADE & INDUSTRY GHANA

2. Outline • The main objectives of the AfCFTA • Negotiating the AfCFTA • Signing & Ratification of the AfCFTA • Benefits of AfCFTA • Launching of Instruments to support the AfCFTA • Harnessing the benefits of AfCFTA • Ghana’s Industrial Transformation Agenda & others to harness benefits of AfCFTA • Conclusion

3. Main objectives of the AfCFTA • The main objectives of the AfCFTA are: • Expand intra-African trade through better harmonisation and coordination of trade within the continent; • Enhance competitiveness at the enterprise level to support economic transformation; • Exploit economies of scale to take advantage of continental market access; • Add value to Africa’s natural resources; • Develop regional value chains; and • Attract investments into Africa

4. Agreement establishing the AfCFTA Protocol on Trade in Services Protocol on Rules and Procedures for the Settlement of Disputes Protocol on Trade in Goods Protocol on Intellectual Property Rights Protocol on Competition Policy • Annexes • Schedules of Specific • Commitments • 2. MFN Exemption • 3. Annex on Air Transport Protocol on Investment Annexes 1. Schedules of Tariff Concessions 2. Rules of Origin 3. Customs Cooperation and Mutual Administrative Assistance 4. Trade Facilitation 5. Transit Trade Facilitation 6. Technical Barriers to Trade 7. Sanitary and Phytosanitary Measures 8. Non-Tariff Barriers 9. Trade Remedies Phase Two

5. The Protocol on Trade in Goods • 90 % tariff liberalisation commitment for the continent has been adopted as the level of ambition for Trade in Goods for both Developing Countries (DCs) and Least Developed Countries (LDCs). • Special concession for 6countries (G-6) to start at 85% tariff liberalization but will also reach 90% two years later. • The G-6 States who will start at 85% level of ambition are Ethiopia, Madagascar, Malawi, Sudan, Zambia and Zimbabwe. • 7% for sensitive and 3% for excluded products have been allocated. • In the long run, the time frames for the general tariff liberalisation, sensitive and excluded products are 10 years for DCs, 13 years for LDCs and 15 years for the G-6, subject to request and offer negotiations, for all State Parties to phase down this category of products.

6. The Protocol on Trade in Services • The scope of Trade in Services negotiations will cover all service sectors as well as all modes of supply defined under the WTO General Agreement on Trade in Services (GATS) and there shall be no a priori exclusion of any service sector or mode of supply of services in the negotiation. • 5 priority Services Sectors, namely; transport, communication, financial, tourism and business services for the 1st round of negotiations have been adopted. • Member States may liberalise more sectors based on the principles of variable geometry and reciprocity.

7. Signing & Ratification of the AfCFTA • 54 out of 55 Member States have so far signed the AfCFTA which was adopted at the AU Extra-Ordinary Summit in Kigali, Rwanda on 21st March 2018. • 27 Member States have ratified and deposited their Instruments of Ratification with the AU Commission. • Implementation commenced from 30th May, 2019 (30 days) after 22 Members States have ratified the AfCFTA and deposited their instrument of ratifications with the AU Commission.

8. Phase II negotiations • The Phase II negotiations will further deepen the AfCFTA: • Investment – Provisions on promotion, facilitation and protection to galvanise the investment needed to restructure Africa’s economies. • Competition Policy - Provisions to enable fair competition and market outcomes that stimulate industrialisation, competition and development. • Intellectual Property Rights - Provisions can incentivize increased innovation, ensure a level playing field and support trade

9. Benefits of the AfCFTA • The AfCFTA will significantly boost intra-African trade from 12 %, which is the lowest as compared to intra-EU trade, intra-Asian Trade and intra- North American trade which stands at 68%, 53% and 46% respectively. • A successful implementation of the AfCFTA would increase intra-African Trade by as much as $35 billion per year, or 52% above the baseline by 2022. Consequently, imports from outside the continent could decrease by $ 10 billion per year, whereas Agricultural and Industrial exports would increase by $ 4 billion (7%) and $ 21 billion (5%) above the baseline respectively (UNECA, 2014).

10. Benefits of the AfCFTA cont’d • At the firm level, it addresses the challenge of a business operator exporting goods to an African counterpart with an average rate of protection of around 12.4% compared to 8.4% when exporting overseas. • Prevent firms from overseas enjoying better terms of trade than African companies in Africa in the absence of bilateral agreements, eg. some foreign countries like the EU have preferential market access.

11. Benefits of the AfCFTA cont’d • Boost the about 80% Small and Medium-sized enterprises in Africa growth by using regional markets as stepping stones for expanding into overseas markets outside Africa • Facilitates industrial sub-contracting and partnership exchange; the exploitation of economies of scale; promote regional value chains; increase rate of diversification and transformation of our economies; reduce venerability of external shocks; promote competition and boost employment opportunities.

12. Ghana’s Trade with the World and Africa • Table 1: Imports sourced from African countries • Table 2: Exports destined to African countries

13. Ghana’s Trade with Africa (US$ Billions)

14. Ghana’s Trade with Africa • Unlike Ghana’s Trade with the rest of the world with consistent Balance of Trade deficit, its Balance of Trade with the rest of Africa has consistently been positive. • Preliminary survey shows that Ghana would substantially benefit from the AfCFTA when it addresses the supply capacity constraints and boost exports. • Ghana’s Exports to Africa are mainly light industrial products including agro-processed food, beverages, edible oil, detergents and plastic products

15. Harnessing the benefit of AfCFTA • Benefits of the AfCFTA will not come automatically. • Actions and complementary measures are needed by State Parties to benefit from AfCFTA • National Plan and Strategy for “Boosting Intra African Trade” (BIAT) needs to be developed by each State Party to identify areas of comparative advantage for diversification and develop value chains for both goods and services. • The BIAT covers seven priority clusters to address - inconsistent trade policy, inadequate trade facilitation, enhance productive capacity, trade related infrastructure, availability of trade finance, trade information, and factor market integration. • Ghana has crafted and is implementing its 10-Point Industrial Transformation Agenda and other complementary strategies in line with the BIAT since 2017.

16. Ghana’s Industrial Transformation Agenda & others to harness benefits of AfCFTA • Enhancing industrial productive capacity: – • One District One Factory (1D1F) Initiative • One Region One Park (Industrial Parks & Special Economic Zones) • Strategic Anchor Industries • SME Development • Trade Facilitation Agreement:- • Introducing Customs Management Reforms • Implementing WTO Trade Facilitation Agreement

17. Ghana’s Industrial Transformation Agenda & others to harness benefits of AfCFTA Cont’d • Trade Related Infrastructure:- • Port Expansion Project, Roads, Airports & Rail Infrastructure Development • Access to Finance:- • Stimulus Package for Local Industries • EXIM Bank Financing Facility and other Banks have pledged to support the initiatives • Trade Information:- • Ghana Commodity Exchange • Electronic Trade Information (GEPA) • Trade Fairs & Exhibitions

18. WHAT IS GHANA ALREADY DOING TO HARNESS THE BENEFITS? • Trade Policy - • National Trade Policy (Completed) • Trade Sector Support Programme (Completed) • National Industrial Policy (Completed) • Industrial Sector Support Programme (Completed)

19. NATIONAL INSTITUTIONAL SUPPORT STRUCTURE FOR AfCFTA • An Inter-Ministerial Facilitation Committee has been constituted by the President to provide strategic direction and coordinate support for the implementation of AfCFTA in Ghana. • A National AfCFTA Coordinating Office is being established at the Ministry of Trade and Industry to act as one-stop shop facilitation and information hub. This will be staffed and operated in collaboration with the Ministry of Foreign Affairs and Regional Integration, and Ministry of Finance. • National AfCFTA/BIAT Steering Committee • Technical Working Groups will be established to coordinate support to the Private Sector under each of the 7 BIAT Clusters. • Stakeholder Consultations and Engagements – sensitization workshops and seminars which have already been initiated to provide information on the AfCFTA will be aggressively pursued on the AfCFTA implementation.

20. The Role of Some Banks • The African Export Import Bank (Afreximbank) will provide 3 Instruments: • AfCFTA Adjustment Facility to manage the adverse effects of revenue losses and stimulate investments to support trade and economic growth • ThePan-African Payment and Settlement System (PAPSS)is a centralized payment and settlement infrastructureto reduce the costs and time variability of cross-border payments for intra-African trade and commerce payments. • The Africa Customer Due Diligence (MANSA) Repository Platform to serve as a single source of centralized database for conducting customer due diligence checks on counterparts in Africa; Financial Institutions, Corporates, and SMEs • The African Development Banks has provided some financial support for the smooth implementation of the AfCFTA. • Other financial Instruments are expected to provide some funding for the successful implementation of the AfCFTA

21. Support Instruments for the Operational Phase of the AfCFTA • The following Instruments were unveiled to support the Operational Phase of the AfCFTA at the AU Assembly Extraordinary Summit in Niger on 7th July 2019: • Adopted the agreed AfCFTA Rules of Origin (RoO) • Dashboard of the Africa Trade Observatory; • AfCFTA Trade in Goods Password Protected Dashboard; • Pan-African Digital Payment and Settlement System; • Continental Online Non-Tariff Barriers (NTB) Mechanism for reporting, monitoring and elimination of NTBs; and • AfCFTA Web-based and Mobile-based Application for Business.

22. Some decisions taken to support the Operational Phase of the AfCFTA • Some of the decisions taken at the July 2019 AU Extraordinary Summit include: • Final schedules of Tariff concessions and outstanding Rules of Origin must be submitted to the AU Assembly in January 2020; • Dismantling of tariffs shall start not later than 1st July 2020; • Ghana should host the AfCFTA Secretariat; • The AfCFTA Secretariat must become operational not later than 31st March 2020; • State Parties must provide necessary support such as financial, political, and technical including the timely provision of information.

23. Conclusion • The AfCFTA is a good choice for Africa • The AfCFTA constitutes the most significant development in Africa’s integration efforts. • The AfCFTA will enhance Government’s current Industrial Transformation Agenda and contribute to the diversification of the Ghanaian economy. • The AfCFTA will open up new market access opportunities under preferential terms for Ghanaian producers particularly SMEs. • Ghana is firmly committed and will support the successful implementation of the AfCFTA for accelerated inclusive growth and development of Africa. • Need for collaboration between all stakeholders to harness benefits of AfCFTA – Member States, Regional Economic Communities, Government, Private Sector, Civil Society, Parliament, Development Partners and the general public to ensure the successful implementation of the AfCFTA.

24. For further inquiries contact:Email: nyame_baafi@hotmail.comPhone: +233505298697THANK YOU