AfCFTA Trade 'Very Slow' Amid Pandemic, Nontariff Issues, Official Says
Trade under the African Continental Free Trade Area has been “very slow” since it began in January, partly due to the COVID-19 pandemic and the lack of agreements over a range of nontariff barriers, said Petina Gappah, principal legal adviser to the AfCFTA. Gappah said many challenges remain before trade within the region operates smoothly, but she said she is hopeful progress will be made.
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Gappah, speaking during an Aug. 18 webinar hosted by the Peterson Institute for International Economics, said she expects two more African countries to ratify the deal by year-end, bringing the total number to 40 countries. “That means we’ll be 15 short of full continental ratification,” she said, “and I think that is an incredible, incredible achievement.”
The AfCFTA was forced to postpone the start of trade from July 1, 2020, to January 2021 because of the pandemic, which has “really held back some of the progress that we hoped to see,” Gappah said. “So in effect, we have really been trading for just barely eight months.” During that time, the AfCFTA’s council of ministers and senior trade officials have been holding “regular meetings.” She also said AfCFTA’s secretary general has been trying to convince more countries to join.
“There's a lot of skepticism, as you can understand, and rightly so, because it's a very frightening idea, the idea of borderless trade,” Gappah said. “So there needs to be a lot of political will behind the project, and that's one of the things that we've been working on.”
Gappah also said the AfCFTA’s dispute settlement body -- which is modeled closely after the World Trade Organization’s appellate body -- has been meeting regularly. Gappah has “slight reservations” about the dispute body because it is so similar to the WTO structure. “That worries me a little bit, because we've seen the cumbersome nature of the WTO process,” she said. “And it worries me even more when I think about how few African countries actually have experience in the WTO.”
Gappah, who previously worked at the WTO’s appellate body, said she used to receive questions from African countries about “capacity building and training” but “less so in actually bringing disputes” to the WTO. “I want [AfCFTA] state parties to use it and to use it frequently, but we don't really have a culture on the continent of using even our own regional economic integration dispute settlement mechanisms,” Gappah said. “The dispute settlement is going to be hugely important in terms of bringing trust to the system.”
Other issues surround nontariff barriers. She said member countries have yet to finalize what goods are covered under the AfCFTA’s tariff concession schedules or even on some provisions surrounding rules of origin. “Actual trade has been very slow to get off the ground,” Gappah said. “If we can get the trade in goods off to a good start, I think we'll be in a very good space to then move on to actual negotiations on services before we even get into what we call the phase-two new generation issues.”
Sherman Robinson, a trade expert with PIIE, said South Africa will be “absolutely crucial” in the success of AfCFTA. Without the country’s full commitment, the deal could be “crippled” because South Africa is the “major trading country in that region,” Robinson said. “You really do need South Africa on board, and then you need to be making your trade policy in South Africa consistent with everybody else,” he said. “That's going to be the major challenge.”
Gappah said she is looking forward to watching how Africa’s largest trading countries take part in the AfCFTA. “It will be very interesting to see even the dominant state parties like South Africa, Nigeria, and so on being also subjected to the same rules as the smaller countries,” she said. “It will be very, very interesting to see how that works out.”